3 Factors that Influence Electric Vehicle Demand

29 May of 2011 by

 3 Factors that Influence Electric Vehicle DemandThere are three key factors that will influence demand for EVs. Price,the cost of gas and range will determine the rate at which EVs areadopted. EVs with price points that are comparable to combustion enginevehicles will sell better than at current price points for EVs (in somecases they are more than twice as expensive). If gas hits $5 a gallonEVs will sell faster than if it gas were to drop below $3 a gallon.Vehicles that have a range greater than 300 miles will sell better thanthose with a range of 100 miles or less.

Excluding the $7,500federal tax credit, the Volt and the Leaf, currently cost $41,000 and$32,780, respectively (both vehicles lease for $349 a month). A 2010 Deloitte report, found that more than half of the US consumers surveyed said they wouldnot be willing to pay more for an electric vehicle than for aconventional vehicle.

The sales of EVs and hybrids have grownalongside rising gas prices. One year ago gas was $2.75 a gallon, nowgas is hovering around $3.79 a gallon.

The Deloitte report foundthat consumers have range anxiety, (the concern that EVs haveinsufficient range). Almost 75 percent of those surveyed said they would need an electric vehicle to travel 300 miles on a single charge beforethey would consider purchasing it. However, 78 percent of those surveyed said they would buy an electric vehicle if gas hit $5 a gallon.

The Deloitte report also indicated that : “At $3 per gallon for gas,internal combustion engines are more economical to operate; the EV willnot be comparable until battery costs are $600 or less per kWh, whichcould occur by 2014, at which time electric vehicle adoption willpick-up (assuming fuel costs remain stable).”

In April 2011, USEnergy Secretary Steven Chu talked about the future of electric cars and indicated that he believes that before the end of the decade EVs willbe “one-third the cost of today’s batteries but have at least threetimes the range.” He also said it will be possible for vehicles totravel up to 500 miles on a single charge.

In the absence ofgovernment legislation that will force significantly improved fuelefficiency, consumers will embrace EVs to the extent that they havebetter ranges and cost less. Climbing gas prices will also drive demandfor EVs. Despite the urgency of finding alternatives to fossil fuelpowered vehicles, market forces will ultimately determine the strengthof demand.

Original Article on The Green Market Blog

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