Growing Demand for Greener Vehicles

Demand for electric and hybrid cars has risen dramatically in recent years.The steady growth in this market is driven by a wave of newtechnologies, shifts in global competition and changes in public policy.

We have come to expect green vehicle development from nations like Japan,South Korea, China, Germany and France, but even lesser automotivepowers are responding to this growing international demand. Publicopinion is getting behind greener vehicles.

Governments andprivate enterprise are responding to this growing demand. Consistentwith public policy initiatives all around the world, Russian PresidentDmitry Medvedev is joining the chorus of countries that see electric and hybrid vehicles as a fundamental part of the move to a low carboneconomy. Russian car maker YAROVIT Motors and financial company OneximGroup are making an electric hybrid vehicle called the E-Mobile (or Yo).

Demand for greener vehicles is growing almost everywhere. Even in America,where the public has been brainwashed by Republicans and corporationsthat are beholden to the old energy economy, acceptance of the newenvironmental and economic realities is growing. According to a 2010survey from Ernst & Young, nearly 20 million Americans would consider buying a hybrid or fullyelectric vehicle. The commercial transportation industry is also getting serious about greener vehicles.

A late-2009 report from Pike Research forecast that hybrid fleet sales would increase from 300,000 in 2009 to nearly 4 million hybrid vehicles by 2015. "Manufacturers are beginningto turn their attention beyond light duty vehicles to the efficiencyopportunities for hybrid drive in heavy trucks," Clint Wheelock, a managing director at Pike, said in the report. "For example, in North America nearly 10 percent of buses sold in 2015 will be hybrids."

A new study by California-based J.D. Power and Associates indicates thatbattery-based vehicles are likely to capture 7.3 percent of the globalautomotive market. However, J.D. Power researchers say that severalfactors could radically increase that number. These factors includebattery cost reductions, increases in petroleum prices and newgovernment mandates.

In a speech at the Fortune Brainstorm Green 2010 conference, Ford Motor Co. Chairman William Ford outlined some of thekey forces influencing the demand for green cars in the US.
Federalsubsidies are critical because, as Ford explained, it is "reallyimportant that we are competitive as a nation in this really criticaltechnology." Removing subsidies would be a mistake because "that’s notwhat other countries are doing."

China’s funding of greenautomotive tech makes China a competitive threat. "They all have plansto come over, and we would be absolutely crazy" to underestimate China’s affect on the US auto market, Ford said.

To make it easier to adapt to changing demand, Ford is developing common platforms using existing car models.

Due to increasing global urbanization automotive companies may consideralternatives to traditional ownership and leasing arrangements andprovide "mobility as service," such as car sharing programs.

However, there are limits to the number of battery powered electric vehiclesthat can be manufactured. Lithium is a key ingredient in advancedbatteries. The future demand for lithium is expected to outpace supply.Companies like BYD are already looking for new sources of lithium.According to a European Commission study of raw materials for hightechnology goods, if drivers continue opting for battery poweredelectric cars, by 2050 the supply will not be able to keep up with thedemand.

To achieve real market penetration greener vehicles mustappeal to consumers through features, functionality and price. Creativeinnovation in both business models and technology, will drive demand inthe greener car market.



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