August 16, 2011. The Green Piece Column.
America: land of the free and home of the gas guzzler. It’s no secret that when it comes to motor vehicles in the USA, it’s not just Texas where everything is bigger – as pick-up trucks and SUVs traditionally rule the roost.
Of course this penchant for larger vehicles isn’t without justification. America by its very nature is a more expansive country with wide open spaces, particularly in the southern and central states, creating the need to carry heavier loads in one journey. Public transport systems in these areas too are less advanced when compared to most of Western Europe; and as much as Americans may fear “gas prices” creeping towards that $4 a gallon threshold – that would still be around half the price currently being paid for a gallon of petrol in the UK.
So is it even remotely feasible that Americans may switch, en masse, to electric cars in even the distant future? Or is that idea nothing more than an environmentalist’s pipe dream?
How to make electric cars competitive
Recently the Belfer Center for Science and International Affairs at the Harvard Kennedy School published a discussion paper examining the potential for electric vehicles to transform the US market. Its conclusion was that significant penetration will only occur if electric cars become legitimately competitive with conventional vehicles – and not only in terms of cost.
As part of the study, the authors focused on four specific areas: whether the cost of purchasing an electric vehicle will be more or less expensive than a comparable petrol powered vehicle; are the comparative costs likely to change over the next 20 years; do electric vehicles have the same attributes as conventional cars and if not, do the differences matter; and will electric car owners be able to access the electricity needed to power their vehicles.
Counting the costs
In terms of costs, the paper suggests that at 2010 purchase and operating prices, a plug-in hybrid with a 40mile electric range would be $5,377 more expensive than an internal combustion engine; while a battery electric vehicle is $4,819 more expensive. Therefore, it fears that the petrol cost savings of electric cars over their lifetime may not offset their higher purchase prices.
However, it does suggest that in the future this cost balance may change. For example, if over the next 10-20 years battery costs will decrease while petrol prices increase, then battery electric vehicles will be significantly less expensive than conventional cars – potentially $1,155-$7,181 cheaper. In fact even when using high consumer discount rates, battery electric vehicles are expected to be less expensive than conventional vehicles.
Nevertheless, plug-in hybrid electric vehicles will remain more expensive than battery electric vehicles in almost all comparison scenarios – and they will only be less expensive than conventional vehicles in a world with very low battery costs and high petrol prices.
What do American consumers want?
It’s not just costs that will play a significant role in a potential consumer switch. Motorists also base their car purchases on how they value certain attributes, such as: performance, reliability, aesthetics and other features.
The study highlights that electric vehicle manufacturers have worked hard to ensure electric cars are competitive in these areas, but they still remain hampered by limited range and fears over reliability. The latter problem should disappear as motorists become more accustomed to electric cars, but range anxiety will continue to exist until battery technology improves.
The authors point out that some of these range-related fears may be considered irrational given that, on average, urban drivers travel less than 20 miles per day. However, consumers are unlikely to base car purchases on rational calculations and the range issue will remain a barrier to penetration.
In addition, the issue of infrastructure is also highlighted. The authors suggest that if the private sector won’t provide the charging equipment, electricity generation and distribution capacity for electric vehicles to succeed, then it will be necessary for the government to do so. However, it does suggest there is no indication that such an intervention would be necessary.
Our verdict – A slow road for electric cars
The challenges that electric cars face in the USA are arguably no different to those they face anywhere in the world – it’s widely accepted that battery technology needs to improve; and that there needs to be serious investment in public recharging infrastructure.
However, perhaps the reluctance to accept this new technology will be strongest in the US unless outside factors also contribute. It may take petrol prices to spiral further – presumably beyond $5 a gallon; and the government may need to place a price on the externalities – such as greenhouse gases or imported oil – that it wishes to reduce.
A future for electric cars in the US is definitely more than a pipe dream but it will take a strong partnership between private industry and the government to push through any change. As for now, while hope may be on the horizon, the ultimate goal still seems to be little more than a dot in the distance.
Faye Sunderland.
