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New Electric Vehicle Study Indicates Long Road Ahead for EV Producers

New Electric Vehicle Study Indicates Long Road Ahead for EV Producers

By Jeff Youngs, November 09, 2012
Electric vehicle (EV) producers must reduce prices and better demonstrate the economic benefits of ownership to consumers if EVs are to capture anything more than a sliver of new-vehicle sales in the United States. This is the key finding of the J.D. Power and Associates 2012 Electric Vehicle Ownership Study,SM which explores the EV shopping, consideration and ownership experience.

According to the inaugural study, the top three reasons potential EV buyers reject this type of vehicle are price, vehicle size and reliability. Consumers also express concern about driving range and the availability of charging stations away from home.

"Current EV owners focus on the emotional benefits of owning an electric vehicle--which are having positive effect on the environment--but the way for manufacturers to take EVs to the masses and increase sales is to address the economic equation," said Neal Oddes, senior director of the green practice at J.D. Power and Associates. "There still is a disconnect between the reality of the cost of an EV and the cost savings that consumers want to achieve."

According to the study, current EV owners most often cite environmental friendliness as the most important benefit of owning an EV. However, the study finds that 45% of consumers considering an EV for their next vehicle want to lower their fuel costs, while 11% of consumers consider an EV for its environmental benefits.

Compared with sales prices for similar gasoline-powered vehicles, the study finds that owners of all-electric vehicles (AEV) pay a premium of $10,000, on average, for their vehicle, while plug-in hybrid electric vehicle (PHEV) owners pay a $16,000 premium, on average.

With regard to the cost of recharging an EV, compared with refueling a gasoline engine, the study finds that current EV owners report an average monthly increase in their utility bill of just $18 to recharge their vehicle's battery--which is significantly less than the $147 that they would typically pay for gasoline during the same period of time.

Based on reported vehicle sales prices and annual fuel savings, it would take an average of 6.5 years for AEV owners to recoup the $10,000 premium they paid at the point of purchase, while the payoff point for PHEV ownership is 11 years.

"The payback period is longer than most consumers keep their vehicle," said Oddes. "The bottom line is that the price has to come down, which requires a technological quantum leap to reduce the battery price. There also needs to be an improvement in the infrastructure, or the number of charging stations outside of the home. Until those two concerns are addressed, EV sales will remain flat."

The study also finds that nearly all EV owners charge their vehicle at home, and that two-thirds elect to install a special 240-volt home-charging station, which can cut EV recharging time in half. According to the study, 43% of EV owners say they received a home-charging station for free. EV owners who paid for a home-charging station spent $1,500, on average, for the equipment, installation, and inspection, an amount that is recouped during the first year of driving.

Nearly half of EV owners report that they also charge their vehicles away from home, with 85% who say the public recharging stations they use are free. However, Jeff Conklin, senior director of the energy practice at J.D. Power and Associates, said, "More work needs to be done to let consumers know where charging stations are located in their area to alleviate some of the concerns they have about where an EV can be charged away from home."

According to J.D. Power, driving range and the availability of charging stations are among the top concerns among consumers considering an EV. However, current EV owners indicate an average daily commute of 34 miles--which is well within the range of a fully charged EV.

For consumers considering an EV for their next vehicle, J.D. Power offers the following electric vehicle buying tips:
  • Drivers with predictable, unwavering daily driving requirements are the best candidates for electric vehicles. Drivers with variable driving requirements may want to consider a plug-in hybrid electric vehicle.
  • Federal or state tax incentives for an EV purchase may exist in your area, and they may vary depending on the make and model selected. Be sure to investigate these incentives in advance of a purchase.
  • Local utility companies may offer special EV charging rates and programs. Be sure to find out if your utility company offers discount rates or programs in advance of purchase.
  • Topography affects electric vehicle range. Consumers in mountainous regions need to remember that EVs consume charge going uphill and capture energy while coasting downhill. If the next charging station is at the top of a hill, leave plenty of range to get there.
  • The U.S. Department of Energy offers maps that show the locations of charging stations across the country:

The 2012 Electric Vehicle Ownership Experience Study is based on online responses from more than 7,600 vehicle owners and panelists who either currently own an EV, are considering an EV for their next vehicle purchase, or shopped for an EV but ultimately decided not to purchase one. The study was fielded in October 2012.

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