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Hybrids, EVs Still Don't Put a Charge into U.S. Consumers

Hybrids, EVs Still Don't Put a Charge into U.S. Consumers

By Jeff Youngs, March 05, 2012
Dozens of hybrid and all-electric vehicles (EVs)-both production and concept models-were on display at the American auto industry's largest annual gathering, the North American International Auto Show, held every January in Detroit. Vehicles on display included the BMW ActiveHybrid 5; a hybrid version of the Mercedes-Benz E300 ; a new Volkswagen Jetta  hybrid; a concept plug-in hybrid for the Volvo XC60  line; and many others.

Indeed, hybrids and EVs are such a common part of an auto manufacturer's lineup these days that they can sometimes seem unremarkable and almost expected, rather than innovative and envelope-pushing. Hybrids and EVs have become so commonplace that one might think they have become a significant part of the car-buying proposition for auto consumers, along with four tires and a steering wheel.

But on one of the press-preview days, deep within the auto show convention hall, Jim Lentz, Toyota's president of North American operations, painted a different picture of electric vehicles. He offered one of the most candid assessments yet heard from an auto executive about American consumers' continued ambivalence about EVs.

Even as he was showing off new members of the hybrid Prius  "family," Lentz conceded that young American consumers see "hybrids as out of reach." He said that the next three years "will be a critical period for gauging consumer interest" in electrification and other advanced technologies, and that cost and convenience remain key obstacles to their greater popularity, as well as the "distinct challenge" of America's electric recharging infrastructure for EVs.

The fact is, hybrids and electric vehicles remain very much a fixture in the plans for the American automotive industry's mid- and long-term future, as automakers and consumers continue to attempt to wean themselves off petroleum-based fuels and the environmental, economic, and geopolitical challenges that they present. But another fact is that, for the moment, the majority of consumers are not too excited about EVs and hybrids, and hold them in low regard because the vehicles are frequently considered expensive and perhaps impractical.

That said, however, J.D. Power and Associates expects slow and steady growth in sales of hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs) during the next decade, with sales reaching 5.2 million units globally by 2020. But even looking eight years into the future, the combined market share for HEVs and BEVs will account for less than 8 percent of the 70.9 million vehicles J.D. Power projects to be sold worldwide by 2020.

"Our forecasted sales total is lower than many in the mainstream media are predicting for EVs and hybrids," notes a recent J.D. Power special report, Drive Green 2020: More Hope than Reality?  "But after listening to the concerns voiced by consumers about these vehicles, we are convinced that vehicle prices will have to decrease, and vehicle utility and convenience increase, to attract more mainstream buyers."

In addition to consumers, senior automotive executives at leading global automakers and suppliers have voiced their skepticism about demand for hybrid, and more specifically, all-electric vehicles. According to a recent study by KPMG LLP, global automotive executives themselves expect sales of HEVs and BEVs to account for less than 15 percent of annual auto sales worldwide before 2015. Moreover, executives in the United States and Western Europe expect even fewer consumers to adopt the technology during that period, forecasting that hybrids and EVs will account for only 6-10 percent of sales in those two markets.

The obstacles to widespread acceptance of electric vehicles so far have been many, according to the J.D. Power report on green vehicles. The major challenges include:

High prices: Tim Dunne, director of global automotive operations for J.D. Power, believes that the price premium that hybrids and EVs carry compared with comparably-sized, gasoline-powered-which can range from several thousand dollars to tens of thousands of dollars-is the most important factor that supersedes everything else when it comes to the continuing lack of sales momentum for EVs.

"Far and away, the initial purchase price of EVs is what drives consumers to consider conventional vehicles," Dunne says. "J.D. Power's research shows that while the vast majority of consumers say they are pro-environment, and that they like the idea of spending less money on the purchase of gasoline, their interest in EVs declines sharply when they hear the upfront price of the vehicles. Bringing up the purchase price is like popping a balloon on their aspirations."

As a result, says Dunne, only a small minority of consumers can get past the notion of paying a premium price for what is usually a small vehicle that doesn't have the attributes of even a midsize car in terms of size and styling.

Range anxiety: The J.D. Power Green report noted that another major concern of automotive consumers is the "range anxiety" that electric-vehicle ownership tends to induce in them. Typical EVs tend to have a driving range that is only 25 to 30 percent of a conventional vehicle, which means EV owners may need to plan their trips more cautiously, or not be able to drive their EVs on extended trips or vacations. Even vehicles such as the new 2012 Ford Focus  Electric or Nissan Leaf  compact cars only promise a driving range of around 75 miles between charges. By comparison, even the largest SUVs and pickup trucks can achieve a typical driving range of several hundred miles between fuel re-fills.

Certainly "range anxiety" is enough of a concern that Chevrolet  identified it in the development and marketing of its Volt . The Volt has a battery-pack that gives the vehicle a range of between 30-40 miles on a single charge, but also has an onboard gasoline engine that runs a generator that produces electricity for the battery as needed. This setup gives the Volt a range of up to 300 additional miles after its initial all-electric range is reached.

Support infrastructure: Despite all sorts of programs by state and local governments, electrical utilities, friendly retailers, and other entities to establish EV-charging stations across the United States, "the current infrastructure to support battery charging is not sufficient to support mass migration to battery-based technology," the J.D. Power report said. Without the widespread availability of recharging stations for consumers to access-which could cost billions of dollars to install and take years to complete-it will be difficult to convince consumers about the convenience of owning EVs.

Power and performance: Most HEVs and BEVs typically can't deliver the same kind of power and performance as do traditional gasoline-powered vehicles. Moreover, some automakers treat hybrid battery systems as power boosters to conventional engines in SUVs and performance sedans. In these cases, the hybrid systems frequently only make minor contributions to actual fuel-consumption and emission reductions.

Moreover, while pure EVs enjoy tremendous torque attributes similar to a sports car, hybrid vehicles tend to be torque-deficient, especially compared to conventional vehicles. While the added torque in EVs is nice to have, typical EV buyers typically don't choose the vehicle for its performance attributes, but instead for its environmental attributes. As a result, the instant power produced by EVs is not a key purchase criterion for buyers. In short, power and performance are not what drives buyers of hybrids and EVs, which makes them a more difficult sell.

Fuel economy: In terms of dollars spent per kilometer driven, according to the J.D. Power report, "it is not yet clear whether an electric powertrain may be more efficient" than a gasoline engine. Gasoline prices that averaged around $3.50 nationally in 2011, and stayed below the $4-a-gallon mark for most of the year, has drawn American consumers back into the comfort zone of inexpensive fuel and traditional internal-combustion engines.

Besides the more tolerable fuel prices, gasoline engines continue to become more and more fuel-efficient themselves. In fact, nearly two-thirds of industry executives surveyed in the KPMG study said they believe that the optimization of internal-combustion engines still offers greater efficiency and CO2 reduction potential-based on the higher fuel-economy numbers being achieved-than any electric-vehicle technology, based on the current energy mix.

When it comes to an issue of pure fuel economy, the leading hybrid vehicles do offer a viable alternative to conventional gasoline engines. But it must also be acknowledged that many hybrids have a hard time competing with another faster-developing alternative technology-diesel power -which can deliver up to 40-percent better fuel economy than gasoline engines.

Battery challenges: Lost on many consumers in their initial excitement about purchasing a hybrid or EV is the fact that the extensive battery systems that power their vehicles may need to be replaced during the vehicle's lifetime, at a substantial cost. Relatively few hybrids have been on the road long enough to have required this step, so far. But with the average age of all vehicles on American roads now exceeding a decade-a record tenure-the issue of battery replacement can be expected to grow stronger as a consideration by vehicle purchasers.

Still, auto manufacturers continue in their determination to develop and deploy even more HEVs and BEVs, viewing the technology as a sort of market inevitability. And it just may be, based on historical precedent. When the Toyota Prius arrived in the U.S. market in 2000, Toyota president

Jim Lentz said at the Detroit show, "many of us at Toyota called it the biggest crap-shoot we'd ever attempted. Today, about one out of every two total hybrids sold is a Prius."

Indeed, despite the relatively modest sales projections for EVs, auto executives indicate that they have not given up on the technology, and that they'll continue to invest heavily in a range of EV technologies. But Dunne of J.D. Power says that he's got a pretty good idea of how this will all shake out: HEVs will dominate the electrified auto sector, not BEVs.

"Hybrid vehicles, compared with BEVs, are the solution for the short, medium and maybe long term," he says. "Auto engineers have been working on battery-powered vehicles for 100 years, and batteries are just not getting significantly better. So unless there's some sort of significant breakthrough in the technology-and, again, there hasn't been one in a century-I don't see a huge breakthrough in demand for BEVs coming anytime soon."

Learn about the history of hybrid cars.

Learn about the advantages of hybrid cars.
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