Electric Cars: Is it coming yet?

The BMW i8 (left) and i3 (right)
Image source: http://cdn.tecnologia21.com

Since the start of 2012, we have been seeing several leading car manufacturers, including BMW, Tesla, and Toyota, rushing to push electric cars (ECs) onto the market. In addition, the European Commission announced on July 11, 2012, that it proposes further cuts to car emissions in the EU. All these signs suggest that the era of the electric car is arriving. The problem, however, is that we have been hearing about the arrival of the electric car since the 80s, and it never came. So what makes people believe that this time the market is any better?

One of the biggest differences between the EC market now and the market a decade ago is customer demand; customer demand for ECs has improved because of 3 main factors:

1.       Lower Price.

Improved technology and strong marketing has generated enough interest in ECs for mass production, dropping the average retail price for an EC to about $40K. It is still about twice the price of the cheapest cars on the market, but cheaper lithium batteries (Bloomberg New Energy Finance reported a 14% drop in prices in the first quarter of 2012 and the trend is likely to continue), bigger emission grants, and rising gasoline prices will add to the financial attraction of ECs. This works well in the current environment where austerity is highly valued.

2.       Better Technology.

Batteries have always been a major concern for EC drivers. A decade ago, drivers where put off by low quality, expensive batteries with a short life span, poor mileage, long charging times, and worse, limited charging stations. This issue has been effectively answered today by:

a.       Cheaper batteries that offer longer mileage, longer lifespan, and faster charging times.

b.       Improved battery power. Tesla’s new model S was reviewed by journalists as the Lambo-like, but minus the noise. Need I say more?

c.       Higher government and co-operate commitment to provide charging stations. In fact, a group in Japan recently went a step further and demonstrated the concept of transferring electricity through concrete. The hope is that by providing a constant stream of electricity beneath roads ECs will never need to be charged again.

3.       Wider Acceptance.

Interest in ECs have been fueled by both economic reasons following rising gas prices and lower oil reserves, and the changes in the competitive environment of the auto industry. New market entrants that focus primary on ECs, such as Tesla, have limited concerns for cannibalization, and have therefore significantly accelerated development and marketing efforts within this market. The effect leads back to more affordable and sustainable pricing.

The 3 factors described above advocates for an overall healthier market environment than before. Although the success of the recent EC ventures can only be predicted following a better understanding of the other factors at work, including a thorough understanding of the competition. But based on what we have said so far, and provided governments and co-operates are committed, the road is paved for the ECs.