For EVs, key number is price, not range
November 1, 2010
by Dave Guilford
Companies that want to sell electric vehicles and plug-in hybrids spend a lot of time talking about range: 50 miles, 75 miles, 100 miles on a charge.
Most likely, they're focusing on the wrong number.
As important as driving range may be, the key number in consumers' minds will be the one in the lower right corner of the price sticker. The price premiums for various forms of electrified drive are likely to turn off car shoppers, according to a new study by J.D. Power and Associates.
Consumers who do the math on fuel-cost savings compared with the added cost will be discouraged -- or as John Humphrey, Power's senior vice president of automotive operations puts it: "When they find out how much a green vehicle is going to cost, their altruistic inclination declines considerably."
Mike Omotoso, Power's senior manager of powertrain forecasting, made the same point at a look-ahead session last week. Survey results show that the main reason consumers consider a hybrid is lower fuel costs, he said. On the flip side, the main reason to reject a hybrid is the cost premium.
As Omotoso phrased it: "People definitely think with their wallet."
And that's for a hybrid, where the initial price premium runs from $2,000 to $10,000 by Power estimates. The added cost rises to $15,000 for a plug-in and $15,000 to $20,000 for an EV. Even with government subsidies, that gets into nosebleed territory -- or "automaker eats some of the cost" territory.
EV proponents expect advances in battery technology, in particular, to start lowering prices. Perhaps. But, Omotoso said, the key factor today is gasoline prices: "As long as gasoline prices remain below $4 per gallon, there's not going to be a true demand for hybrids, plug-ins and battery electric vehicles."
- Honda will show a new EV concept Nov. 17 at the Los Angeles Auto Show, the company says. Honda also will reveal a plug-in hybrid platform showcasing its next-generation technology.
- Nissan/Renault CEO Carlos Ghosn says EVs need two years of government support in developed markets, according to Reuters: "Two years of government support are needed to jump-start these markets, and then the products will grow on their own and take off."