2010 - Year of the Electric Car?

Will 2010 be the year of the Electric Car? I hope for the best, but prepare for the worst. Let me explain.

In 2009 GM, Ford, Nissan, Toyota, Aptera, Fisker, and others announced electric vehicles in their line ups for 2010 introduction (2011 model year). Like in previous years, these dates are still subject to change. Remember when ZAP announced the Alias in June, 2007? Two and a half years later the Alias hasn't yet hit the streets.

To date, only the Tesla is on the road as a production vehicle. What is holding up the others? One factor is common to all - the cost of batteries. Lead Acid batteries are relatively cheap but extremely heavy. Manufacturers won't use lead acid because the weight of the batteries themselves limit vehicle performance. Lithium Ion batteries are 1/4th the weight for the same amount of power. Unfortunately, they are many times more expensive than lead acid. Detroit's Big 3 say that Battery powered vehicles won't hit the mainstream until battery costs drop below $250/kilowatt-hour (kWh). Prices are about $1250/kWh today, or about 5 times where Detroit wants prices to be.

EVs have to offer a reasonably equivalent financial proposition to ever expand beyond a niche market. According to Boston Consulting Group in "Batteries for Electric Cars" (published Jan, 2010) 55% of EV buyers expect to break-even (compared to gas cars) on EV ownership costs within 3 years.

Would the average consumer buy an electric vehicle in 2010? Probably not. The same study calculated the break-even point in the United States as 15 years WITHOUT government incentives. The Boston Consulting Group study assumed $100/barrel oil, a $7500 tax credit, and a 40 mile per gallon gas powered equivalent vehicle. These are all reasonable assumptions in today's economy as one can argue whether today's $78 oil price is offset by an inflated 40mpg fuel economy rating.

Should car buyers consider electric cars ? Absolutely. Oil prices did not fall as much as expected in light of a poor U.S. economy. Global demand for oil is still too high, which will push gas prices higher as the U.S. economy recovers.

This study did not take into account ongoing maintenance costs. Electric traction motors have just 1 moving part compared to over 500 parts in a gas motor. After deducting maintenance costs for the other unnecessary parts like spark plugs, oil filters, muffler, alternator, transmission fluid, etc. the total cost of owning an electric vehicle is far less than the gas car. Drivers of the Toyota RAV4 EV will for the most part tell you their only maintenance costs are for rotating tires and replacing wiper blades.

Another assumption is that electric vehicle technology will continue unchanged into the future. Unfortunately, this assumption is incorrect. The latest version Prius Hybrid has far better regenerative braking than previous models, meaning more energy to recharge the batteries and less wear and tear on the brakes. Panasonic's latest lithium ion batteries offer significantly higher capacity and faster recharge times, meaning more miles per charge and charges that take less than one hour instead of overnight.

Increasing gas prices (pushed by global demand), decreasing battery prices (driven by volume production), combined with current tax incentives and lower maintenance costs, could easily push the break-even point for Electric Vehicles down to the three year mark, or even less.