Is the EV market at a tipping point?

Is the EV market at a tipping point?

Could the introduction of more affordable electric vehicles to the consumer market push the EV industry to a tipping point?

With plug-in hybrids leading the way and a new wave of EVs hitting the streets earlier this month at the North American auto show in Los Angeles, the possibilities seem bright. Given their price point and performance, these new cars could jumpstart the more widespread adoption of electric vehicles.

The L.A. debuts

The Chevrolet Spark EV is an all-electric version of GM’s current mini car, offering a “20-plus” kilowatt-hour battery and fast charging onboard. The SAE combo system will produce an 80 percent charge in just 20 minutes. All of those electrons will flow to a 130 horsepower motor with 400 pound-feet of torque, only slightly less than the 420 pound-feet in a Camaro SS. The Spark EV will go on sale in California and Oregon in summer 2013, priced at $32,500, or right around $25,000 after Federal electric vehicle credit.

Staying in the micro-car segment, Smart showed off its recently priced ForTwo ED. At $25,000, or $17,500 after tax incentives, it is a reasonably priced alternative for urban dwellers or those without the need for a back seat.

Next page: The importance of inexpensive EVs

Finally, Fiat unveiled its 500e car.

It has a reported 80-mile range from a 24 kilowatt-hour battery pack that will charge in 4 hours using 240 volts.

Fiat is reportedly pricing the EV at $45,000, though that price has yet to be publicly confirmed. While certainly not inexpensive compared to the Spark, the Fiat does have a distinct Italian flair absent in many other cars on the road.

 

The auto industry is at a critical point, where sales of EVs and PHEVs need to ramp quickly to shore up the finances of electric ecosystem players, including battery suppliers, charging infrastructure players, and utilities. Battery maker A123 recently filed for bankruptcy, highlighting the struggles of prominent auto suppliers as adoption rates remain relatively low.

The importance of inexpensive EVs to the ecosystem

Innovative infrastructure companies like ChargePoint,the operator of a network of charging stations, and Evatran, the maker ofPlugless Power wireless EV charging stations, require a significant volume of EVs on the road before they can generate meaningful sales volumes. The success of these types of companies is tied very closely to automakers’ ability continue growing EV sales at rapid rate, and vice versa. This kind of circular relationship has created a chicken-and-egg challenge, and the problems at companies like A123 and Better Place only emphasize the need for a quick solution.

Luckily, with lower-priced EV options coming online from Smart and Chevy, manufacturers have the potential to reach a broader customer base. In turn, this could drive additional demand for the components and peripherals that propel, charge, and serve EVs and their drivers. With the average cost of a new car topping $30,000, the availability of sub-$30,000 EVs may be the spark the segment needs to reach volumes where suppliers can find economies of scale big enough to build out the EV ecosystem to self-sustaining numbers.

Evidence the market for electrics is trending up

According to Ward’s Automotive, electric and plug-in electric hybrid vehicles made up about 0.6 percent of all U.S. light vehicle sales through November, tripling the segment'smarket share from one year ago. While the Nissan LEAF’s sales numbers are down slightly on the year, the pure EV market has grown 15.5 percent, year-over-year with the addition of the BMW 1 Series, Ford Focus EV, Honda Fit EV, Mitsubishi i-Miev, and the Toyota RAV4 EV.

The real success story is evident in the PHEV segment, where Chevrolet has sold more than 20,000 Volts in 2012, a 240 percent increase over last year’s sales numbers. With the introduction of the Toyota Prius plug-in and the Ford C-MAX earlier this year, there is real momentum in the segment.Since these vehicles require charging infrastructurelike pure EVs, they are encouraging the build-out of the ecosystem with each additional car sold.

As momentum grows in this segment and the ecosystem becomes more extensive, cost-effective, and reliable, the most common arguments against EV purchases will be crowded out.

Range anxiety disappears when charging stations are easily accessible. Cost complaints are addressed when component costs are driven down through scale of production. It remains to be seen whether or not the introduction of moderately priced EVs will propel that segment, or if PHEV sales will continue growing at this pace, but the upward trend in sales should give many players in the market hope.

Image by kriangkrai wangjai via Shutterstock.