Do Electric Cars Have a Viable Future in the Motoring Industry?

Investment in electric cars is growing as governments enforce stringent targets on carbon emissions, in the hope of reducing environmental damage and providing a long term solution to ever-diminishing oil reserves.

With the majority of major car manufacturers now offering electric or hybrid vehicles, consumers have the opportunity to choose from a wide range of different models at varying levels of performance. Although prices are still high in comparison to conventional petrol engines, firms are now benefiting from economies of scale in production and price improvements are starting to feed through to consumers.

Sales, however, are still slow. In 2009 battery producer "Better Place" struck a deal with Renault to sell 100,000 electric battery operated vehicles, but eventually only shifted 1,300 units. Several large American electric car manufacturers went bust including Coda, Fisker and battery maker A123. Electric cars are still expensive; Fiat-Chrysler’s boss said that they will lose $10,000 on every 500e battery they sell, which is approximately double the price of the petrol equivalent.

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The electric car industry is still being propped up by heavy state subsidies. In the UK, the Plug-in Car Grant provides a £5,000 discount for new electric vehicles and the Californian government imposes minimum quotas on the number of ultra-low carbon cars sold by manufacturers. This is helping to drive further investment in the industry, a prime example being BMW’s innovative i3 chassis, made from carbon-fibre-reinforced polymer, half the weight of steel.

Propping up the industry is all well and good but without adequate demand the industry will continue to falter. Consumers continue to be put off by the range of electric vehicles, with most models requiring charging every 75-100 miles. For example, the popular Nissan Leaf has a range of around 75 miles, but requires an overnight charge once depleted. This means that electric vehicles are only suited to short distance driving, for light and moderate use.

In the long term, electric technology faces competition from other forms of fuel. Research into new biofuel technology is growing, which will enable fuel to be developed from renewable sources like switch grass and algae. Consumers are therefore wary about investing in new technology which may not become the next best source of car fuel. Hybrid vehicles offer the advantage of providing both electric and petrol technology under one bonnet, with the petrol engine kicking in once the battery is depleted, removing concerns over low electric ranges.

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However, a study by CarGurus.com in 2011 has questioned the value for money of hybrids, with a large price premium providing long payback periods: “The hybrid premium tends to considerably outweigh any savings you might see in reduced fuel costs,” said Langley Steinert, founder and CEO of CarGurus.com. “In 76 per cent of the cars we examined, the cost of ownership was significantly higher than the cost of ownership of the same petrol-only model.”

On average the study found that hybrids were £4,144 more expensive than petrol equivalents, with an additional £1,424 to own and operate; this makes it much more difficult for drivers to recoup fuel savings over time. Although the premium will fall over time, demonstrated by Ford’s value-for-money Lincoln MKZ hybrid, this doesn’t really help consumers hoping to make their long-term car purchase now.

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Like electric vehicles, hybrids remain a relatively small niche; of the 10.5 million vehicles sold in the United States last year, 290,232 were hybrids. Most current buyers are therefore likely to be highly environmentally motivated, but without immediate costs savings, it will take a while until the mass market catches on.

With petrol engines getting greener too, there is also the argument that electric power is just as carbon intensive as burning petrol, requiring power stations to convert coal to electricity; although this is refuted in most circles: "Even when you factor in the carbon emissions and pollution from the power plants that produce the electricity to power the cars, and from manufacturing and disposal, electric cars produce about 40 per cent less carbon dioxide and ozone than conventional cars," says an article in MIT's technology review.

Despite poor sales, the electric market isn’t all slow burn; America’s Tesla Motors, long derided for losing money, is beginning to turn a profit, paying off its $440 million government loan five years early.

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In the UK, the infrastructure to support growing numbers of electric vehicles is increasing rapidly. UK car charge firm "Chargemaster" recently floated on the stock exchange, and they currently provide over 6,000 electric charge points nationwide.

The government has also announced that it will fund new electric car charge points to help roll-out the technology nationwide, with an extra £37 million being made available to local authorities, NHS trusts and train operators to offset installation costs: "This demand is being driven by automotive manufacturers producing a growing range of new plug-in cars required to meet regulatory emission targets, the UK government's recent commitment to provide £37m of funding for charging infrastructure, as well as other governments' commitment to encouraging the uptake of environmentally cleaner vehicles," said Chargemaster’s chief executive, David Martell.

The UK hopes to achieve 122,000 charge points nationwide by 2021, with the European Union announcing a target of 795,000 over the same period; by then forecasted global revenue is expected to reach £672m.

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The UK Government has also recently announced plans to create the Advanced Propulsion Centre, a research hub for ultra-low carbon fuel technology. Research into electric technology will be highly prevalent here, although funding will also be used to develop other types of new fuel technology. Peugeot Citroën recently revealed a prototype of their ‘Hybrid Air’ model, which features a petrol engine and a hydraulic system that is capable of running on air, demonstrating that anything is possible.

Although the technological landscape is uncertain, as governments continue to show their support to the electric car industry, there is clearly confidence in the technology’s long term viability. With a £5,000 subsidy currently available to electric car drivers in the UK, now could well be the time to trade in your gas-guzzler for a more economical and environmentally friendly alternative, particularly if you only drive over short distances.
Do Electric Cars Have a Viable Future in the Motoring Industry? Do Electric Cars Have a Viable Future in the Motoring Industry? Reviewed by Hayley Reeve on Thursday, April 24, 2014 Rating: 5

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