U.S. Hybrid EVs Show Sustainable Growth but Plug-In EVs still under Development

published: 2011-08-10 13:43 | editor: | category: Analysis

As the largest energy consuming country in the world, transportation in the United States accounted for 28.1% of total energy consumption in 2010, according to a statistic report released by the U.S. Department of Energy. Notably, petroleum share of transportation energy consumption was as high as 93.2%. In 2009, cars and light trucks combined account for about 60% of transportation energy consumption.

If the U.S. government were to change the energy policy to secure energy needs or to lower dependence on petroleum, transportation would be a good and effective start point, not to mention economic benefits of upgrading industry technology and creating more value-added jobs. The sales of hybrid electric vehicle reached 0.35 million in 2007 which accounted for 70% of global HEV sales. Though the sales figure declined to 0.27 million in 2010 primarily due to the economic downturn by the financial crisis and lowered gas price, the HEV is the closest product to the realization of alternative fuel vehicles widely available and affordable on the market.

The policies drive the market mainly in twofold ways. The CAFE sets guidance for fuel efficiency for different weight class vehicles while special tax credits incentivize the HEV purchases. Purchase of a new hybrid vehicle after December 31, 2005 may be eligible for a federal income tax credit of up to $ 34000. Tax credit amount progressively decreases as automakers' sales reach centain numbers. CAFE standards for light weight cars will become more stringent, aggressively setting the national fuel economy standard of 35 mpg for light weight vehicles by 2020.

In terms of battery suppliers for hybrid vehicles, Panasonic dominates the American hybrid vehicle market with an unbeatable market share of 67% while the second-ranked manufacturer Sanyo had only 24% in 2009. Interestingly, Panasonic acquired Sanyo in 2008 but let it continue to operate as a subsidy and therefore the Sanyo maintained its brand name. As far as HEV sales volume is concerned, Toyota’s Prius led the market with a remarkable market share of 48% in 2009. In contrast, the combined sales volume of the American big three (GM, Ford, and Chrysler) was only 50,000 hybrid or 17% of the total domestic HEV sales volume. However, since the growth of HEVs has been supported by the government subsidies, EnergyTrend beleives that decreasing subsidy amounts will be passed onto manufacturers and cause price pressure to reduce battery costs.

In comparison to hybrid electric vehicles, the development of pure electric vehicles is still at its early stage. The penetration growth of EVs is much dependent on the technology and infrastructure readiness as well as government support. While the manufacture of batteries for automobiles is not mature enough in terms of economic concerns, practicality and safety, the development of EV market has to rely on infrastructure that also require other technology integration and standardization across different industries.

Many find EVs’ limited travel distance and long hours of charge time inconvenient and thus are unwilling to switch to EVs. However, in recent years, companies have realized electricity-powered transportation will be more efficient and profitable in the movement of people and goods and started to invest in the new technologies and infrastructure to capture future opportunities.

For example, residents in the west coast will soon change their perception after the first electric highway is introduced in America. The California-based AeroVironment will build charge stations every 40 to 60 miles along the interstate highway 5 between the Canadian border and Everett and between Olympia and the Oregon border, as well as along US 2 between Everett and Leavenworth within the next 6 months, serving a broader base of drivers of EVs such as Nissan LEAF and Chevrolet Volt. On the other hand, Coulomb Technologies, the electric vehicle infrastructure company, has also announced its plan to install 150 charge stations around Boston which will be supported by the U.S. DOE’ $37 million loan.

Yet, the industry transition may take as long as 5-10 years to truly promote the use of pure electric vehicles. In the future, as wider availability of charge stations around the neighborhood is established, consumers will adopt the idea of driving EVs as a norm.

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