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EVs will remain niche for automakers as gas engines improve

EVs will remain niche for automakers as gas engines improve

Posting in Energy

Gas engine improvements will make it tough for electric vehicles (EVs) to go mass market largely because of price. In other words, gas and diesel engines will dominate through 2020.

Internal combustion engines will continue to improve enough to cut CO2 emissions and enable automakers to hit their 2020 emissions targets, according to the Boston Consulting Group.

In a report, Boston Consulting Group (BCG) questions the dominance of the electric vehicle era. The argument is that internal combustion improvements can cut emissions by 40 percent with an average cost of $50 to $60 per percentage point of CO2 reduction. That tally is half the cost of what was expected three years ago.

Automakers will need multiple efforts---vehicle mass, aerodynamics and power management---to hit emission reduction goals, but BCG noted that gas engines still have plenty of room for improvement.

These gas engine improvements will make it tough for electric vehicles (EVs) to go mass market largely because of price. In other words, gas and diesel engines will dominate through 2020. BCG did note that EVs will appeal to green consumers willing to pay a "significant premium."

Topic page: Electric cars

Overall, EVs will "not be the preferred option for most consumers," said BCG. Battery pack costs are expected to fall by 64 percent from 2009 to 2020. That drop will equate to $360 to $400 per usable kilowatt hour by 2020. The problem: There's a $9,600 extra cost per vehicle to have a pure battery EV.

BCG also argues that China and Europe will be the biggest EV markets. So-called green consumers who will pay a $4,500 to $6,000 premium for an EV and don't expect to break even over the car's life are a select bunch. These green buyers represent 13 percent of consumers in China, 9 percent in Europe and 6 percent in the U.S.

Other key data points include:

  • EVs will represent 7 percent of China's new car sales in 2020.
  • EVs will represent 8 percent of new car sales in Europe.
  • Japan will see EVs be about 5 percent of new car sales in Japan in 2020 and 2 percent in North America.
  • EVs and hybrid vehicles could become 15 percent of new car sales in North America, Europe, China and Japan in 2020.

The catch for automakers is that their businesses will become increasingly complex. Car companies are likely to invest in compressed natural gas engines, continue to improve gas engines and then juggle hybrid and electric vehicles.

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Larry Dignan

Editor-in-Chief

Editor-in-Chief Larry Dignan is editor-in-chief of SmartPlanet and ZDNet. He is also editorial director of TechRepublic. Previously, he was an editor at eWeek, Baseline and CNET News. He has written for WallStreetWeek.com, Inter@ctive Week, New York Times and Financial Planning. He holds degrees from the Columbia University Graduate School of Journalism and the University of Delaware. He is based in New York but resides in Pennsylvania. Follow him on Twitter. Disclosure