The respected J.D. Powers released a report saying that only 7.3 percent of the automobiles on the road come 2020 will be electric or hybrid. The report is something of a counter to all the hype electric vehicles have been getting this year. But some important players in Silicon Valley, Detroit, Tokyo, India and China expect a more rapid transition to an electric car, and furthermore, a cleantech, economy.
Here’s what J.D. Powers analysts had to say about the growth expected in the electric and hybrid vehicle market worldwide over the next 10 years:
In 2010, the total number of passenger vehicles sold worldwide is expected to reach 44.7 million units. Of this number, approximately 954,000 vehicles—or 2.2% of the global total—employ some type of battery propulsion system, either hybrid electric or pure battery-driven. By 2020, global passenger-vehicle sales are expected to reach 70.9 million units, of which 5.2 million units (7.3% of the total) will feature some type of battery-powered configuration.
J.D. Powers’ analysts point out, rightly, that there will have to be major improvements in battery technology and electric drive trains, and prices will have to come down for those technologies before there’s widespread adoption.
But others, including one of the key backers of Tesla, expect those developments very quickly. And still others say necessity will drive that wave of invention.
Alan Salzman of Vantage Point Ventures told me in the spring that he expected electric vehicle technology and adoption to follow a similar curve to that of such technologies as the personal computer and flat screen television—once-luxury items that have become common objects as technology has both dropped in price and improved. Salzman expects a much more robust adoption of electric vehicles. Here’s what he told me:
We’re just into the first and second generation of electric cars. Looking at the past ability of Silicon Valley and other innovation centers to improve technology rapidly, the next generations will be better, faster, and cheaper. And that will mean much more rapid adoption of electric cars than is commonly projected, he believes. “So if it were a five-person car and it cost $25,000, comparable to a Prius, why would anyone drive anything else? I think the answer is, 'hmmm, I don’t think you would,'” he says. “So electric cars are an inevitability because the electric motor is inherently more efficient and more effective than a combustion engine.” While auto analysts expect slower adoption of electric vehicles, Salzman says they’re too pessimistic. He believes a tipping point in that phase could be reached in the next 10 to 15 years.
There are other reasons for both electric cars and new forms of energy to advance rapidly.
First, as famed oil banker Matt Simmons pointed out before his death earlier this year, the world has likely already passed peak oil production. Others dispute that claim, but there’s no doubt that oil is getting harder and more dangerous to find, as oil companies drill deeper and deeper under the ocean. And demand for energy is going to rise.
As I wrote this spring:
It took a century for citizens of the United States and Western Europe to achieve a robust standard of living. In China and India, the Earth’s two most-populous nations with a combined population of 2.47 billion, people are bent on achieving that same standard in the next 20 years. What that means is tremendous demand for the staples of modern life: energy, steel, concrete, clean water. New supplies will either have to be found or invented—fast. That’s why a number of venture capitalists believe the next big development in their industry and among the companies they support will dwarf even the information-technology revolution of the past two decades.
So that kind of outlook predicts robust growth not just for alternative energy to drive vehicles, but other portions of modern economies.
And when it comes to electric cars and hybrids, venture capitalists aren’t the only ones betting on electric vehicles--not by a long shot. The largest car companies in the world are also well into the game, as are some of the biggest makers of batteries, the key component in electric cars.
Toyota, the world’s biggest car company, invested $50 million in Tesla when that company became the first American car company to go public since Ford in the 1950s. Toyota--which already has the franchise on the best-selling hybrid, the Prius--is also paying Tesla $60 million to develop an electric drivetrain for its RAV4 crossover.
Tesla will be expanding its own offerings at the NUMMI factory opened last week. So far, the company has only built cars for the elite--six-figure, high-performance, two-seat roadsters. But at NUMMI, the company will be developing the Model S, an all electric luxury sedan. And CEO Elon Musk said he hopes to develop lower cost electric vehicles in the future.
Nissan and General Motors are rolling out either electric, or extended-range hybrids this year. And companies as diverse as China’s BYD, in which Warren Buffett is an investor; India’s Tata; Ford and Volkswagen all have plans for electric vehicles and better hybrids.
Perhaps as importantly, two of the world’s largest battery makers have announced a partnership to develop and market batteries for electric vehicles. Japan’s Hitachi, and Johnson Controls of Milwaukee are teaming up in the battery game.
Hitachi was one of the first companies in the world to develop lithium ion batteries, the core of current technology for electric vehicles. And Johnson Controls is the world’s biggest maker of lead acid batteries, the batteries used in current internal combustion engine driven cars.
Given all that, it should be an interesting 10 years. Will companies be able to quickly develop electric cars as something other than a luxury or an oddity? And will consumers across the world gravitate quickly to the change? Or will it be a slower movement, as the folks at J.D. Powers expect?
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