Consumers Still Reluctant to Plug In to Electric Vehicles, Expert Says

10/17/11Follow @XconomyDET

Last week, the Center for Automotive Research (CAR) hosted its third annual conference on electric plug-in vehicles, titled “The Business of Plugging In.” The event drew global leaders from the realms of automotives, technology, finance, government, and policy. This year’s conference was different, says Brett Smith, Co-Director of Manufacturing, Engineering and Technology for CAR, in that is was less about hype and more about overcoming challenges.

“This year, the title of the conference was more appropriate than ever before,” Smith says. “When we were planning the event, we talked about how incredibly challenging it is to create a business model for electric vehicles. For the first time, at this year’s conference we heard car companies saying, ‘It’s really hard work, and we don’t yet know the outcome, but we still feel we have some really good ideas.’ “

Smith says one reason consumers have been slow to warm up to electric vehicles is because traditional, combustion-engine vehicles are still much cheaper and increasingly more fuel efficient.

“Electric vehicles have wonderful driving attributes,” Smith says. “But when it comes down to it, it’s hard to imagine paying between $8,000 and $20,000 more for a plug-in electric vehicle when similar economy models deliver such improved fuel efficiency. We’re talking about 40 miles per gallon compared to 60 miles per gallon. To most consumers, that’s not enough of a difference to justify paying a significantly higher price.”

Smith also says that as long as gas remains relatively cheap, it makes it “very hard” for consumers to recoup, through fuel savings, the money they spend upfront to purchase an electric vehicle. “The car companies have a slide they show internally to a select group of individuals that shows the payback period for electric vehicles, and it’s not months, but years—dozens of years, in some cases,” Smith says. “At this point, it isn’t an economically viable decision for consumers. But there are many other reasons to buy electric vehicles.”

Among those, Smith says, are the social costs involved in owning a vehicle with a traditional engine, and the likelihood that cities and states will soon start taxing drivers who stick with cars that are hard on the environment.

“Car companies will continue to develop electric-vehicle technology for at least the next five to ten years,” … Next Page »

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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