Electric Car Assessing the Market

¶ … Electric Car Assessing the Market Viability of an Electric Car The economics of electric vehicles and their contributions to a cleaner environment have many municipalities, states and nations considering how to motivate more consumers to purchase them. Clearly the economic advantages of the excellent fuel efficiency that electric vehicles provide have significant advantages for consumers and businesses, as each must contend with a continually higher Total Cost of Ownership (TCO) over the lifetime of vehicle use (Weiss, Patel, Junginger, et.al., 2012).

For purposes of this analysis, the term electric vehicles includes battery-based electric vehicles, conventional hybrids and plug-in hybrids. Analysis of the Electric Vehicles Market In determining the long-term viability of electric vehicles, the supply chain for components and patent ownership needs to first be considered.

Toyota owns nearly 85% of all patents for the conventional hybrid technologies (Weiss, Patel, Junginger, et.al., 2012) followed by Ford Motor Company, who has invested a higher than industry average level of research & development into each of the types of technologies comprising the definition of electric vehicle used in this analysis (Egbue, Long, 2012). In previous generations of these vehicles, the supply chain has only delivered sporadic levels of quality and yield rates of specific subassemblies and components (Voelcker, 2010).

This has kept the price exceptionally high, and in many cases even where a given vehicle platform has had significantly lower levels of production costs, the inclusion of an electric-based engine and drivetrain, transmission and support structure has added on average $15,000 to the price (Egbue, Long, 2012). In addition to the costing structures of these vehicles, there has also been the continual challenge of making the supply chains within dominant auto makers function efficiently.

The Toyota Production System has been modified to support a more diverse product mix including the integration of more advanced electric vehicle assembling and corresponding advanced production processes (Egbue, Long, 2012). This alone will lead to lower costs on Toyota models as the company reaches higher levels of production efficiencies overall. All of these factors have led to forecasts of between 100 to 120 new models being produces industry-wide in 2013 as the industry supply chain can now manage this run rate and diversity of models (Egbue, Long, 2012).

Aggregating together the sources of data available from an analysis of the electric vehicle supply chain, it is reasonable to project that regular hybrids will growth from just under 300,000 units in 2013 to 500,000 by 2015 (Egbue, Long, 2012) (Weiss, Patel, Junginger, et.al., 2012). At 522K units, hybrids will be 55% of the total market size, which will be 900,000 total units. The plug-in models are expected to generate 200K units in 2015, and the balance in high-end battery-based electric vehicles including the Chevy Volt (Weiss, Patel, Junginger, et.al., 2012).

Research indicates that the combining of hybrid and battery-based technologies could be the fastest-growing segment of all, attaining a 39% compound annual growth rate (CAGR) through 2020. Conclusion Given the low TCO and the high gas mileage, owning an electric vehicle has many advantages. Add to that the legislation.