Forecasting the success of game-changing technologies is like predicting the weather. Despite a mediocre success rate, it is done every day. Ask me what the weather will be in 2017, and if I want to be absolutely right, I will say: “During the summer months, we expect sun with occasional rain, whereas in the winter months, some snow can be expected.” This prediction would protect my career in any company, but it won’t get me any press.
If I want press, I need to say: “In 2017, fire and brimstone will rain from the skies, which will cause a great conflagration, because all rain will have stopped a year earlier.” These predictions can be made with little risk. Six years down the road, who will remember the nonsense I said today? That thought crosses my mind as I read studies that predict the adoption of electric vehicles. Today, we have two of those. They couldn’t be more apart. We commissioned a third one.
A new report from Pike Research says cumulative global sales of plug-in electric vehicles (both plug-in hybrids and pure EVs) will reach 5.2 million units by 2017. Also in 2017, Pike sees cumulative global sales of 8.7 million hybrids. I am not commenting on the first number. The last number sounds awfully low: In March 2011, Toyota alone had already sold more than 3 million hybrids. The global sales number of all hybrids was around a million last year.
The charitable thought that Pike has its “cumulative” messed up (it usually stands for “all cars sold up until that point”) is derailed by another prediction by Pike. Pike thinks that by 2017 plug-ins and hybrids will represent a global market share of about three percent. According to Pike,
The other report was released a while ago by the Boston Consulting Group. Their report wisely predicts that “the electric car will face stiff competition from ICEs when competing solely on the basis of TCO economies and, hence, will not be the preferred option for most consumers.”
BCG hopes that “there is a distinct “green” consumer segment that will be willing to pay a significant premium for EVs even if the total cost is higher.”
And where will most these EVs be sold? The Boston Consulting Group has a different opinion than Pike:
BCG sees EVs and hybrids reach 15 percent of aggregate new-car sales in the four major markets (North America, Europe, China, and Japan) in 2020. They don’t give a global number, at least not in the free version of the study. But these markets represent the bulk of new car sales – at least today. China is indeed the wild card – for any type of car. My spreadsheet has total Chinese car sales at 60-70 million by 2020, with a – by world standards – still moderate car penetration of around 300 per 1000. Currently, the number is around 60 per 1000.
Last year, global production of all types of automobiles was 78 million, with China contributing 18 million. Add in India, and world car production can easily double by 2020. A 15 percent share would be 23 million EVs and hybrids in the year 2020 alone.
Pike and BCG clearly differ, both in numbers and main markets. So we asked our prediction champions at Edmunds what they think. John O’Dell, Senior Editor at Edmunds AutoObserver/Green sees it this way:
The problem with all these predictions is that they use logic. Gas and diesel easily cost double in Europe compared to the U.S. Logic dictates they all drive electric vehicles by now. They don’t. Even the adoption rate of hybrids is homeopathic. In 2010, the adoption rate for hybrids and EVs stood at 0.8 percent in Germany.
Logic is even more thrown off by the fact that fuel prices fluctuate wildly across Europe. Oddly enough, they are highest in Norway, the Saudi Arabia of Europe. How does $10/gal grab you? If you want to get gas “cheaply” (like $7 a gallon), you need to go to Latvia or Luxembourg. Nevertheless, the needle on the adoption-meter in Europe doesn’t even quiver. What moves is the mileage-meter. The average new car registered in 2001 in Germany used 8 liters of gasoline per 100 km and 6.4 liters of diesel. By 2010, this had dropped to 6.5 liters of gasoline per 100km and 5.8 liters of diesel – across all cars, from Mini to S-Class. 5.8 l/100km is 40mpg (non-EPA).
In China, the price of gasoline is higher than in the U.S. (between $4.75 and $5.30/gal, depending on grade and currency rate,) but it still is not as outrageous as in Europe. Sales of EVs and hybrids? The Guardian cites a report by IHS Global Insight that says that exactly one Prius was sold in China in 2010. The Guardian promptly found an anonymous industry observer who quipped that “it may be a domestic rival that bought the hybrid to strip it down and see how it works.” Chinese clichés are always fun, but at that take rate the Chinese won’t even bother taking a Prius apart.
I don’t see this situation to change quickly. Europeans may have outrageous gasoline prices, shorter driving distances and that fabled public transport. Nevertheless, purchasing decisions are usually driven by such illogical considerations as visiting the in-laws 300km away, and touring Tuscany next summer. As the stats above show, if they want to save gas, they drive diesel. European governments are very reluctant to when it comes to EV subsidies, they need their money for other things. European drivers are very reluctant when it comes to changing habits at the pump, witness the recent buyer’s strike against ethanol.
The wild card in the EV game indeed is China. The wild card could be an 8, which stands for good luck, or a 4, which stands for death. We have chronicled China’s flirtations with electric vehicles extensively at TTAC, but currently, it is all talk and little action. Even generous subsidies can’t convince Chinese to drive electric. Even after subsidies, regular cars are cheaper. And most of all: No EVs to buy.
China has the power to force people to go electric. Any amount of Chinese coercion usually results in howls of protests from western media. Ordering Chinese to drive electric on the other hand results in applause. The problem is that it’s not working.
“Beijing has already begun restricting new licence registrations. Sales have flattened,” reports the Guardian. “Restricting new license registrations?” If I want to buy a new car in Beijing, I have to enter a lottery for a license plate. Roulette has better odds. “Flattened?” Cratered is the better word. China Daily reports that in the first half of 2011, only 154,200 automobiles were sold in Beijing, 59.2 percent below the same period in the previous year. What sells in Beijing is plywood to board-up car dealers.
Beijing, with a population similar to all of Australia, would be the ideal market for EVs. China Daily explains why, and why not:
It does not look like this w 
ill be changing anytime soon. Apart from great announcements, nobody seems to be in a great hurry to make product.
There is one company that has a proven, mass produced pure plug-in: It is Nissan and its Leaf.
Nissan has quietly advanced to the largest Japanese manufacturer in China. Nissan sold 1.3 million units in China in 2010 and wants to nearly double this by 2015. Nissan could sell Leafs in Beijing tomorrow to plateless and eager customers.
But Nissan won’t. Nissan will introduce a pure plug-in under the Chinese Venucia brand – by 2015. Nissan’s joint venture partner in China is state-owned Dongfeng. Carlos Ghosn could use the Chinese volume for his Leaf technology – but he is not stupid. Both Nissan and Dongfeng have their reasons for going slow.
The question “why not earlier than 2015?” gets you an inscrutable Chinese smile, or a Gallic shrug, depending on who you ask.
Both Pike and Boston Consulting will gladly sell you their studies and hope that you will hire them for ongoing consulting services. If you pay their fees, they will tell you what you want to hear. I am inclined to listen to the free advice by John O’Dell of Edmunds:
There is another thought that crosses my mind when I write about predictions. Before the IBM PC was launched in 1981, IBM had done extensive studies. The overall market for such a device was seen limited to 5,000. I kid you not. 5,000 pieces total. My agency had the European account for IBM, and I had their data.
We all know how that worked out.
