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One Million Plug-in Cars by 2015?

Why nobody agrees on how many plug-ins will be on U.S. roads

4 min read

Since 2008, Barack Obama has consistently promoted the goal of having 1 million advanced technology vehicles on U.S. roads by 2015. The number refers to plug-in vehicles that use grid power, stored in lithium-ion battery packs, to operate their electric traction motors. Regular hybrids like the Toyota Prius don't do that. The all-electric Nissan Leaf, the series hybrid Chevy Volt, and an upcoming plug-in hybrid version of the Prius do.

But recent analyses by experts and industry analysts differ sharply on whether that number is achievable. Many say that high cost, limited range, a nascent supply chain, and consumer hesitancy will make 1 million vehicles in five years impossible.

Advocacy groups, other analysts, and the U.S. Department of Energy insist the number is reachable—even if it may be a "stretch goal," in the words of market research firm J.D. Power & Associates, which considers 750 000 more reasonable.

In January, a panel of industry experts, convened by Indiana University, issued a 78-page report, Plug-In Electric Vehicles: A Practical Plan for Progress, that called the 1 million goal undoable. The panel based its conclusion on announced production volumes of plug-in vehicles and its own analysis of consumer demand.

Just days later, the DOE riposted with an 11-page status report, One Million Electric Vehicles by 2015. Its conclusion was different: Based on "conservative" estimates of production plans, it said, a total of 1.22 million plug-in vehicles could be built and sold by the end of 2015. The DOE report, oddly, sourced not automakers but media reports of their plans.

The DOE predicted that two-thirds of the 1.22 million could come from General Motors (with its plug-in series hybrid Chevrolet Volt) and Nissan (which sells the battery-powered Leaf and will add other models by 2015). It omitted estimates for hybrid powerhouse Toyota—which will sell a plug-in version of its Prius next year—and estimates from at least five other companies planning to sell plug-in cars.

Several points should be kept in mind about Obama's goal. First, it's cumulative over five years, not an annual sales rate. Second, it includes both retail buyers and fleet purchases. Third, 1 million vehicles in five years pales next to the 50 to 75 million new vehicle sales predicted in the United States over the same period—even more so against the 250 million vehicles on U.S. roads today.

Finally, with U.S. corporate average fuel-economy standards set to exceed 30 miles per gallon (or fall below 7.8 liters per 100 kilometers) in 2016, automakers know they must start work on plug-in vehicles to prepare for the next round of even more stringent standards.

Analysts who say the goal isn't reachable cite three areas of doubt: supply, demand, and cost. Supply is easiest to analyze: Automakers rarely cite production targets, but estimates are leaked to trade journals or at industry events. Still, by most analysts' tally, global production of electric vehicles will clearly surpass 1 million by 2015. It's the number sold in the United States—a demanding market with very competitive pricing—that remains in doubt.

Consumer appetite for the vehicles is tough to gauge. Right now, the Leaf and the Volt are in high demand, with the earliest adopters proudly trumpeting cross-country trips in Volts bought many states away. The depth of the early-adopter pool is unknown, as is the degree to which a Volt or a Leaf becomes a rolling status symbol for some, as the Toyota Prius hybrid did in its day.

Many analysts, among them Rebecca Lindland, a director at IHS Global Insight, say one factor that will choke demand for pure electrics is that they'll never be capable of acting as a household's primary vehicle, given perpetual anxiety over their limited range (117 kilometers, or 73 miles, for the Leaf).

Working in favor of plug-ins is the fact that an average U.S. household now has more than two cars. Buyers mix vehicle types—sedans, minivans, sport utilities—to meet their different needs, and in years to come, they will likely do the same with power trains, say analysts and advocates. With 78 percent of U.S. vehicles traveling less than 65 km per day, not every vehicle has to be capable of more than the Leaf's 117 km.

Cost remains the biggest deterrent. Plug-in vehicles today are far more expensive to build and buy than their liquid-fueled counterparts.

Early adopters eagerly pay more for goods they desire, but mainstream car buyers won't. That's the reasoning behind purchase incentives: They get more vehicles on the road sooner, bolstering the supply base. Even the $7500 U.S. federal tax credit covers only part of that differential, though. Other state, local, and corporate incentives vary enormously.

Still, Oliver Hazimeh, a partner at management consultant PRTM, thinks there's untapped mainstream potential for plug-in cars. He says that the cars' advanced systems will "create a 'cool factor' "—especially among younger buyers.

Fleet buyers will help as well. Plug-ins would work well as urban delivery vehicles, because they could return to a charging depot at night. Still, according to Edmunds .com CEO Jeremy Anwyl, delivery vans of all sorts make up just 1.9 percent of the U.S. market.

But vehicle fleets aren't just commercial trucks. General Electric said in November it would buy 25 000 electric vehicles, including 12 000 Chevy Volts, for its own use. Plug-ins serve as rolling "green" ads for companies, but what all fleet buyers really treasure is the lower cost of running on grid power (it's one-fifth to one-third the cost per mile of gasoline).

That said, even automakers aren't convinced the United States will hit its 1 million target. Britta Gross, director of global energy systems and infrastructure commercialization for GM, thinks the country might miss the target by a year or two.

But whether the United States hits that mark in 2015 or 2017 may not really matter. Like the moon shot, an audacious goal has been put out there—and the industry is moving smartly toward it, which was hardly the case even five years ago.

The biggest determinant of whether Obama's goal will be met is oil prices. Unrest in oil-producing regions, plus growing demand from China, could convince consumers who are wary of gas-price levels to take the plunge—or more accurately, the plug.

About the Author

John Voelcker, a contributing editor, has been following advanced cars closely for nearly a decade. He writes, reviews, and oversees editorial content for GreenCarReports.com and AllCarsElectric.com. He wrote "One Million Plug-in Cars by 2015?", because this U.S. goal has become a political football. After digging into the assumptions behind the numbers, he found that many people have been missing the bigger picture. "It's not really about the specific number," Voelcker says. "It's about having a goal."

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