From: Sarah Lozanova , Triple Pundit, More from this Affiliate
Published September 22, 2009 10:06 AM

The Electric Car: Who Will Lead the Market?

The outlook for the electric car couldn’t have looked brighter when oil was priced at $140 a barrel, consumer confidence was high, and offers of credit were plentiful. Now that a variety of electric vehicles are nearly ready to hit the market in larger quantities, the world is a different place. The leading manufacturers of the electric car and its ability to compete with evolving hybrid technology have yet to be determined.

Electric vehicles sales will surely benefit from higher fossil fuel costs and governmental incentives. A large upfront investment must be made to produce the volume of vehicles needed to reduce manufacturing costs and create a vehicle-charging infrastructure. Geography and culture will impact which countries can accept the smaller range of most electric vehicles and who can afford to purchase one. Technology advancements will dictate the range of vehicles in the future and the speed at which they can charge.


United States

Earlier this year, the U.S. started trailing China as the largest global market. The U.S. does remain the leading global market for hybrid vehicles and President Obama set a goal to have 1 million plug-in electric vehicles on U.S. roads by 2015. This is encouraged by a federal tax credit of $7,500 for the purchase of plug-in electric vehicles.

Although the U.S. lags behind China and Japan in battery technology, President Barack Obama wants the US to be at the forefront of producing this new transportation technology. “Even as our American automakers are undergoing a painful recalibration, they are retooling and reimagining themselves into an industry that can compete and win, because millions of jobs depend on it,” says Obama.

This goal is backed by $2 billion from the American Recovery and Reinvestment Act, of which $1.5 billion is earmarked specifically for U.S. battery manufacturing. The Department of Energy is providing $400 million to create an electric vehicle infrastructure. Despite lagging behind in hybrid technology, Ford and General Motors both have electric vehicles due to hit the market in the next two years.


This is now the largest auto market in the world. A recent McKinsey & Co study predicts the Chinese electric vehicle market to be worth up to $220 billion by 2030. The government is adding fuel to the fire by offering local governments or taxi fleets up to $8,800 in subsidies for every electric or hybrid vehicle. Electric charging stations will soon be constructed in Beijing, Shanghai, and Tiajin.

Even if powered by electricity generated from coal, electric cars will decrease carbon emissions by 19% and reduce urban air pollution. First time car owners comprise 80% of the market and perhaps can more easily adapt to the smaller range of electric cars because many have utilized electric motorbikes and scooters.

To capture a large share of the U.S. and European market, Chinese automakers will have to meet rigorous safety standards and advance technologically. “You have the battery, the motor. You need the control systems to make them work together. Control systems are very difficult. The Chinese makers really don’t have them,” says Yale Zhang, a Shanghai-based analyst for CSM Worldwide.

Electric vehicles however provide an opportunity for Chinese automakers to excel in an industry where they have long lagged behind. The founder of BYD Company stated at an unveiling ceremony in Shenzhen, China, “The development of electric-powered vehicles is the best way for the Chinese auto industry to surpass other leading countries.”


Due to higher gas prices, environmental awareness, and a smaller average driving range, Europe seems like a natural fit for the electric car. Efficient vehicles already dominate the market, yet hybrid vehicles were not efficient enough to woo many buyers.

The Israeli-American venture capital project, Better Place is making Denmark an appealing place to market electric vehicles by creating 50,000 charging spots by 2011 using wind energy. Denmark also has a tax policy that benefits electric cars, while England offers an incentive of $3,000 for the purchase of electric vehicles.


This represents the second largest hybrid vehicle market globally and the leading manufacturer of hybrid vehicles. If this is an indicator for the electric vehicle market, then the future looks promising. The next generation of hybrid cars however may present fierce competition for all-electric vehicles.

This article was reproduced with the kind permission of Triple Pundit.

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