When President Obama announced his commitment to increase America’s fuel-economy standards to an average of 35.5 miles per gallon by 2016, a collection of stakeholders who historically have not shared a unified vision stood behind him. Today, these automotive executives, elected officials, environmental leaders, union representatives and others largely support a new, fuel-efficient direction for the United States transportation industry.
More and more, automakers are looking to achieve efficiency gains by developing plug-in electric vehicles.
The Obama Administration has set a goal of putting 1 million plug-in hybrid electric cars on the road by 2015 and the ARRA stimulus funding puts substantial resources behind it. Still, significant work remains to be done. To put the challenge before us in perspective, 1 million vehicles represents less than one half of one percent of vehicles on the road today.
Inertia: Why Pour Billions Into a Product with Unproved Demand?
Domestic automakers understand that the government wants them to produce more electric vehicles, but capital is hard to come by when you're either bankrupt or close to it and operating in a depressed economy. Before an auto company takes the risk of retooling its factories and hiring or retraining its staff on a large scale, it needs to be convinced that there will be a market for its product.
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Projections developed by Rocky Mountain Institute using the Bass Diffusion Model -- one of the most widely accepted models for the S-curve technology diffusion path -- suggest that large numbers of early adopters must not only purchase the vehicles but be so satisfied with their new cars that they encourage others to invest as well (see the blue curve below). For this to happen, plug-in vehicles must move beyond their current niche status, and we need to be prepared to support them before they roll out in significant quantities.
