Green technology cheerleaders are eagerly awaiting the proliferation of electric cars. But are their expectations a little too ambitious? Matthew DeBord from The Big Money thinks so. He cites a study says that says the electric car market should reach $300 billion by 2020. DeBord calculates that this means it would account for approximately one-quarter of new auto sales over that period. That's an awful lot of growth in just a decade, considering right now electric cars account for approximately zero-percent of the market.
DeBord offers some more perspective:
Why do we need to be in such a hurry? There are plenty of technologies that would allow us to reduce emissions and increase fuel economy without having to force-feed EVs to the market. If EVs achieve 5 percent by 2010, 10 percent to 15 percent by 2020, and 25 percent sometime before 2050, we'll be far better prepared for a swift, complete shift to full electrification at about the time our oil supplies begin to seriously dwindle--and more importantly, once we've replaced coal-generated electricity with something far more environmentally benign (even if that's more nukes). Remember, the Prius has been in the market for almost a decade now and it's achieved less than a 3 percent share. Ambition and optimism are wonderful, but we also need to understand what the auto market wants and can bear.
I think DeBord's last point is especially strong. Look at the historical penetration of new auto technology with the Prius. Over the same time horizon, it's achieved less than 3% of the market. How could electric cars possibly do almost ten times as well?
I've commented in the past that I'm worried the government is pouring so much money into this technology, which hasn't proven consumers will grapple onto it quickly. I would actually argue that electric cars will face even more substantial barriers than hybrids. For starters, electric cars will be far more expensive than hybrids. But more importantly, hybrids aren't as massive change a in cultural norms -- they're essentially like other cars the U.S. is used to, but they get better gas mileage. With electric cars, however, you have to worry about charging and charging stations, which is a big departure from the pump and drive culture America enjoys today. And that doesn't even begin to get into the massive infrastructure spending necessary to accommodate enough charging stations.
The only way electric cars could really create an insane amount of consumer demand over the next 10 years is if oil prices go completely crazy. But as DeBord implies, that isn't like to happen. That could happen by 2050, but oil supplies shouldn't be too strained by just 2020. Instead, over the short-term I would envision hybrids gaining more momentum and electric cars earning market share much more slowly than these wild expectations call for.
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