Is the Government’s goal of achieving 10% electric vehicle usage or 230,000 vehicles by 2020 achievable? Let’s start by looking at recent purchasing patterns, then we’ll consider both the benefits and barriers inhibiting the transition to electric power, before considering what the future holds in store.

First, some recent trends

So how many electric vehicles (EVs) were registered on Irish roads with a 131 plate? 32 [1], or 0.05% of total vehicle registrations over this period. Of this number, 23 were registered in either February or April – a concentration of sales in these two months, and not in the traditional January peak, indicating a predominance of fleet vehicle purchases.

Figure 1 Licensed Vehicles for the First Time, Other Fuel Types, All Vehicles, 1998 to 2012

Despite the low number of EVs registrations to date in 2013, all may not be lost. Analysis of registrations over the fifteen year period from 1998 to 2012, and illustrated in Figure 1, indicates a clear upward trend in numbers of registrations for ‘Other Fuel Types [2]’, the majority of which are likely to be EVs [3]. Registration patterns for 2011 and 2012 indicate (as in 2013), however, that overall EV registrations have been bolstered by fleet sales. Despite the upward trend, there is obviously a long way to go!

What are the benefits of EVs?

As key environmental benefits are linked to local electricity production sources, information from the Sustainable Energy Authority of Ireland (SEAI) ‘A Guide to Electric Vehicles’ has been used in summarising EV benefits:

• low operating costs including 70% saving on fuel costs, and reduced maintenance requirements
• vehicle performance – strong acceleration, smoother and quieter than other vehicle types, albeit with a reduced top speed
• no tail pipe emissions, particularly beneficial in urban areas where emissions from road traffic contributes to poor air quality
• reductions in carbon emissions of 30% compared with diesel (based on the current electricity mix).

At a national level, EVs main benefit is their potential to contribute to reductions in overall carbon emissions. SEAI state that 14% of Ireland’s electricity is sourced from renewables, with a target to reach 40% by 2020. Back of the fag packet calculations indicate an EV could achieve a 50% reduction in carbon emissions by 2020 compared to a diesel car (less if diesel engines were to become cleaner over this time). Should Government’s target of 10% EV penetration be realised alongside its ambitious renewable energy targets, EVs have the potential to reduce national carbon emissions by around 1% [4]. Not insignificant, although conventional wisdom may have predicted a much greater impact.

What are the barriers to achieving Government’s EV goals?

Amongst the extensive international research in the field, one excellent paper by RAND Europe, ‘Bringing the electric vehicle to the mass market, a review of barriers, facilitators and policy interventions’, February 2012 encapsulates the barriers as follows (supplemented with some contextualised local information):

• Limited range, long recharge time and high cost:
  • Range – varies by vehicle, but typically 120 – 185 kms, although over 400 km achievable from the most advanced cars such as Tesla Model S.
  • Recharge time – full charge in 3.5 to 8 hours depending on the battery type, with a fast charge (80% charge from zero) achievable in 25 minutes.
  • High battery cost, which can make up to 50% of vehicle production cost, and translates through to high purchase cost for consumers. Government grants of up to €5,000 and zero or reduced vehicle registration tax helps alleviate the pain.
• Limited recharging availability, although considerable investment by ESB in rolling out a network of charge points throughout Ireland aims to address this barrier.
• Safety concerns, namely collision safety, electrical hazards and absence of engine noise.
• Consumers’ negative perception and understanding of future savings: – key aspects are the value placed by consumers on future savings, misunderstanding fuel economy benefits, and the value placed by many car drivers on top speed and acceleration characteristics.
• Consumers’ attitude-action gap: – while consumers may be concerned about their car’s impact on the environment, it does not necessarily translate through to purchasing decisions with other factors such as price, fuel consumption costs, vehicle size reliability and comfort representing much more important considerations.
• Customers’ unfamiliarity with EVs: – poor awareness amongst EV users of the relationships between driving patterns and car performance.
• Institutional barriers, whereby big businesses aim to protect their commercial interests, by lobbying against measures to promote roll out of new technology if it is deemed likely to devalue existing investments.

What other technologies are possible?

Hydrogen fuel cell powered cars represent the most likely alternative, and Honda has been leading development of this technology for a number of years. More recently, Ford, Daimler and Renault-Nissan have joined forces to develop a fuel cell system, with the aim of launching “the world’s first affordable, mass-market, fuel cell car” by 2017. Although fuel cell technology is not new, according to Dr. Anthony Baxendale, manager of Future Transport Technologies & Research at Mira Ltd, “the production cost until now has been prohibitive, so by collaborating and joining forces they will be hoping to accelerate development.”

So is the 2020 target of 230,000 EVs achievable?

Sales of EVs are likely to follow the technology adoption lifecycle described in the Diffusion Process [5], and subsequently in Diffusion of Innovations [6], in which those that adopt new technology can be classified into five groups:

• innovators – the first people to adopt to an innovation, sometimes described as ‘visionary or imaginative’
• early adopters – those that adopt after the benefits start to become apparent, these represent the second fastest group of individuals to adopt
• early majority – assuming the technology is accepted by society, these people are sometimes described as ‘pragmatists’, or ‘the followers of fashion’
• late majority – those that adopt after over half the population have chosen to do so, these are often described as ‘conservative pragmatists’
• laggards – those that hold out to the bitter end.

Analysis of registrations from 1998 to 2012 indicates that EVs currently represent approximately 0.2% of the overall fleet – by Rogers’ definition, these owners represent the earliest of early innovators.

So is the 2020 target of 230,000 electric vehicles achievable? Assuming modest growth of say 2% per annum in new vehicle registrations from 2012 levels, EV sales would have to account for nearly one third of annual sales for the remainder of the decade. Is this realistic? To put it in an international context, sales of EVs in Germany and the US, two of the world’s automotive powerhouses, are forecasted at around 10% of the annual total by 2020 [7]. Additionally, given that Irish EV registrations in the first half of 2013 represented 0.05% of total car registrations, the short answer appears to be no!

Ok, so the 2020 target may look like it’s unachievable, but building a bridgehead to the future is essential – ‘the stone age didn’t end because we ran out of stones’. History has a habit of repeating itself, and this time round it is unlikely that full depletion of oil stocks will be the catalyst for a transition to alternative power sources, although rising oil prices will inevitably be a factor. “Big Auto” is now in the game in a serious way and it seems likely that we are at the start of a paradigm shift away from oil. Whether EVs represent a longer term replacement technology or a stepping stone to hydrogen fuel cell powered vehicles remains unclear at this point. So we may now be at the Betamax moment – with uncertainty about which technology (EV or fuel cell) to back.

What are the opportunities to influence consumers’ future purchasing decisions?

If the 2020 EV target is to remain more than just a pipe dream, consumers need much greater clarity and a higher degree of certainty about future direction of technological evolution. For this to be achieved, governments need to join forces with industry to share the efforts, costs and risks of technological development, and the not so easy task of influencing consumer purchasing decisions.

Article Author: Ciaran McKeon, Transport Insights’ Managing Director
Email: [email protected]
Phone: +353 1 685 2279