SV Forum’s Annual Cleantech Conference, Part 1: Opportunities and Challenges for EVs in 2012

Realism and a bit of pessimism at the SV Forum Annual Cleantech Conference

On January 19, SV Forum’s Annual Cleantech Conference brought together entrepreneurs, investors and the business community at large to discuss a range of topics including electric vehicles, green building, new technology opportunities and the investment climate for early-stage cleantech deals. In my years of attending cleantech conferences I have found the sense of realism refreshing and there was a real back to the basics roll up the sleeves mentality among the audience.

Electric Vehicles will take time to have a profound effect on the market.

“EVs primarily face a market adoption problem, not an infrastructure challenge, to move from early adopters to mainstream buyers,” said Thilo Koslowski, vice president and distinguished analyst at Gartner, as he recapped Gartner’s 2011 report about EV readiness in the US.

More information about the Gartner EV report (for a fee) can be found here.

His predictions are that EVs will be an increasingly important part of the drive train mix but growth will be slow and they will not make a significant impact until the 2020 time frame (3-5%). Note that the overall market for hybrid electric vehicles is about 2% of all vehicles sold in the US, about 270,000 in 2011 and over 2 million sold since their introduction in 1999. On the Gartner hype cycle, EVs are on the downswing but have not reached bottom yet as EVs have not been able to meet the unrealistic expectations placed on them as a magic bullet for all consumers. Gartner notes anecdotally that interest and enthusiasm seems to be waning both on the consumer side and among the auto manufacturers. Nissan Leaf and Chevy Volt have sold less than expected and there have been technical challenges for the Volt.

However, Gartner’s pessimism was countered by a panel that included EV manufacturers Coda Automotive and GM. They see 2011 as laying the groundwork for a very bright future with over 18,000 EVs sold even though only 3 options were available (Tesla Roadster, Nissan Leaf, Chevy Volt). 2011 EVs are 3x what hybrids were in 2000 and there has been overwhelming positive consumer response from those who have purchased EVs. In addition Gartner themselves forecast EV sales to reach 100,000 in 2012 and a wide range of new models to be launched.

Byron Shaw of GM noted that if you look at it from the perspective of % of total vehicles sold then it doesn’t look good. But if you look at it from the perspective of year on year growth, 2012 will be a huge year. Most of the major auto makers are launching EVs in the US in 2012 including 4 in the next 12 months by GM alone.

He noted that while many EVs will not meet all consumer needs, among vehicle-owning homes, two thirds of them have 2 or more cars and an EV can be seen as viable commuter car in most urban areas.

Challenges moving forward

While batteries (price and range) are the main limiting technical factor, more importantly, public awareness and education are the biggest barriers to moving from the relatively small early adopter market to wider acceptance in the mainstream market.

There has been early success in putting the vehicles out there, but it seems like the excellent driving experience has been undersold and there is still anxiety about lack of public charge points. Furthermore, the automakers have not succeeded in raising consumer awareness about the benefits and limitations of EVs. The operational benefits are not well documented and depreciation is still unknown. Upfront costs vs. operational savings are not a main buying factor for vehicles today and will require rethinking auto purchases.

Read part 2 from SV Forum’s Annual Cleantech Conference here.

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