Today electric cars make up a very small part of the overall car market. While the size of the global car market is around 85 million cars a year, the electric cars make up much less than 1%. What are the reasons for the low market share and why the electric cars are not picking up momentum? We examine the issues and possible solutions for this market.
Hurdles faced by the electric cars
Most of the time, the issues surrounding the electric car market seem to be revolving around the customer’s perception, cost and infrastructure. The customers are still not very open to electric cars and are very comfortable with their petrol/diesel based cars. The oil prices are not very high these days, and fuel costs are not forcing the customers to rethink on their strategy to purchase an electric car. On the other hand, the cost of owning an electric car is expensive compared to a petrol or diesel fueled car by at least 30-40%.
Another worry for the electric car market is the infrastructure. The charging network for the cars needs to be fully developed for the electric car to succeed in the market. Even the developed market has not done enough to construct a good network of charging stations. The US has over 20,000 charging stations. Compare this figure with more than 150,000 gas stations in the US, assuming at least 5 gas dispensers per gas station that amounts to 750,000 gas filling points. It clearly shows the need for improved infrastructure for charging facilities.
Solutions and strategies
Customer perception about the electric cars needs to change. This means that companies working on the electric cars need to promote the electric car models more aggressively to the public. While promoting the cars to the public, the car makers should make them aware of the advantages of the electric cars over conventional cars (read petrol/diesel).
Many car makers do such promotional campaigns, but they hardly succeed in winning the customer acceptance. One reason for this is that the electric cars are still expensive and customers think that the cost simply outweigh the advantages. Further, infrastructural worries and range offered by the electric cars are concerns raised by the customers. Cost of batteries is a major challenge to electric car makers. Therefore, cost challenge can only be met by investing on newer battery technologies. There are research projects going on worldwide which should result in lower cost of batteries. For example, a research project from Power Japan Plus is developing organic batteries which may reduce the cost of batteries. Further, when the manufacturers increase the volume of electric cars, the cost would decline considerably.
It is clear that initial cost and infrastructural hurdles force manufacturers to offer the electric cars in limited range of models. On the other hand, it is the manufacturers who should take lead in finding solutions for cutting cost of the batteries and investing in charging infrastructure. However, this has not been the case with most of the car makers. While Nissan and GM have already promoted their electric car models such as Leaf and Volt respectively, more car makers need to come out with electric car models in their lineup.
The companies should focus on increasing the number of models in their product range. Nissan, for example, has just one model offered as an electric car, while it offers more than 15-20 petrol/diesel based models. Such a ratio will not allow the electric cars to penetrate the car market.
If the car makers believe that electric car technology is a future technology, then they must include more car models in their range of products. Obviously, this strategy is to be supported by the infrastructure as well. Without a proper charging infrastructure, the mass volume of cars manufactured will find difficulties in charging the batteries. GM and Nissan have been trying to build up the charging infrastructure in the US, which is a good sign for electric car market. Finally, the electric car market is here to stay. As fossil fuels deplete and renewable energy sources take the lead, the electric cars are going to be the non-polluting vehicles. As the world moves towards reducing the carbon footprint, electric cars should be winning the market for sure.