Detroit, Michigan – The cost of improving CO2 emissions from internal combustion engines (ICEs) is less than expected and automakers should be able to meet 2020 emissions targets mainly through improvements to conventional technologies, according to a new report by the Boston Consulting Group.
According to the report, Powering Autos to 2020: The Era of the Electric Car?, ICE technologies offer the potential to cut tailpipe emissions of carbon dioxide by approximately 40 per cent, at a consumer cost of US$50 to $60 per percentage point of reduction for an average passenger car. That is roughly half the cost of what was expected three years ago, the report said.
However, manufacturers will need to make several changes simultaneously to achieve such dramatic reductions, including modifications to combustion technologies, transmissions, vehicle mass, aerodynamics and power management.
Although conventional technologies will pose stiff competition for electric vehicles (EVs), the study also found that there is a distinct “green” consumer segment willing to pay a significant premium for EVs.
“Electric cars will undoubtedly play an increasingly large role in many countries’ plans in the decades ahead as energy independence and environmental concerns intensify,” said Xavier Mosquet, lead author of the report. “But they will gain only modest ground to 2020. Gasoline- and diesel-powered vehicles are improving faster than expected and will continue to dominate the global landscape.”
The report also found the following:
– China and Europe, not the U.S., will be the largest market for EVs in 2020.
– Based solely on total cost of ownership, EVs will not be the preferred option for most consumers. Battery pack costs are forecast to fall approximately 64 per cent from 2009 levels to $360 to $400 per usable kilowatt hour by 2020, but this will still represent a cost of $6,900 per vehicle for the typical 20 kWh battery necessary for a purely electric EV.
– EVs will see relatively strong uptake from a distinct segment of environmentally-conscious consumers who are willing to pay an up front average premium of $4,500 to $6,000 to purchase a “green” vehicle, do not expect to recoup the difference over time through lower operating costs, and are willing to pay about 10 to 20 per cent more in total cost of ownership over the vehicle’s life. These consumers represent 13 per cent of buyers in China, nine per cent in Europe, and six per cent in the U.S.
– Assuming that the Chinese government remains committed to EVs, the study projects that these vehicles will represent seven per cent of the country’s new-car sales in 2020. Despite the modest percentage, China will become the world’s largest EV market due to its overall market size. Europe will be the second with a project eight per cent of new-car sales. EVs are expected to account for five per cent of the new-car market in Japan and two per cent in the U.S. in 2020.
– Compressed natural gas (CNG) could expand beyond its current stronghold with transit buses and airport shuttles, and see growing adoption by delivery vehicles, government fleets and taxis.
The study cautioned that the Chinese demand for EVs is especially hard to predict. The Chinese government’s latest draft plan calls for 500,000 electric passenger cars, trucks and buses on the road by 2015 and five million by 2020, but only around 2,000 were sold in 2010 despite government incentives worth up to $9,000.