By Jeff Siegel
"How can you say you're a supporter of electric cars when you predict only 1% market penetration by 2020?"
This was a question I was asked during a recent alternative energy finance meeting I attended. My answer was simple: Because misinforming the public about the realities of electric vehicle integration is not in the best interests of electric car supporters.
I realize many of my fellow EV supporters don't like it when my analysis never shows EV market penetration moving beyond 1.5% by 2020. But my job isn't to soothe the emotions of unrealistic zealots. And quite frankly, pushing starry-eyed and highly-improbable expectations does no one any good when the chickens come home to roost.
Moreover, to go from practically zero to 1% or 1.5% penetration inside of ten years is actually quite impressive - and should be used not to trivialize growth estimates, but instead to celebrate the fact that a major game-changing transportation technology is actually unfolding right before our eyes.
Follow the Curve
If you plot an adoption curve for the electric vehicle market, this is where we are:
Click to enlargeWe will not likely even get to the start of the early majority stage until sometime around 2020 to 2025, and much of this will be dictated by how quickly battery costs come down and oil prices rise.
Over the next ten years or so, we're also going to see which car makers can actually make a profit on these things. Certainly no honest or rational analyst expected GM (NYSE:GM) and Nissan (OTCPK:NSANF) to come out of the box with their electric offerings with huge gains. But at some point, the tide will have to turn, shareholders will demand accountability, and I suspect early in the game, there will only be two, possibly three, real winners here.
Of course, it's still too early to see who will lead the EV market. Certainly GM and Nissan hit the ground running, and despite the partisan slaves and media blowhards who insist no one wants electric cars, there's been a 228% increase in sales in 2012 compared to 2011.
Sure, the actual amount of vehicles sold is barely an accounting error when you look at it in the grand scheme of things. Still, to pull off that kind of growth for a disruptive technology that comes with a pretty high price tag - and do so during one of the worst economic climates this nation has ever faced- well, that's nothing to trivialize.
You've Come a Long Way, Baby
While electric car development is off to a solid start (not counting the constant barrage of misinformation and empty rhetoric attacks), the market has a long way to go before it gets to that next level - the level where these vehicles are no longer falsely accused of being golf carts, tools of a socialist conspiracy, or toys for the wealthy.
Kind of like where we are today with conventional hybrids. It's funny, but I've been noticing over the last year or so that those who once criticized conventional hybrids with great fervor are now showcasing conventional hybrids as the "rational" solution when compared to electric cars. And I suspect in another 15 years or so, when hydrogen vehicles make a go at it, they'll do the same thing with electric cars.
In any event, conventional hybrids have come a long way since first arriving in showrooms back in the late 90s. It wasn't long ago that the most you could hope for in the hybrid world was a very small, two-seater Honda Insight.
Not today. Whether you want a basic sedan - like the 50 mpg Toyota (NYSE:TM) Prius - or the roominess of Ford's (NYSE:F) new SUV crossover, the C-Max (delivering 47 mpg), there's something for most folks who want an affordable vehicle that does just a little more to contribute to the displacement of all that foreign oil.
in just a little more than ten years.
And in another ten years, we're going to go from high-priced electric vehicles with limited ranges below 100 miles to more competitively-priced electric vehicles with all-electric ranges from between 200 miles to 500 miles.
This, by the way, is not an unrealistic expectation. Based on all the interviews I've done with chemists, engineers, and car designers, this is absolutely the direction in which we are heading. Yes, it's going to take at least another ten years to get there. But when we do, oh, how you're going to love fueling your vehicle with domestically-produced electrons, and not 87 octane (which will likely run you between $6 to $8 a gallon by then).
Believe me when I tell you, even at $3.50 a gallon, it's a real treat. To a new way of life and a new generation of wealth...