The Global Market for Electric Vehicles

By Baumgartner, William; Gross, Andrew | Business Economics, October 2000 | Go to article overview

The Global Market for Electric Vehicles


Baumgartner, William, Gross, Andrew, Business Economics


Worldwide sales of electric vehicles are slated to increase at the rate of sixty percent per annum in the coming years. We project global sales of more than one million such vehicles valued at $24 billion in the year 2007. The number of such vehicles on the roads of six continents that year should reach the four million mark. Most of the units will be cars and light trucks, though a growing number of buses and sanitation trucks will be evident as well. Despite rapid growth, electric vehicles as a whole will constitute only 1.5 percent of global motor vehicle production in 2007 and only 0.5 percent of the worldwide number of motor vehicles on the road in that year. Clearly, we are looking at a narrow, albeit fast-growing market.

The majority of electric vehicles produced in the next seven years will be battery-powered, but the other two categories--hybrid and fuel-cell powered--will be growing faster by the second half of this decade. Political pressure and legislative mandates, in response to environmental issues, will be key influences. The electric vehicles will be used primarily in densely populated, heavy traffic, and hence poor air-quality areas such as the California, selected West European capitals, Tokyo, and possibly Bangkok, Mexico City, and Sao Paulo. Electric vehicles ultimately must compete on the basis of economics and technical performance with gasoline, diesel, and even natural gas-powered vehicles and will require a significant amount of supporting infrastructure. Since production is still minimal and since the path of regulation is not clear, forecasts here are more tentative than for other markets and industries.

The Physical Environment--Key Issues

A continuing global concern into the twenty-first century is the reduction of airborne pollutants, especially in large urban centers. Industrial emissions and motor vehicle exhausts have been identified as major contributors. There is consensus that air pollution is easier to control from large central sources such as electric power plants than from millions of individual vehicles. Hence, pressure is building to control emissions from electricity generation and to use electric power for vehicles.

The likely impact on air pollution levels by switching to electric vehicles remains in dispute. For example, a major study in England published in the late 1990s. concluded that hydrocarbons resulting from electric vehicle operations would be less than that from gasoline, natural gas, or ethanol-fueled vehicles; the same as that from biodiesel-fueled vehicles; and, greater than that from conventional diesel and liquid propane gas fuel vehicles. In contrast, a U.S. study, done at the same time, concluded that a substitution of a half-million electric cars and light trucks for vehicles powered by fossil fuels would result in little or no reduction in peak ozone levels in Los Angeles or New York City. However, a key assumption in the latter study was the increasing use of "cleaner" fossil fuels and "cleaner" traditional vehicles.

Finally, much debated and still unresolved is the issue of increased pollution that might result from production of the massive batteries required for electric vehicles. The manufacture of lead-acid batteries--still the major battery type as of now--entails increases in lead production. Such batteries would need to be recycled at some point and that could release large quantities of toxic lead. Shifting the recycling activity from Western nations to countries with less stringent regulations--such as Taiwan--is a temporary solution at best. A recent study from Calstart, a nonprofit California consortium, recommends that a deposit of about $125 be levied on light-duty electric vehicle batteries to ensure their return and recycling. It is not surprising that large auto manufacturers are now moving toward new kinds of batteries (nickel-cadmium, lithium, zinc-air, etc.), though some of these still pose environmental hazards.

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