Nissan CEO Carlos Ghosn made news this week by predicting that the market for electric vehicles is ready to accelerate quickly, leaving car manufacturers with insufficient capacity to make them.
Ghosn is not known for being a starry-eyed dreamer, yet his forecast bucks conventional wisdom in the automotive industry. What can patterns of market evolution tell us about the future for electric vehicles?
New markets begin to blossom when they surmount a handful of early obstacles. Specifically, success begins when:
In the case of electric vehicles (EVs), the industry seems to be at this kind of tipping point. A certain type of buyer — e.g. socially-conscious, status-oriented, buying a second vehicle for everyday use — finds these cars attractive. Charging docks can be easily installed in people’s homes, and a handful of public docks are now emerging as well. Service for the vehicles is reasonably good, and dealers are beginning to push their sale. Many potential customers know satisfied EV drivers. Resale values are strong. Metrics are emerging to compare the energy-efficiency of EVs. Critically, tax credits incent early adoption; in the U.S., these can amount to $8,600, which can be a quarter of the vehicle’s price.
Nissan is investing heavily in its forthcoming Leaf, an all-electric vehicle (not a hybrid) that it projects will sell 500,000 units in 2013. By contrast, some industry watchers predict that total EV sales for all manufacturers will amount to 500,000 by that year. Clearly, Nissan is putting serious money behind its vision.
While technology will improve over the next decade on several fronts, particularly on the capacity and cost of batteries, and while the public charging infrastructure is quite nascent, the market seems to have reached the point where offerings are good enough for a significant segment of customers. Given the social-status and tax-credit advantages of buying an EV sooner rather than later, we can expect this market to begin growing fast. Nissan may be in an excellent position to seize early leadership, much as the Prius made Toyota the leader in hybrid vehicles.
Story by Steve Wunker.
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