Many technologies are launched, but relatively few ultimately take over their respective markets. For those technologies that do take over their markets, it can take a long time, often decades. But at some point it becomes clear that the technology has crossed a key “tipping point,” and that it is here to stay.
What drives a technology over the tipping point can vary -- perhaps it’s a matter of market share, of relative economics, or of public policy mandates. California promoted the earliest wind farms some 40 years ago, for example, and even today public policy incentives remain important to the continued expansion of wind energy. But the basic economics of wind energy have also evolved to the point that most analysts would agree that wind power is here to stay.
Electric vehicles of all kinds accounted for 3.4 percent of U.S. auto sales in 2012. Most of those (98 percent) were hybrids or plug-in hybrids. Battery electric vehicles (BEVs) accounted for just 0.1 percent of vehicles sold. BEVs aren’t new; they constituted almost 40 percent of the vehicles in service in the early 1900s (BEV sales at the time peaked in 1912). BEVs again made a run at the market twenty years ago when the California Air Resources Board first pushed zero emission vehicles. In both cases, electric vehicles did not fully “tip,” and instead faded away (as documented in the documentary film Who Killed the Electric Car?).
In the last couple of years, more than half a dozen manufacturers have come out with a new batch of BEVs. Significant effort has gone into building a battery-charging infrastructure to help make BEVs more attractive to consumers. The current darling of the BEV market, Tesla, has a market cap that exceeds that of several other auto companies, including Mazda and Fiat.
But the BEV market picture is not universally optimistic by any definition. Several companies in the BEV supply chain have called it quits during 2013, including the Think and Coda BEVs. Fisker Automotive, after losing almost $200 million in federal funding, is on life support waiting to be restructured. A123 Systems, Better Place (the once-hot battery swapping service), and most recently ECOtality (the installer of charging infrastructure), have also called it quits or announced bankruptcy filings.
I think it’s safe to say that BEVs have not yet reached a tipping point. There are several obvious reasons for this conclusion. For one thing, BEVs are still expensive. Also, consumers are afraid they’ll be left high and dry (i.e., range anxiety is prevalent), while others are afraid they’ll buy a BEV just before a major technology advancement is announced. Similarly sized gasoline-powered competitors are becoming more fuel efficient in their own right, and lower gasoline prices aren’t helping either. No wonder BEVs are tottering rather than tipping.
The Tipping of the Hybrids
I think it’s fair to say that hybrid electric vehicles have passed their own tipping point. Ironically, many hybrids are far from an economic slam-dunk for auto buyers. Edmunds.com reports a wide disparity of payback periods for hybrids over their conventional counterparts, ranging from a few years to more than twenty. Under current economic conditions and given the rising fuel efficiency of many gasoline cars, reported declines in vehicle miles traveled, and falling gas prices, it may prove difficult to reduce that payback period. Nevertheless, hybrids are penetrating more deeply into the overall fleet.
Hybrids are boosting mileage and making people feel “green” even in large vehicles, all without the range anxiety and other issues faced by BEVs. Absent the repeal of federal fuel economy standards, or the long-term (and highly unlikely) return of $2 gas, it is hard to imagine the disappearance of hybrids. Of course, it remains to be seen whether they can dominate the automobile market as a whole (hybrid vehicles still account for only about 3 percent of vehicles sold domestically).
Are BEVs on the Same Path to a Tipping Point?
Ironically, some BEVs can have shorter payback periods than hybrids. Under our time-of-day electricity pricing plan here in Portland, Oregon, for example, we pay approximately a penny per mile when charging our Nissan Leaf at night. This compares to about 13 cents per mile for the equivalent gasoline-powered vehicle. If we were to drive 15,000 miles per year with that differential, we would save $1,800 per year. Over seven years, that’s almost $13,000. Add to that the $7,000 tax credit, and it’s possible to see how a BEV could generate a shorter payback period than some hybrids.
BEVs, however, face key challenges. With the exception of the expensive Tesla, most BEVs are quite range-limited; our Leaf gets between 60 and 90 miles per single charge. For the same reason, BEVs will also remain limited to the physically smaller parts of the automobile fleet. We’re unlikely to see larger BEVs until and unless batteries get lighter and cheaper.
So BEVs are a very different consumer product than hybrids, plug-in or not. They’re also a different product when you consider the overall goal of deploying the technology. Hybrids improve the efficiency of the vehicle fleet, but they don’t fundamentally challenge the role of gasoline in the transportation system. BEVs do, and could be a key step in the transition to a low-carbon economy and in addressing the problem of climate change. That’s why the future of BEVs matters. That’s also why stakeholders with an interest in climate change and sustainability issues should care about the question of a BEV tipping point.
Can we identify that tipping point, and more importantly can we figure out ways to actively help BEVs get to that point?
The more BEVs sold, for example, the greater the incentive to overcome the battery and technology limitations that currently challenge BEVs. If the tipping point is primarily a function of the number of BEVs sold, for example, we may want to work to convince hybrid buyers to buy a BEV instead. If the tipping point is a function of the number of EV batteries sold overall, convincing hybrid owners to switch may not be the answer, as opposed to expanding the entire EV pie. If the tipping point depends on the market success of at least one BEV model (as can be seen with the history of the Toyota Prius hybrid), then perhaps we should be encouraging consumers to buy a smaller number of BEV models.
Critical to the question of how to reach the tipping point may also be the question of how we are promoting BEVs. Most BEVs are ideally suited to urban travel and commuting, rather than longer-distance traveling that requires an enormous distributed charging system.
An analysis by Navigant Consulting of ECOtality’s recent bankruptcy filing noted that public charging stations have been used, on average, 4 percent of the time. My own family is probably fairly typical; we rarely use public charging stations, and generally just charge our Nissan Leaf at home overnight (by far our cheapest option). Only when our daily travel exceeds 70 or 80 miles do we need additional charging; even then, we usually are able to use our home-based charging system. The battery technology of our Nissan Leaf really isn’t ready for convenient long-distance travel just yet.
Policymakers can tackle similar questions when it comes to a BEV tipping point. To make BEVs more attractive, should they be exempted from new road taxes that may be imposed on hybrids? Should BEVs be allowed into HOV lanes, even if that access is reduced for the rapidly expanding population of hybrids? Should BEVs be differentiated from plug in-hybrids? Or does the tipping point depend more on the volume of EVs generally (e.g., total batteries sold), rather than BEVs in particular? In that case, we may need to push for incentives to remain in place across the EV field.
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Dr. Mark C. Trexler is Chief Climatographer at The Climatographers, where he uses knowledge management tools to work with companies on understanding and responding to climate change risk. He has 25 years of business experience, most recently as Director of Climate Risk at Det Norske Veritas (DNV). Mark is co-author of "The Changing Profile of Corporate Climate Change Risk," published in 2012 by Dō Sustainability Publishers, and "Adapting to Climate Change: 2.0 Enterprise Risk Management," published earlier this year.