Power says electric cars just don’t have the spark

By Dow Jones Newswires-Wall Street Journal
Posted Oct. 27, 2010 at 12:57 p.m.

A well-known auto industry forecasting firm on Wednesday suggested that the heavily promoted battery-powered vehicles about to appear  are headed for a much slower takeoff then some auto makers and industry analysts expect.

In a new study, J.D. Power & Associates said sales of electric cars are likely to remain low for  several years and won’t make up more than a small slice of the global market even 10 years down the road.

The combined sales of hybrids such as the Toyota Prius and electrics such as the  Nissan Leaf will total just 5.2 million in 2020, J.D. Power said. That would represent just 7.3 percent of the global market in 2020, which J.D. Power sees reaching 70.9 million passenger vehicles.

“Everybody feels that everybody else should be driving environmentally friendly vehicles. Although consumers generally want to be environmentally conscious, they are much more conscious of their personal economics,” said Dave Sargent, J.D. Power’s vice president of automotive research. “Right now, consumers have a lot of unanswered questions about the purchase premium of a hybrid or all-electric vehicle.”

Some automakers and other forecasters are more bullish. General Motors Co. and Nissan Motor Co.  are spending billions to market electric cars they hope will become mainstream. The Chevrolet Volt, made by GM, and the Leaf are due in U.S. showrooms  in the next few months.

A separate study by Boston Consulting Group sees hybrids and electrics making up 26 percent of the global passenger car market in 2020.

Many countries, including the U.S. and Israel, are supporting electric vehicles with tax breaks and other financial incentives as part of an effort to reduce petroleum consumption and cut greenhouse gases.

Still, J.D. Power said that without a dramatic rise in fuel prices, a coordinated global governmental push or a technological breakthrough that lowers prices, consumers are unlikely to adopt the vehicles.

The researcher pointed to consumer surveys. Buyers didn’t like the appearance and perceived performance of hybrids and worried about the limited range and recharging times for electrics.

More than 20 electric vehicles are planned to go on sale in the next three years in the U.S., which has backed $5 billion in investments for battery technology and consumer incentives to kickstart the market.

J.D. Power estimates that U.S. market in 2020 will account for purchases of about 100,000 electric cars total, or about two-thirds of the annual U.S. sales of Prius hybrids last year. Hybrids will make up 1.7 million in sales that year under the forecast.

Europe will be the largest market for electric cars, accounting for more than half the projected 1.3 million sales.

Seifi Ghasemi, the chairman and chief executive of Rockwood Holdings, which produces the lithium chemicals needed for advanced batteries as well as other chemicals, said in an interview Tuesday that people underestimate the potential of electrics.

“I think we might be underestimating the enthusiasm of the customers,” Ghasemi said. He said governments could and should be doing more to press for the adoption of electric vehicles as a national security and economic concern. “Unless we change the internal combustion engine to something other than that, it doesn’t solve the fundamental issue of energy security.”

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