Electric Car Industry Part 1

Electric Car Industry

  Overview of the project

Electric cars are the recent innovative additions in automobile industry, which have mainly gained attention due to their environmental friendly aspects. These cars have several benefits like, exemption of fuel expenses and saving the fast depleting oil resources. Electric cars are also available at different prices with optimised performance facilities. However, despite several advantages, the industry has not yet received a proper acceptance from society. Therefore, this research project aims at finding out the main barriers that electric car industry is facing.

1.1       Aims and research questions

In order to achieve this aim, the research project is further sectioned in three research questions; so that a step by step process is carried out to explore the major barriers hindering the successful execution of electric cars in current times. These research questions are following:

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  1. What are the major barriers to entry for electric cars into the automobile markets?
  2. What is customer attitude toward electric cars?
  3. What is the quality and performance of an electric car, when compared with a conventional oil-driven car?

1.2       Justification for selection

The reason behind developing these sub-questions is to address the three key components of the projects. First, the barriers, which have been fiercely confronted by electric cars in this industry; second, the customer attitudes (positive or negative), toward electric cars (posing an opportunity or threat), and finally, the comparison of electric versus conventional cars. A critical exploration of all these fundamental points will assist in finding out the answers to the research questions.

2         Academic Research Literature

In present times, hundreds of research studies have been carried out on electric cars and their commercial value. Different surveys, research analysis, opinions and statistical findings are gathered to provide useful information regarding electric car industry. Despite it, the industry is facing barriers to enter successfully in automobile market.

2.1       Emerging thought of Electric Cars

Global warming is one of the dangerous issues in current times, and emission of poisonous gases is quite apparent today (Rutgers, 2011), from growing diseases to damaging environmental signs (Solomon & Manning, 2007). Some of the plans are to make people understand the situation and act toward environmental damaging causes (Wilkins, 1997). Another major problem, aside from widening challenge of greenhouse gas emissions is fossil fuel depletion (Shafiee & Topal, 2009). One of the research studies in 2007 by the European Union showed that, 80% of greenhouse emissions were concerning to energy, while 77% were having their origin from carbon, which was as a result of fossil fuel combustion (EEA, 2009). Another research showed that transport sectors and electricity generating agents are the biggest contributors to these environmental issues, and CO2 emissions (IEA, 2006).

IPCC Data from 2007 showed that globally, over 25% energy is consumed for transportation purpose, and 23% of gaseous exchange and emission is related to greenhouse gases (IPCC, 2007). Transport sector consumes energy and also produces poisonous gases, which continuously damage our environment (Bellis, 2010). Automobile are highly important for two reasons, first the cars are dominated worldwide, and specifically in street traffic in most of the countries. Secondly, the economy of a country is boosted by the greatest income generation from cars (Bellis, 2010). Besides these, cars also have several alternatives available, apart from other vehicles, like trucks (Chapo, 2010). Although, small trucks can also be operated electronically in a limited range, big trucks are however dependent on diesel fuels, which comprises 80% methane, either fossil or biogenic sources (Department of Energy, 2010). Buses can also be controlled and run electronically in some restricted range; buses are also heavily dependent on compressed natural gases like methane. Fuel cell driven buses are already running in countries, small trucks with energy saving options are just the conceptions (Electric Drive, 2010).

According to German Federal Environment ministry, in Germany, cars produce 60% carbon emission and in future, with growing traffic and demands worldwide, and specifically in Asian regions, the environmental issues may further hamper (Farber & Association, 2009). According to data collected from Shell (2007) by the year 2030, the global vehicle stock may reach up to 630 million to one billion. Likewise, the vehicle growth is expected to increase 63 to 100 million cars, annually, till 2030 (Happyanto et al, 2012). Environment is also suffering from other issues in addition to carbon emission. For example, modern internal combustion engine vehicles (ICEVs) contain extremely poisonous and life threatening toxic dangerous gases. According to WHO (World Health Organisation), air pollution is one of the most threatening pollution types today (WHO, 2011), which according to an estimation is causing two million premature deaths annually worldwide (International Technology Education Association, 2000-2007).

Almost all research studies exploring the facts and figures of electric cars refer to environmental forces at first. For example, according to Inter-governmental Panel on Climate Change (IPCC), exceeding level of Carbon is damaging the environment, and it may cause dreadful alterations in environment, if not controlled up to 50% to 80% by 2050 (UNFCC, 2011). Another research showed that developed countries should specifically set targets control global warming more than the 2 °C threshold temperature for catastrophic climate change, which means 80%–95% by 2050 (EU, 2011). Another report indicated that oil dependent cars are the key contributors of carbon emission (EEA, 2010). Developed countries exceedingly realised to present some radical solutions and electric cars were seemed to be the highly acknowledged alternative (EU, 2009; EU, 2010).

Another research study estimated that if car fleet vehicles are replaced by battery electric vehicles, then carbon emission can be reduced as lower as by 51% in the UK, 60% in the USA, and 91% in France (King et al., 2010).

According to Settle (2013) discusses that the perception of electric vehicle is quite boring, unattractive and underperforming, outdate, and quite tiresome. If market trends are observed, it can be seen that the industry is still in its infancy level and electric vehicles also show a big sign of vitality. However, despite the general perception, Settle (2013) thinks that electric vehicles have also received huge praises from critics and likeness from customers as well.

Shirouzu & Lienert (2013) research shows that according to two largest makers of Japan, despite hundred years of development and work, electric cars still have not gained momentum which it should have received so far. Similarly, in some other countries, specifically in Asian regions, Europe and North America, some promising steps are made toward alternative sources of hydrogen as power sources (Shirouzu & Lienert, 2013).

2.2       Barriers, performance and opportunities

Shin et al (2012) carried a research study in South Korea, on the usage of electric cars, customer perceptions toward electric vehicles, barriers that these vehicles have been using and the impact of these vehicles on existing cars; the survey included over 250 households and analysed the trends of future automobile market with a scope of electric vehicles. The research showed that, electric cars are facing a barrier of public acceptance and a perception that these cars are boring, unattractive and underperforming, outdate, and quite tiresome, which is not right to a big extent (Shin et al¸ 2012).

Bellekom (2012) conducted a related research in Netherland, the purpose was to find out the future of electric cars in the region and find out that, if electric vehicles can make their place till 2020.

Another study by Yan et al, (2012) found that, electric cars can gain momentum and acceptance from society, if some feasible and comforting options are given to people. For instance, these cars do not present attractive features and options to customers, which can remark the high demand, which is one of the barriers. For example, in these cars, the barrier of inadequacy of cooling devices is there, which despite the presence of electricity, may require an additional huge power to function properly.

Forbes (2013) stated electric and hybrid cars in China, their growth, barriers and customer perceptions. Research surveys and governmental policy documents show that China is investing heavily in clean energy vehicles. Likewise, the country is promoting electric and hybrid cars, as an alternative to gas guzzling cars (Park, 2012; Richard, 2012), which are an ultimate damage to global environment today (Daily Caller, 2013). Despite the growing concerns of Chinese government, statistics has however indicated that a majority of automakers have not shown considerable steps toward electric vehicles, despite the subsidies lavished from government on carbon free niche (Gayle, 2012; Graham-Rowe et al, 2012). Likewise, in Beijing, irrespective of big markets for automakers, electric cars have not found sound market because of less concern from automakers and public (Forbes, 2013). Some expert Chinese automakers and analysts argue that electric car industry in China is not flourishing, which is one of the reasons that while producing electric cars, the technologies are still backward and do not serve mass production (Shina, et al¸2012). Due to this reason, China’s electric car sector has not been contributing much in economy and solving the widening global gap development issue (Xinhua, 2012). Another study reported that Chinese hybrid cars are not implemented successfully as they are not playing their role powerfully in fuel saving as competitors (Solomon, Qin & Manning, 2007). The report also pointed out that only few companies are showing interest to participate in the construction of support facilities like, charging stations. Some other research studies regarded coming 20 to 30 years as critical period for companies to decide for ways toward global new energy vehicle advancements, where the key contribution is expected to receive from United States and Germany mainly (Xinhua, 2012). Forbes (2013) reported that in China, government is showing great concerns toward electric cars, and setting tax friendly policies and financial services. The government is also training more professionals in the industry to encourage hybrid cars. Some expectations are to bring efficient fuel consumption up to average of 5 litres and energy saving cars below 4.5 by 2020 (Shina, 2012). To meet public needs, another plan is to build more charging facilities within and between cities. It is supposed that new energy vehicles can bring growth in China (Bloomberg, 2013) and can help in reducing carbon emission (Forbes, 2013). Chinese government is however making continuous efforts toward carbon free environmental protective vehicles, and the target of government is to produce over 500,000 alternative energy cars to existing cars, by the year 2015 (Bloomberg, 2013). Another study reported that China shipped over 2000 electric and hybrid cars in 2012, contributing as 14.6 million passenger cars sold in 2011 in largest auto markets of the world (Bloomberg, 2013). Some of the automobile industry officials reported to looking for ways to subsidise electric cars to 25 cities (China Daily, 2013) which is credited by legislatives (Bloomberg, 2013; Forbes, 2013). Many leading automakers are also supporting the plan for carbon free environmental friendly electric cars, and consider that ideas of environmental protective vehicles should be encouraged (Forbes, 2013). Despite these facts, majority of automobiles have not shown considerable concerns toward introducing or supporting electric cars (Xinhua, 2012).

Budde et al, 2012 conducted research on identifying public resistance to electric cars in Denmark. The paper explored many geographical policies and business models, to examine electric car mobility in Denmark. It was found that such emerging models are highly dependent on technology advancement, which can resolve the issues of better performance and pricing. Besides, the issues of innovation, sustainability and related conceptual models were examined in the study. The researchers concluded that, the deployment of electric cars can be made a realistic approach, if some wise steps are used as alternatives. For example, renewable energy systems should be utilised, like wind power sources, and mutually supportive policies should be developed, which can contribute in achieving wider aims of carbon emission reduction (Budde et al¸ 2012).

Growing engulfing concerns of carbon emission and environmental issues are surrounding the people today (Eco News, 2012; Lieven et al, 2011; Michael & Hidrue, 2011; Sierzchulaa, et al, 2012, Christensen, 2012). The number of electric cars in California increased after the legislation passed in favour of zero emission options in fleets, which brought an opportunity for automakers to introduce electric cars in the region. Afterward, Fiat 500e and Honda Fit EV joined the rank in 2013, but the prices of the models were increasingly higher, which brought the perception of electric cars being much expensive to a lower level to some extent (Anderson, 2013).

In California, hybrid cars are regarded as palatable choice, with an option of gas and electric motor convenience, to recharge car battery at home, which can bring sensible green option if adopted by many other regions as well. Besides, electric motors in hybrid cars can also be used wisely; that is, by using electric motors, gas engines can be supported, and regenerative braking to recharge the battery options can be achieved. By using electric motors in this way, better fuel economy can be achieved than previous years.

Another case study by Happyanto et al, (2012) on speed synchronisation of induction models for transient response of electric car, also discussed the barriers faced by electric car industry and general public perceptions towards these vehicles. The paper described motor speed parameters of electric cars and the overall performance, which can be one of the big reasons toward setting opportunities or barriers in the field of electric cars. It was found that overall, electric cars show an average performance, which can however be increased efficiently, if advancements in technologies are brought. Electric cars can be more efficient, helping people in terms of cost, efficiency, speed and performance. (Happyanto et al, 2012).

2.3       Consumer attitudes and perceptions

In order to find out the consumer attitudes toward electric car, many surveys were conducted in different countries.

One of the research studies was carried out in Hong Kong, which is one of the most developed and populated territory in the world. Due to high density, public transport is effective and cheap in the region, with an estimation of 415,000 private cars in 2010 (Census and Statistics Department, 2009). The region has also been noted as increasingly dangerous due to severe air pollution, resulting HK$21.2 billion hospital admissions and low productivity per year (Scent, 2007). Bloomberg News (2011) reported that, air pollution and related environmental issues caused over 4500 deaths between 2007 and 2010 in Hong Kong (Bloomberg News, 2011). Seeing the situation, Hong Kong government imported many Mitsubishi Motors i MiEV electric cars and attempted to introduce less polluting vehicles (Lau, 2009). Due to good travelling behaviour of locals and sound infrastructure, Hong Kong is a suitable place for electric cars. According to ETCACC (2009), despite these facilities, people showed less inclination toward adopting electric cars. Government efforts are also limited in this regard to leave positive impression on roadside air quality (ETCACC, 2009). According to Delang & Cheng (2012) research survey, people in Hong Kong have a clear understanding of environmental issues and the costs of internal combustion vehicles. Many survey respondents agreed that electric cars are good alternatives to control greenhouse gases, air pollutants and roadside air pollution. However since the method of electricity production in Hong Kong is dependent on burning coals, roadside air pollution control cannot be achieved by electric cars (Delang & Cheng, 2012).

Another research study was carried out by Graham-Rowe et al, (2012) on examining consumer attitudes of UK non-commercial car drivers toward electric cars. The report identified six fundamental responses; that is, reduction of cost, vehicle confidence and adaption demands of vehicles, environmental beliefs, the perception of electric cars according to their efficiency, and the impression management. The overall results of survey disclosed some potential barriers toward adapting electric cars in UK by mainstream consumers. Some of the factors find out were prioritisation of personal mobility needs over the safety of environmental issues, electric cars in view of social desirability and increasingly sophisticated technological advancements, which ultimately leave such vehicles obsolete (Graham-Rowe et al, 2012).

Shirouzu & Lienert (2013) research shows that, consumers continued to show less inclination toward electric cars, or electric vehicles which hit United States in early twentieth century, which are replaced strongly by gasoline powered cars. Despite the fact that, green house concerns are growing and many companies are investing billions of dollars in going green programs, many new vehicles, including the electric vehicles of Nissan in early 1910 till 1990, these vehicles were not highly credited. Since, these vehicles showed a range of problems, which ultimately led to change the plans for EVs; for example, electric vehicles were high cost, and also were not having long driving range, with lack of charging stations (Shirouzu & Lienert, 2013). Seeing the growing environmental issues and low concern from customers, government of United States invested big amounts for up to one million electric cars on United States roads by 2015 (Shirouzu & Lienert, 2013).

Some statistical analysis also shows the picture of electric car adoption, barriers and public perceptions in United States, which is considered to be a powerful marketplace for leading automobiles. The statistics from the year 2007 to 2012 October show different story. For example, in 2007, the overall market share was 2.99 with total sales of 352,274 for electric cars. In 2008, a sharp decline was noted in these statistics, up to 2.37, with total sales of 313,673. Moving ahead in 2009, the market share unexpectedly fluctuated and a small increase of 2.78 was received with total sales of 290,292. However, the dropping trend in 2010 was again on there to 2.37 of total sales, making up the total sales figures to 274,555. In 2011, the market share again dropped to 2.23, showing a worse trend since the introduction of electric cars in United States. In 2012, some efforts were made to control market share up to 3.30, which is quite better since 2007 with total sale of 393,938 until 2012 (EDTA Companies, 2012).

The above figures show that the yearly consumers in US markets are showing a less inclination towards electric cars, due to their poor performance and high prices, which can be one of the reasons behind low interest of customers towards these cars.

In 2003, Toyota was the first company producing electric cars, naming it Prius. Today, a big percentage, up to 95% are received from oil, and only 5% from electric sources, which means people have started to show their interests toward electric cars, to some extent. In general, the electric cars and hybrid cars be differentiated on the basis of their fuel usage. For example, electric cars are solely dependent on rechargeable batteries, while hybrid cars can use either electric energy or gas energy, or both (Smith, 2012).

Different ways can be adopted to recharge electric cars, to set their speeds at different levels. For example, the normal ranging recharged points can take from 6 to 8 hours for a full recharge, which means up to 13 Amp. Likewise, there are certain speed indicators and speed charring points, which may consume 3 to 4 hours, with 35 Amps. Furthermore, not all electric cars are dependent on speed charger, since it varies according to car capabilities. Another kind of charging point is rapid charger, which has 125 Amps, which can recharge the car up to 80% during half hour or less, but it has not yet gained popularity in United Kingdom, due to being unaffordable price.

One of the advantages of rapid chargers is that, it can assist in sales increase and can also contribute in country economy. Furthermore, many customers consider that long time recharging battery can be the one choice toward electric cars.

In United States and UK, people perceptions change from one region to another (Hall-Geisler, 2012). For example, in Amsterdam, majority of people are motivated toward green technology, and the owners of electric cars can also apply for recharging points closer to their locality, in case of unviability of charging facility at home. Besides, electric car owners in UK, suffer from same issues of recharging batteries, however, many customers are concerned about green and environmental friendly technologies. According to the Department of Transport UK, by the year end of 2013, approximately 9000 recharging points in UK will be established, which negates the research study of the year 2011, where BBC report indicated that in May 2011, there were only 704 charging points in UK (BBC member, 2011), which means, establishing more charging points in UK may require a lot of time.

Another change can be seen in consumer perceptions, which vary country to country. For instance, in Hong Kong, people show an interest toward environmental protective schemes, and people have huge awareness regarding environmental issues and also some inclination toward electric cars. They can also contribute toward purchasing these cars and helping companies to increase manufacturing. However consumers are aware that electric car performance is less performing comparing with petrol car but, it seems that they would trade the petrol car for the environment advantage.

One of the surveys was carried out by Rolim, Gonçalves, Farias, & Rodrigues (2012) in Portugal, with an aim to finding out the impacts of electric car adoption on driver behaviour and environmental performance to test customer satisfaction; the survey results indicated that, the major reasons behind customer adoption, rejection, reluctance or inclination toward electric cars is increasingly dependent on the economic and environmental aspects of electric cars. However, most of the drivers perceive that, due to speed of the car, their behaviours and moods vary. Additionally, people who own electric car are traveling 3.4 trips a day with an average of 43 km every day (Rolim, Gonçalves, Farias, & Rodrigues, 2012).

On close consideration, it is evident that people perceptions in Portugal and Hong Kong are quite similar, as both are concerned about environmental friendly innovations and products. However, they also consider economic aspects of a product as well, which influences their behaviour toward adoption or rejection of electric cars.

According to Sierzchulaa, Bakker, Maat, & Wee, (2012), in 2003, there were only few factories producing electric cars; but today, the number of electric car factories have increased up to 76 in 2011 and constantly increasing in coming years (Sierzchulaa, bakker, maat, & wee, 2012).

76 factories during 8 years show that electric car industry is growing, and also willing to provide our market place more cars with increasing demand. However, some studies as given above show that in some regions (like China, Germany and Asian regions), people are increasingly reluctant to adopt electric cars, and therefore automakers are not investing in electric cars. However overall, the trend of electric cars adoption has increased in past 8 years.

A research article by Hidrue (2011) illustrated consumer willingness toward electric cars and their general perceptions in United States. Results of this research showed varying responses, since it included age group from youth to older people, and specifically the educated demographic group was focused. These people were surveyed about electric cars and their purchase/ rejection towards these vehicles, and causes. First common opinion from all respondents was regarding gas prices, which has quite certainty of an increase in future. Another reason was given that; they found it quite easier to recharge cars at home at much convenient prices, instead of going out. Besides, people who travel long distances in US, are likely to consider the money saving option, more than that of electric car contribution toward environment. The researcher found through this survey that customers are concerned either about higher prices of electric cars, which hinders them to make a purchase decision, and secondly the long and tiresome time taken by these cars for recharging.

The above research studies show that almost in all countries, the major concerns and perceptions of public toward electric cars were either in the circle of car performance, or their price range. Unlike Hong Kong, where people were more concerned toward average performance and less price, customers of United States were more inclined toward high performance and low pricing, which can affect car industry growth. Also, customers in United States showed similar tendency as Portugal people, about saving aspects. However, the common concerns among all of these countries were either about long time recharging issue of electric cars, or their higher prices, which can affect the growth of electric car industry in United States, or in other countries as well.

A study carried out by Lieven, Mühlmeier, Henkel, & Waller, (2011) illustrated statistical findings and the evaluation of electric cars on the basis of facts and figures, regarding their pricing and quantitative measurements. For example, these authors elaborated cars in 8 types, naming the first one is Micro car, city car, with start price from € 8,000 to €18, 000, second type is compact car, small family car, with start price from €12,000 to €24,000, the third type is midsize car with start price from €17,000 to €30,000, the fourth type is Van start price from €18,000 to €35,000, the fifth type is Executive car, price start from €25,000 to €60,000, the sixth type is SUV, example could be land rover or jeep start price from €40,000 to €100,000, the seventh type is Luxury car with average price of €50,000, the last type is sport car with average price of €40,000 (Lieven, Mühlmeier, Henkel, & Waller, 2011). If we compare the prices and critically compare electric cars with petrol cars in terms of pricing expanses, electric cars are evidently on higher pricing range, which can influence overall electric car markets. It should be noted that electric cars have not yet gained higher momentum in automobile industry and no considerable acceptance from public. Consumers in all countries are concerned about performance issues of these cars, so this shows one of the strong weaknesses of electric vehicles.

3         Discussion and Analysis

All the studies, opinions, analysis, statistics, discussions and facts illustrate that it is quite challenging and complicated to launch a new industry or make a product part of society, specifically when it has a range of other alternatives. Electric car industry is one such examples of challenging component, which has several benefits and shortcomings. There are a range of successful automobiles in market today, from Mitsubishi i-MiEV, to work vans, like the Ford Transit Connect Electric; however, the success of electric car is still uncertain and challenging. Studies showed that this industry is facing barriers and challenges, which have been summed up in this section. In this segment, the researcher has also debated on certain findings, elaborated above and attempted to meet all research questions and project aims, to find out the barriers, public perceptions and future of electric cars.

7         References

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BBC News (2009). Is it true that electric cars are slow and perform badly? [Online] Available from: http://news.bbc.co.uk/1/hi/business/8002184.stm [Accessed 7th April, 2013]

BBC News (2011). Electric car charging points ‘shortfall’, [Online] Available from: http://www.bbc.co.uk/news/uk-13326029. [Accessed 7th April, 2013]

Bellekom, S. (2012) Electric cars and wind energy: Two problems, one solution? A study to combine wind energy and electric cars in 2020 in The Netherlands, 45(1): pp. 859-866

Bellis, Mary, (2010), Alessandro Volta (1745-1827) [Online] Available from: http://inventors,about,com/od/utstartinventors/a/Alessandro_Volta,htm [Accessed 14th April, 2013]

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Bloomberg News (2013) China Should Expand Subsidies to Add Hybrids, Geely Says, [Online] Available from: http://www.bloomberg.com/news/2013-03-06/china-should-expand-subsidies-to-add-hybrids-geely-s-li-says.html [Accessed 14th April, 2013]

Bloomberg News, (2011) Nissan Leaf May Choke in Hong Kong Smog. Bloomberg News. [Online] Available from: http://www.bloomberg.com/news/2011-11-14/nissan-leaf-may-choke-in-hong-kong-smog.html [Accessed 14th April, 2013]

Census and Statistics Department (2009) Transport, Communications and Tourism, Census and Statistics Department, [Online] Available from: http://www.censtatd.gov.hk/FileManager/EN/Content_807/transport.pdf  [Accessed 14th April, 2013]

Chapo, Richard, (2010), Electric vehicle invented. [Online] Available from: http://ezinearticles.com/?Electric-Vehicle-Invented&id=299575 [Accessed 14th April, 2013]

China Daily (2013) China’s new electric cars subsidy to expand, [Online] Available from: http://usa.chinadaily.com.cn/business/2013-02/27/content_16264979.htm [Accessed 10th April, 2013]

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