Can electric cars break out of niche status in US, China market?

"Unless the government adds detailed action plans and centralized direction to its plan, China may well squander the vast opportunity electric vehicles are now offering," Yang Jian, the managing editor of Automotive News China, wrote in a December 2009 editorial.

One reason for automakers' trepidation is technological. Most electric-car makers are working under the assumption that once the battery runs down, cars will recharge at home rather than on the road – limiting the cars to short distances.

"If I'm going to consider an electric vehicle to buy as a second vehicle for commuting, then I'm going to have to see clear advantages and a quick payback period," says Trevor Houser, a partner at Rhodium Group, an economic advisory firm based in New York. "That's going to be tough."

To address the "range anxiety" of prospective electric-car consumers in the US, a number of states, namely California, Oregon, and Hawaii, as well as private companies, are working to develop and install public charging stations on a large scale. Nissan has teamed up with AeroVironment and eTec, firms that specialize in installing public charging stations. The firm eTec got $100 million in funding from the US Department of Energy through the stimulus bill.

Public charging infrastructure is still in a nascent stage, however, partly due to concerns that electric cars would lead to a spike in electricity consumption.

US, China partner on electric cars

In November 2009, President Obama and Chinese President Hu Jintao announced a new joint initiative on electric vehicles, agreeing to work together on research, technology, and standards.

"The focus is on market creation – how to increase demand in China for electric vehicles," Mr. Houser says. He recently served as an adviser in the US State Department and worked on the joint initiative. "Not only are there environmental and energy security reasons for this, but also the more demand there is, the less Chinese companies will be inclined to manufacture purely for export."

Forecasts suggest that demand for electric cars will rise gradually, but not expand into the mainstream anytime soon. Ernst & Young's survey of 1,000 licensed drivers in the US found that only 10 percent of drivers would even consider purchasing a plug-in hybrid or electric vehicle. IHS Global Insight in Lexington, Mass., predicts that pure-electric vehicles will account for more than 1 percent of the market by 2014; hybrids and plug-in hybrids, 24 percent.

Electric-car advocates argue that consumer demand will surprise carmakers.

"The suggestion that the electric vehicle is doomed to be a niche vehicle is wrong," says Plug In America's Mr. Geller. "What needs to change is merely perception, and that perception will change faster than the ability to deliver the cars."

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