The number of electric cars around the world is growing and China remains one of the industry’s most dynamic markets. In 2017, it was the Chinese who bought over half of all the electric cars sold in the world (around 1.1 mln cars). To put this in perspective, European sales went just over 400,000 while the United States did not even reach that figure. One of the obvious advantages of electric cars is they are environmentally friendly. Air pollution is an acute problem in China right now. However, it appears that the new type of vehicle is still far from its victory on the road. Today only one in every 250 vehicles has an electric engine. CB Insights analysts identified three main barriers that the new industry needs to break in order for electric cars to become a mass product.
Price and price again
One of the main obstacles is the prices of electric cars compared to conventional vehicles as well as their maintenance costs, CB Insights researchers believe. Even back in 2017, two out of the three best-selling models cost over $80,000 which is much higher than what their potential owners can afford. According to a UBS research that interviewed around 10,000 from the six largest markets in the world, families that are considering buying an electric car have an annual income that starts at $300,000 (even in the United States it is only 3% of the population). Moreover, 60% of buyers are not ready to pay more for an electric car, a 2018 McKinsey survey found. Thirty percent even claimed that electric cars must be cheaper than ordinary cars.
At the same time, electric cars are becoming more competitive price-wise, mainly due to their upgrading batteries. The cost of batteries went down by more than 80% since 2010, or from $1,000 per kWh of capacity to $209. If back in 2015, chargers accounted for over 57% of the cost of an averagely priced sedan in the United States and now account for around 33%. CB Insights notes that by 2025 the cost of a battery will only make 20% of the price.
Even the total cost of owning an electric car is currently decreasing. The Michigan University found that in 2018 electric cars cost out half as much as vehicles with regular engines. This may become a very significant factor in buying an electric car, CB Insights believes. Consumer Reports poll shows that 66% of potential buyers said that the long-term cost-efficiency will impact their purchase decision.
It will only get you so far
Price tag is not the only reason why customers decide against owning an electric vehicle. For now, there are serious doubts in the market as to whether it is at all practical to own such a vehicle and whether electric cars are ready to meet drivers’ everyday demands.
The concerns are mainly about the battery operating time and charging speed. A regular gas-fueled sedan can run for 400 to 600 miles until it requires fueling – which takes around 10 minutes. In 2018 American electric cars could only run for 125 miles without being recharged and then required 30 minutes to 20 hours of charging time depending on the charger and the battery type.
The restrictions are gradually being eliminated. Between 2011 and 2017, the average distance electric cars can cover on one charge increased by 56%. As of 2019, the market already offered eight models that can run over 200 miles. Moreover, CleanTechnica forecast says that by 2028 the average distance for electric cars in the United States will reach 400 miles. It is expected that the charging time will reduce as well and by 2025 it will only take half an hour to charge up to 80%.
Lack of infrastructure
The biggest obstacle for a more rapid development of electric transportation is a critical shortage of infrastructure. More than 50% of the respondents interviewed by the American Drivers’ Association said that they are not ready to buy an electric car exactly because there are not enough charging facilities.
This barrier appears to be the most difficult to surmount because manufacturers are simply not ready to invest in the development of charging stations until there is a sufficient number of electric cars in use. This is merely too expensive. Goldman Sachs estimates that building the required infrastructure will cost around $6 trillion. As a result, for now there are only 632,000 public charging stations for 5 mln electric cars and roughly half of them are located in China. The International Energy Agency predicts that by 2030 passenger vehicles around the world will require 30 mln public charging stations.
By Olga Blinova