Industrial Researcher Optimistic About

Carbon reduction, environmental protection, high-flying fuel prices, the impact of urbanization, even new lifestyles for people everywhere: all matters of intense concern, and all intensely related to the development of electric vehicles (EVs).

Chen Chih-yang, deputy industry researcher at the Industrial Economics & Knowledge Center (IEK) of Taiwan's Industrial Technology Research Institute, recently conducted a comprehensive study of EV development and analyzed related driving forces and market conditions, hoping to help Taiwanese EV makers to map out their appropriate positioning and niche markets.

Long History

In fact, Chen said, EVs have a very long history: the first one was demonstrated in the United Kingdom as early as 1834 by Thomas Daveport. But that pioneering model used a battery that could not be recharged; in 1859 the Frenchman Gaston Plante invented the rechargeable lead-acid battery, bringing new life to the development of EVs in Europe.

EVs were brought to market constantly in the late 19th century. The industry reached its peak in 1910 and began declining 10 years later for several reasons, including the development of a comprehensive network of public highways in the United States, which created a strong demand for vehicles with longer cruise ranges; the development of more and more oil fields, which reduced fuel prices and operating costs for internal combustion engines; and the development of mass production of gasoline-fueled cars by Henry Ford, who priced them at just US$650 each.

These factors, Chen pointed out, caused EVs to be almost totally forgotten until the oil crises in the 1960s and 1970s, which prompted governments everywhere to look urgently for new and alternative energies. In addition, the increasingly serious greenhouse effect also directed more and more attention toward the development of EVs.

Energy and environmental protection laws and regulations imposed in industrially advanced nations beginning in the 1990s became another major driving force for EV development, and most big-country governments and international automakers began pouring increasing amounts of resources into EV projects. This led to the development of the famous GM EV-1 battery electric vehicle (BEV) and the Toyota Prius plug-in hybrid electric vehicle (PHEV).

Today all major automakers have their own EV development projects, and these “vehicles of the future” are also attracting an increasing number of newcomers onto the bandwagon. After such a long time in the darkness, a new age of EVs seems about to dawn.

Market Optimism

As an industry analyst who has focused on EVs for years, Chen is highly optimistic about the development of the EV market. "We should first pay attention to the overall market environment and then learn the reasons for my optimism," he explained. "The energy security concerns of governments, global environmental issues, and international oil prices all affect the market."

The energy security issue results from government concerns about the availability of energy resources. These should be diversified and there should be a low reliance on imports so that energy security is not too vulnerable to wars, resource drains, or accidents in production or transportation. All major governments, if they can, will try to develop more alternative energies so as to minimize the potential impact of energy crises. Governments are striving to develop such energy sources as wind power, solar power, and geothermal power, among others, mainly with the aim of reducing reliance on fossil fuels.

Environmental protection is another driving force behind EV development. Increasingly serious global warming is having a bigger and bigger impact on water resources, crops, ecological systems, and human health, and greenhouse gas emissions have become a key target for environmental action. The California state government, for example, has promulgated stringent CO2 emissions regulations in a bid to roll emissions back to the 1990 level by 2020. EVs are playing a vital role in such efforts worldwide.

Another factor stimulating the demand for EVs is fuel prices, which climbed to a record high in 2008 before declining to more affordable levels recently. Drastic changes in oil prices inevitably have an impact on the minds of consumers, some of whom are being persuaded to choose EVs or hybrid EVs (HEVs). When fuel prices soared to sky-high levels, sales of HEVs in the U.S. boomed so robustly that supply could not meet the demand.

Personal Transportation

Another factor in the future of EVs is consumers' attitudes, which always involve price and performance. Everybody knows that EVs cannot yet compete with internal-combustion vehicles in terms of performance, price, and the convenience of replenishing energy. This means, Chen said, that the popularity of EVs depends heavily on the following factors:

First is government policy. Governments can subsidize EV manufacturers or buyers, or heighten the purchase and operating costs of internal combustion vehicles so as to make EVs more competitive. In the U.S., for example, federal and state governments now provide incentives for EV use, including tax offsets, priority EV lanes, and free parking. Also in the U.S., automakers are encouraged to develop EVs by CAF? (corporate average fuel economy) regulations.

Second is improved overall EV performance. In almost all aspects, including cruising range, maximum speed, battery life, and safety, EVs still fall behind their conventional counterparts. Battery recharging time is another decisive factor in purchasing willingness. Future efforts must be directed toward improving the performance of EVs so that they can fully meet consumer expectations.

Another key factor is EV infrastructure: battery charging or swapping stations, and other necessary facilities. This is crucial to the popularity of EVs, and more and more governments and automakers are linking up with power companies to build and test charging stations. Japanese carmaker Mitsubishi, for example, began cooperating with several power companies in 2006 and plans to set up 200 battery charging stations throughout Japan. This project is expected not only to validate Mitsubishi's iMiEV BEV model, but also to encourage the development of policies and strategies for promoting such vehicles in other markets.

The renaissance of EVs, Chen said, is a necessary trend and all major automakers are devoting resources to related development work. Taiwanese companies that want a share of this new market, he stressed, will have to quickly identify their niches in the industry (the development of key systems, the production of motors or lightweight parts, etc.); otherwise, they will face great difficulties in competing with the well-established big players.