Electric Vehicles: It Might Sound Like a Good Idea; But There's At Least a 15-Year Payback Period; What Were They Thinking?
As automakers aggressively pursue electric vehicles, a study released today shows the cost targets behind the plans are unlikely to be achieved, making it hard for consumers to recoup the extra cost of buying electric. The study by Boston Consulting Group, released at an Automotive Press Association event in Detroit today, concludes the cost of electric vehicles is unlikely to drop to the $250 per kilowatt/hour threshold that is cited by many carmakers for these vehicles to be competitive in price.MP: Aren't they supposed to do a cost-benefit analysis ahead of time?
That benchmark is not possible without a major breakthrough in battery technology, and no such breakthrough is on the horizon, said Xavier Mosquet, the Detroit-based leader of BCG's automotive group. As a result, the payback time for an all-electric vehicle in the U.S. is about 15 years, and for an extended-range vehicle such as the Chevrolet Volt it would be 19 years, the study finds.
For consumers to break even on their electric car purchase, one of the following things must happen:
• There is a chemistry breakthrough that keeps material costs the same while creating a battery that can store twice as much energy, reducing the cost from $400 per kW/hr to $215.
• A new $7,700 government incentive is offered.
• Owners triple the number of miles they drive annually so the extra cost pays for itself.
• Oil prices increase from $100 a barrel to $375 a barrel.
• A 210 percent incremental gasoline tax is implemented.
While any of them are possible, or a combination of each could add up to enough, Mosquet said he sees it as unlikely. As a result, he expects electric vehicles will continue to play a minor role in most automakers' portfolios.
Thanks to R_Adams.