Electric cars – the game is on
Whether you are in manufacturing, banking, investment or just a corporate spread-better, electric automotive technology continues to raise its profile in the news. In the USA, President Obama has just announced a $2.4 billion stimulus plan into electric vehicle technology and even the UK’s own modest £230 million of subsidies for electric car use, to come into effect in 2011, has been extended to the fleet market in recognition of wider implications of this technology.
The question is ‘when is the time right to jump in and commit investment to this technology?’
Reserved opinion would tell you to keep your money elsewhere - for the next two to three decades at least; after all, the wider general public is hardly queuing around the block for an electric car, the price of an electric car is still much higher than that of a gas-guzzler, battery prices are still uneconomic and we don’t have an infrastructure for recharging.
The counter argument would point out that demand for electric cars has been kept low by quashing any development news of note, the price of an electric car would be the same as any other if levels of production were sufficiently high (and their lifespan is far greater since they require lighter bodies for lighter power trains), battery technology has advanced greatly since General Motors killed the electric car in the USA several decades ago and the charging infrastructure is very much dependent upon the type of electric car you decide to go with – don’t forget that the original Electric Vehicle (EV) was rechargeable from your home/garage - and much depends on what type of single power source or hybrid vehicle you go with.
The smart money would suggest that you should be looking to jump in over the next few years (not decades); after all, if HMG will be subsidising EVs to the tune of £5,000 per car from 2011 and Obama will have to have something to show for $2.4 billion of subsidy before the end of his current, and first, term, the technology will have to gain mainstream traction fairly soon. Add to this the fact that the USA cannot afford to become a hostage to oil fortunes - it simply cannot satisfy its domestic oil demand with ‘home-grown’ oil - and the fact that when oil is at $60 a barrel, electric cars are actually cheaper to run for the consumer than a petrol powered one (source: McKinsey Global Institute), and you have a compelling argument for getting into the EV market, in whatever shape, size or form, over the next five years or so.
As ever, however, the argument will be won or lost not on the political or economic front. It will be decided by the power of the automotive industry that has a lot invested in maintaining to continuance of 19th century internal combustion engine technology; electric vehicles don’t require the same level of servicing, they don’t require exhaust replacements or, for that matter, most of the parts which keep the aftersales department (and, by profit centre, the whole dealership and OEM) in business.
It seems, therefore, that this year is a make or break point; governments all over the world are being press-ganged into shoring up bankrupt global automotive manufacturers. Political will to truly make EV technology and production a condition of subsidy would guarantee a change in our transportation history.
It appears that the Bonn Climate meeting this week is not living up to expectations; it is to be hoped that the penny drops in time for the Copenhagen Summit at the end of the year.
… and it would be wise to have your money men keep an eye on this topic; it could be make or break for your organisation also.
