Electric drive vehicles have the potential to wean the United States off foreign oil and drive it toward an era of zero-emissions transportation, but that potential is being pushed into the more distant future by the ominous fact that most consumers aren't buying them.
Plug-in electric vehicles (PEVs), which include both battery electric and plug-in hybrid electric vehicles, make up less than 1 percent of the U.S. car market. Add in hybrids, which are selling at a much faster rate, and electrified vehicle sales are still only around 3 percent.
One of automakers' greatest concerns in meeting the Obama administration's ambitious new fuel economy standards is that consumers will continue to steer clear of alternative automobile technologies, which come at a steep price premium.
The regulation completed last month requires automakers to double the average light-duty fleet fuel economy to 54.5 mpg by 2025. The rule itself is technology-neutral, but the aggressive target pressures car companies to make and sell all types of electrified vehicles, a category that includes hybrids, plug-in electric vehicles and fuel cell vehicles.
Given how challenging these technologies are to produce and market, many automakers have asked, "If we build them, will buyers come?" Others have been more eager to get in the game.
"I get really frustrated with the automakers that say, 'We can't sell [electric vehicles]. No one will buy them,'" said Diarmuid O'Connell, vice president of corporate and business development at Tesla Motors. "The truth is that even in the darkest hour of the auto industry, one thing that our domestic automotive [original equipment manufacturers] and other OEMs were really good at is marketing and selling our vehicles.
"If you try hard enough, you can do it," he said in an interview.
More than 60 models to choose from
More than 40 hybrid vehicle models are available in the United States, and more than 20 PEVs will be available in the next two years, prompted by policies to reduce greenhouse gas emissions.
In addition to the federal fuel economy targets, automakers selling in the lucrative California market must also meet the zero-emissions vehicle, or ZEV, mandate, which requires PEVs and fuel cell vehicles to make up about 15 percent of the fleet by 2025. The state aims to have low- and zero-emissions vehicles make up 90 percent of its fleet by 2050.
John Krafcik, president and CEO of Hyundai Motor America, said in a recent speech that his company already boasts a fleet average of 37.6 mpg. Still, to meet the ZEV mandate, a third of Hyundai's sales will have to be fuel cells, battery electrics and plug-in hybrids by 2025, he said.
It took conventional hybrid vehicles 15 years to claim a solid wedge of the U.S. automotive market. PEVs could take an equally long, if not longer, time to scale up.
The price tag is a major hurdle. A survey conducted by consulting firm Pike Research found that consumers would pay $23,750 for a PEV comparable to a $20,000 gasoline-powered car. The 2012 Toyota Prius Plug-in Hybrid, Honda Fit EV and Ford Focus Electric are all well above $30,000 and still outside most consumers' budgets even with federal incentives.
Pike Research expects the cost of lithium-ion batteries -- the primary reason PEVs are so expensive -- will drop by 5 percent this year and 10 percent next year as more battery plants come online, bringing greater efficiency and more competition to drive down costs. But the firm expects the price tag on PEVs won't fall below $18,000 before the end of the decade.
PEVs also cause range anxiety, even though most American commuters drive well within their limit. Charging infrastructure is expanding, but slowly, and batteries can't recharge fast enough to compete with the quick fill-up at the gas station.