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Charging Infrastructure Needs to be Improved for Faster Electric Car Adoption

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Electric car sales continue to witness double-digit growth rates with more than one million electric cars forecast to be sold in 2017, marking an important tipping point for eco-friendly cars. Improving battery technologies and decreasing electric car prices contribute to expanding electric car sales. However, charging infrastructure remains underdeveloped and needs to be improved in order to stimulate wider electric car adoption.

Electric car sales to reach one million units in 2017

Electric car sales continue to register double-digit sales gains, with more than one million electric vehicles predicted to be sold for the first time in 2017. Although electric car share in the total motor vehicles market remains small, sales of one million units would be higher than sports or luxury cars.

Electric cars are expected to continue increasing their market share and forecasts suggest that 15% of cars could be electric by 2025. However, these estimates may be too conservative given the fact that industry giants Mercedes-Benz and Volkswagen aim to launch entire new ranges of electric cars by 2025.

Nevertheless, several hurdles such as higher car prices, limited drive range and insufficient charging infrastructure remains. These hurdles will need to be resolved in order to reach ambitious future sales targets.

Source: Euromonitor International from JATO Dynamics, company reports

Source: Euromonitor International from company reports

High price of electric cars is not the most significant hurdle anymore

Consumer surveys in the US and Europe suggest that the high price of electric vehicles is one of the key reasons hurting wider electric car adoption. However, improvements in battery technologies and expanding electric car production volumes helped to reduce the price of electric vehicles. Bloomberg New Energy also predicts that electric cars will be cheaper than gasoline-powered cars by 2025.

Price comparison of some of the most popular electric cars globally shows that prices range from USD30,000 to USD40,000, excluding government subsidies. The price of electric vehicles is quite similar to the average price of a new car in the US, Europe and China, indicating that electric cars are within the reach of an average car buyer.

Moreover, Euromonitor International survey shows that only 13% of buyers would not be willing to pay anything extra for an eco-friendly car. The vast majority of buyers would agree to pay up to 25% extra for an eco-friendly car, with a 15% price premium seen as the most reasonable limit.

Falling electric vehicle prices and consumer willingness to pay extra for green cars indicate that there are more important hurdles than price, hurting wider adoption of electric cars.

Source: Euromonitor International from company reports

Charging infrastructure is the overlooked hurdle

Insufficient charging infrastructure is indicated as another key hurdle hitting electric car sales according to consumers. For example, the largest electric car market, China, had just 100,000 public charging points across the country in 2016. There were 72,000 public charging stations in Europe and more than 42,000 public charging points in the US. Infrastructure in the latter country seems particularly scarce given the large distances that Americans travel each year. In 2016, average annual distance travelled by car in the US stood at 21,100 km.

Insufficient charging infrastructure leads to other limitations too. Firstly, lack of charging points lead to range anxiety. Electric car manufacturers are aiming to improve driving range, but this leads to increased price and weight of the car as more batteries are needed. Expanded number of chargingpoints would help to reduce range anxiety and make electric cars cheaper and more appealing.

Secondly, insufficient infrastructure results in limited usability of electric vehicles. As driving range remains limited, many of the electric cars are used as second or third family vehicles. The consumer base for electric cars therefore remains small, as there is only a small number of customers willing to spend in excess of USD30,000 for a second car with limited driving range.

Lastly, the charging time of electric cars needs to be reduced. Even with fast charging capability, it takes several hours to significantly charge an electric car. For example, a 10-hour drive would extend to 15 hours with an electric vehicle, as one-third of the time would be spent charging the car. However, if charging time would be reduced from hours to minutes, this would improve electric carusability, reduce range anxiety and help with faster adoption of electric cars.

Car manufacturers are already acknowledging the issue of insufficient charging infrastructure. For example, in January 2017, BMW, Daimler, Volkswagen and Ford signed an agreement to develop an ultra-fast charging network in Europe. Initially, companies will build only 400 ultra-fast charging points, although this could be a big step forward for wider electric car adoption.


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