Will 'fun factor' or mandates drive electric car sales?

The first wave of electric cars are targeting consumers willing to pay a premium for a greener machine, but government mandates to get them on the road are also needed, say experts at MIT Energy conference.

BOSTON--If the green-tech industry had its equivalent of the iPhone , it would be the electric car, a product that has cachet with consumers. But it's still unclear what will drive sales of plug-ins: will it be consumers willing to pay more for a greener ride or government mandates for fuel efficiency?

Speakers on a panel about electric vehicles on Saturday at the MIT Energy Conference said that both consumers and government policies will drive electric and plug-in hybrid car adoption. But they also expect electric cars will be premium products desired both because they are cleaner than gasoline-only cars and for their performance.

"These cars are fun to drive," said Richard Lowenthal, the CEO of electric car charging station company Coulomb Technologies, who drives an all-electric BMW Mini-E. "Mandates don't drive me, although possibly the Mini-E wouldn't be in existence without mandates."

BMW has been testing the Mini-E with 600 consumers in the U.S. and Europe since last June, and the car appears to be popular with drivers even though there are some clear trade-offs. In particular, the driving range varies from about 75 miles in cold weather to 100 miles.

But BMW has found that 75 miles is sufficient range for most people. It also found that having charging points in a few locations--home, office, and places with long visits, such as airport parking lots--resolves challenges of charging and range. As a result, government programs to build electric car infrastructure can be targeted incentives, said Tom Baloga, vice president of engineering for BMW North America.

"The investment in infrastructure needs to be focused if there are incentives for charging stations, as opposed to the idea that you need to blanket the U.S. with (stations) at places where everybody stops," he said.

Fisker Automotive plans to release the Karma, a high-end luxury electric car, by the end of the year, which is part of the company's strategy to appeal to consumers who want to purchase greener products.

"The question is can we come up with cars that are desirable enough, and I think the answer is, yes, we can," said Henrik Fisker, CEO of Fisker Automotive. "It's not just about the cost of fuel anymore and not about politicians forcing people into tiny ugly cars."

He expects that all premium automakers in the next seven to eight years will offer plug-in hybrid versions of their vehicles.

Power train innovation
Still, mandates clearly help shape the market for cleaner cars. Fisker noted that some European cities have policies to limit tailpipe emissions in city centers, helping create a market for cars that can operate in electric, no-emissions mode. In the U.S., Fisker expects there to be regulations to limit tailpipe emissions in coming years.

Also in the U.S., the Obama administration has pushed policies to encourage domestic auto manufacturing, Fisker said. "The U.S. government put a loan program in place where we got access to a loan--we have to pay it back, so it's not a bailout. The interest of the U.S. government (does not want) the American car industry (to be) left behind in the race to get these new vehicles on the road," he said.

The net effect of the spate of clean-vehicle policies is that they are driving more technology innovation in the power train, said Ric Fulop, a co-founder of lithium ion battery company A123 Systems.

"The car industry is heavily regulated--air bags, traction control--there's an incredible amount of regulation you have to abide by," he said. "What we haven't had is power train regulation...which we are starting to see with CO2 restrictions in Europe."

Most automakers seem to be betting that cars with a green brand, such as the Prius, will continue to resonate with certain consumers as they introduce new models, such as the Chevy Volt or Nissan Leaf. But what remains to be seen is how many consumers will be willing to spend extra for these models.

"My wife doesn't like the Mini-E because she worries about running out of battery," said Coulomb's Lowenthal. "Not going to the gas station as often matters to her, not performance."

 

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