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Peak car pumps up EV market

Posted: 30 Aug 2011 ?? ?Print Version ?Bookmark and Share

Keywords:EV market? peak car? car use?

Peak car, the idea that car use is in the decline, has been observed as early as 2004 in countries such as the U.S., the U.K., Germany, France, Australia and Sweden. In many countries, both peak car ownership and peak per-person car travel has also been reached. Although the market is seen to further regress, emerging economies are somehow compensating for this, but only temporarily. It is foreseen that the decline in car use will be noticed in these economies as well.

Factors that contribute to peak car include demography, change in lifestyle, improvement in public transportation, gridlock, fuel and car maintenance costs, increase in car life and car fuel inefficiency.

Japan, which has the world's oldest population, was the first to see peak car in the 1990s. Populations are greying and pensioners do not drive to work. In countries such as the U.S., healthcare costs in old age can be crippling, leaving minimal disposable income. One of the electric vehicle (EV) positives coming from this is continued recession-proof sales of mobility vehicles for the disabled. The growing number of elderly people is more likely to have a pure electric mobility scooter or power chair rather than a car. These vehicles are enjoying their second decade of strong increase in sales.

IDTechEx has forecasted the growth of this market from 1.3 million mobility vehicles rising to 3.1 million in 2022. It is a smooth projection of past growth driven by both increasing age and obesity.?

For younger adults, the Light Electric Vehicle (LEV) partly replaces cars nowadays and work-from-home arrangements discourage car ownership. You can beat the traffic jams and save money with e-bikes (with throttle) and pedal assisted bikes. IDTechEx has forecasted a $5.9 billion global market for these as early as 2015 at ex-factory prices. A large market for hybrid electric motorcycles is also on the way.

The largest fall in car use in the U.S. is from people under 35 years old, while 17 year olds with driving licenses have dropped from 75 percent to 50 percent or so since 1998. U.S. citizens in their 20s no longer drive more than average?they drive less. More of them seek inner city apartments, shop online, telecommute and live in walkable neighborhoods near public transport. They also increasingly use social media instead of meeting people. The decline is greatest outside city centers, which means gridlock is not the only one to be blamed. The University of West England has been tracking a similar trend in the U.K. where the young are also creating peak car. Bike use is also rising.

Car addiction is being broken as public transport improves, offering quieter, smoother electric buses and taxis, analyzed in an IDTechEx report. Additionally, we are now in the age of the 100km traffic jam, increasingly inadequate parking and service stations, congestion charging and vehicles banned from city centers. To encourage use of the new subway, Beijing has capped car license issuance at 20,000 per month. In countries such as China, India and the Philippines, it is physically impossible to have a large percentage of the population driving cars.

Fuel costs, rising car taxes and insurance premiums sit awkwardly with what is often no growth in disposable income. Public transport and more affordable personal transport such as e-bikes take over. One in every two bikes sold in the Netherlands are now electric, according to IDTechEx.

Car life has trebled in 20 years. This, and the recession, contributed to U.S. car sales plummeting from 11 million in 1985 to 5.5 million in 2009. People can and do keep cars much longer if times are hard and the subsequent increase in U.S. car sales was a measure of catch up, not a return to long term growth. Because batteries for electric cars, particularly pure electric cars, are extremely expensive, they may go against the trend with people scrapping the car rather than buy a new battery after 5?10 years. If this happens, expect a backlash from environmentalists, and that includes governments these days, eager to find an excuse to abandon subsidies in order to balance their books.?

Whether conventional or electric, cars use about five times more fuel per passenger kilometer than electric bikes or, at the other extreme, large buses. This gap is widening as some bikes carry two people and buses fill up. Indeed, in the U.S., the average car journey carries only 1.7 people nowadays, 0.5 people down in 1970.?

Setbacks not anticipated such as the global recession, the Japanese tsunami and the possibility of another recession have the effect of accelerating changes. Thus, IDTechEx has to recognize that the electric car industry has effectively lost a year, compounded by late launches of the most important new hybrid and pure electric cars and inability to meet demand. However, those electric bikes, taxis, vehicles for the disabled and buses are all moving on apace, no setbacks there. In addition, hybrid and pure electric off-road vehicles are increasingly popular for military and leisure purposes.

With more shopping online, an electric delivery truck replaces the car. Indeed, almost silent electric aircraft are now available from several manufacturers and they will sometimes be a good alternative to the car as they can land almost anywhere, day and night. Electric boats are increasingly popular on the increasing number of inland waterways that ban the internal combustion engine. Some carry 150 people and some are small privately owned vehicles.

IDTechEx therefore no longer forecasts that electric cars will be more than half the EV market over the next decade. It now appears that rather less cars but more alternative vehicles will be needed. Cars will be less than half the market value over the next decade. There will be no more than 785,000 electric cars sold in the world this year, including hybrids, but over 35 million electric vehicles of all types are being sold this year as the mix changes rapidly.

Among growing markets that are tracked by IDTechEx, hybrid versions are leading to a large new market for specially designed range extenders varying from single cylinder piston engines to micro-turbines, small fuel cells and other options. It also expects the market to grow to over $60 billion in the decade, but mostly for cars and similar sized vehicles because the electric car business is going to be huge as well.

- Peter Harrop

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