Frost: Financial Plans Boost Euro Passenger Electric Vehicle Market
August 4, 2008 // Published as a news service by IHS
Depleting reserves of fossil fuels and rising levels of greenhouse emissions are expected to break electric vehicles (EVs) out of their niche end-user segments, according to Frost & Sullivan.
The mainstream adoption of EV will open up opportunities for utilities, suppliers and finance businesses, as efforts are being made to create a one-stop shop for vehicles and energy.
Analysts said original equipment manufacturers (OEMs) have little choice but to be part of the EV market if they are to address the escalating energy situation.
They will be encouraged by novel financial models and the advent of lithium ion battery technology, both of which are expected to revolutionize the automotive industry.
There could be a sudden movement toward the battery leasing business, analysts said, which will be initiated by the EVs and sustained by the OEMs. It remains to be seen if the consumers adapt well to this innovative financial model.
Apart from the possible opportunities created by battery leasing, the market is also getting a leg up from the federal and local governments, which are helping OEMs match the prices of EVs through legislation, benefits and rebates, analysts said.
"The rate at which the consumers accept the leasing model and the degree of benefit the end-users derive from the business model will play a decisive role," said Frost & Sullivan research analyst Anjan Hemanth Kumar.
"In parallel technological enhancements with respect to the battery packs is equally important. With the increase in driving range, the customer base increases beyond the city limits. A battery pack of up to 100 mile range can tap suburban population and neighborhood cities; a pack with 150 plus miles can tap rural population there by potentially touching more than three million likely EV buyers."
There are already several punitive regulations in place for gas-guzzlers in London, where offenders can be charged between £8.00 and £20.00. Analysts said "congestion charging" is expected to be implemented in Milan, Oslo, Manchester and Madrid, where the charges are likely to be between €1.00 and €25.00. On the strength of these favorable directives, the European EV market is estimated to roll out more than 250,000 vehicles by 2015.
Until 2012, EV companies are likely to target hot spots such as London, Stockholm, Oslo and Rome. The U.K., Scandinavia, France, Italy and Spain are likely to constitute 93% of sales in Europe. Analysts said once EV manufacturers enhance the safety features and range of their products, they will widen their market's geographical boundaries.
OEMs and related companies are expected to adopt various financial models to increase sales, but leasing is expected to be the most popular and could account for 75% of sales by 2015. During the same period, analysts said bigger OEMs are likely to eat into 76% of the market currently occupied by small OEMs.
"OEMs will compete in all customer segments - from economy to premium - and the prices are expected to range from €11,000 to €348,000," said Kumar. "EVs could potentially offer monthly savings of €150-€700 to drivers, encouraging buyers to make ROI [return on investment]-based purchase decision."
Source: Frost & Sullivan.