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Sales of electric cars might lack juice

October 27, 2010 |  8:22 am

All the hype about the new generation of electric cars may just be reflecting the passions of technology geeks and environmentalists.

Auto industry market research company J.D. Power and Associates said Wednesday that combined global sales of hybrid electric vehicles and battery electric vehicles were expected to reach just 5.2 million vehicles in 2020, or only 7.3% of the 70.9 million autos expected to be sold that year. Nissan

The industry is expected to sell about 1 million electric and hybrid vehicles this year, a little more than 2% of global demand, the company said in its “Drive Green 2020” report.

The problem for this new generation of cars, according to the market research firm, is that gas prices remain too low to generate demand, consumers remain concerned about the technology, drivers worry about the range of the cars, and at the end of the day, they are just too darn expensive compared with conventional combustion-engine vehicles.

“Many consumers say they are concerned about the environment, but when they find out how much a green vehicle is going to cost, their altruistic inclination declines considerably,” said John Humphrey, senior vice president of automotive operations at J.D. Power. “For example, among consumers in the U.S. who initially say they are interested in buying a hybrid vehicle, the number declines by some 50% when they learn of the extra $5,000, on average, it would cost to acquire the vehicle.”

Humphrey said drivers are tripped up by how long one would have to own such a vehicle to realize cost savings on fuel, compared with a conventional car.  They also worry about the cost of replacing depleted battery packs.

Still there’s a passionate cadre of hybrid and electric car fans, Humphrey said. They are generally older, more highly educated -- possessing a postgraduate degree -- high-income individuals who have a deep interest in technology or who like to be among the early adopters of any new technology product. But that doesn’t describe the general population.

The J.D. Power report comes just months before the first mass-market electric and plug-in hybrid vehicles hit auto showrooms.  Nissan plans to start selling its battery electric Leaf compact sedan by year's end. General Motors will launch its Volt, which uses an electric motor to drive the car and a gas engine that acts as a range-extending power generator when the batteries run out of power.

Power said for sales of cars like the Leaf and Volt to take off, petroleum prices will have to rise significantly. Moreover, the industry needs technological breakthroughs that lower the cost of the cars and support consumer confidence in the batteries, power train and range of the vehicles. And finally, the electric-vehicle industry may need government policies to encourage the purchase of such cars.

-- Jerry Hirsch 

Photo: Nissan Leaf. Credit: Los Angeles Auto Show