The Big-City Market for Electric Cars Is Waiting

February 4th, 2011

World’s largest electric car-sharing program planned for Paris

A recent study has confirmed what common sense won’t tell you: Early big-city adopters for electric cars are ready and willing to consider electric vehicles (plug-in hybrids and BEVs – battery electric vehicles), even with their present high cost and the lack of widespread charging stations.

Why? People who live in the world’s biggest cities have the worst air, densest traffic and the shortest distances to drive. Parking is a killer problem. Consequently, they are more “green-minded,” and in New York, for example, some 20 percent would consider buying an electric car.

The study—by McKinsey, the global business consulting firm—is entitled “The fast lane to the adoption of electric cars.” You can read it here, but you’ll need to register (it’s free) to get the entire piece.

Drivers in New York, Paris and Shanghai were surveyed, and 30 percent in Shanghai would consider an electric. They prefer plug-in hybrids, as they want longer-distance, family-size capability. New Yorkers look for a mix, including small city cars. Surprisingly, most early adopters said they could deal, for now, with reduced numbers of charging facilities. Nonfinancial incentives—like special lanes for electric cars and convenient charging stations—might be just as important as the $7,500 tax rebate, now being scammed by some.

Here are some of the study’s implications. First, car companies are becoming aware (some of them) that the automobile’s future will be electric, sooner or later. BMW has bet considerable resources on designing a car for the city, as we reported. Yesterday, the company launched a film about the emergence of the megacity and its implications for car design: “Currently 50 percent of the world lives in cities, and by 2030 nearly 5 billion people will live in sprawling ‘Megacities’ (cities with more than 10 million people).” Watch the film, featuring some notable commentators, here.

Portland's electric car plan

City of Portland's electric car plan

The big-city market for small, parkable, reasonably priced electrics is out there, or at least there in sufficient numbers to serve as a test bed for some fleet rentals (as Smart is doing with Hertz) and for relatively fixed-distance repeatable driving, like delivery vans and maybe CNG-powered taxis do.

There are plenty of hybrids and BEVs coming to market. Buick, of all brands, just announced its second hybrid, for the Regal. But the auto industry has yet to make a real push into segmentation of the green market—making products not to satisfy all customer needs, but those in particular market situations like big cities—and marketing to specific segments. Another McKinsey study spoke to that issue over a year ago.

Understanding and building electric cars for different driving requirements, even with the present battery situation, is something the industry can do. Making these cars appeal to a specific class of buyers is something (called marketing) in which they have much less talent.

Which company do you think will be first to tap into that giant big-city electric car marketplace?

—jgoods

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  1. jgoods
    February 5th, 2011 at 11:05 | #1

    @ panayoti
    So maybe we should have a trade war with China? Or adopt the Chinese system? Or ignore our oil addiction? Wait passively until the perpetual motion machine(?) is discovered?

    So what should we do, Señor P.? I’m sure you have the answer.

  2. panayoti
    February 5th, 2011 at 00:15 | #2

    I would bet its a Chinese company. This reminds me all too much of the “green” movement who demand that we wean ourselves off coal, gas, and oil because of our “addiction” to foreign suppliers. They want those energy saving light bulbs, windmills, solar panels etc to proliferate and “save the planet”. As a conservationist, I admire their idealism, but condemn their logic and number crunching. Who are the largest suppliers of these solar panels and windmills? Yep, China!! So we subsidize the companies that manufacture these items and those companies take their operations overseas to produce those items, and then they pass the cost of manufacturing to Americans and sell it back to us at a nice profit. So we waste the subsidy but yet raise the cost to American consumers.

    This administration and its cohorts in the EPA and green movement have vowed to kill our oil addiction. So through regulation and now the Courts, oil drilling in this country has virtually been emasculated. Yet the price of oil does nothing but rise. We can’t drill in the oil sands out west, off our coasts and in the gulf. How do manufacturers lubricate their machines? With solar panels and windmills?? How about our auto engines?? With energy saving light bulbs?? The logic here is just plain stupid and the greenies don’t have a clue about numbers.

    Who does?? The Chinese of course! They devalue their currency to undercut other currencies and to gain a mercantilist advantage in their trade policies with other countries. They buy the majority of the world’s commodities, including oil, copper, steel, and food. They use near-slave labor and can undercut prices of virtually everything including the key elements necessary for battery production. So it would be no surprise that they can manufacture cheaper batteries and charging stations than anyone else. Yet our government continues to subsidize ethanol, solar production, battery research and ignores pleas to allow our most cost effective sources of energy to act as a bridge until some modern perpetual motion machine is discovered. I seriously am starting to believe that the greenies are leading us to Jonestown.

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