Green Cars of the Future Will Drink Gasoline

The popular notion is that “green cars” are electric cars. While that may be accurate, a new report from the Boston Consulting Group claims clean and efficient internal combustion-powered vehicles will dominate the green scene for the coming decade.

Internal combustion engines — gas and diesel — are getting cleaner and more efficient at a lower cost than was expected, while Electric Vehicles remain hamstrung by high costs and a limited driving range.

“Gasoline and diesel-powered vehicles are improving faster than expected and will continue to dominate the global landscape,” concluded Xavier Mosquet, BCG senior partner.

“Electric cars will undoubtedly play an increasingly large role in many countries’ plans in the decades ahead as energy independence and environmental concerns intensify,” he continued. “But they will gain only modest ground to 2020.”

Fuel economy can improve by about 40 percent compared to today’s cars, at a cost of between $2,000 and $2,400, according to the report, entitled “Powering Autos to 2020: the Era of the Electric Car?” The improvement will come as the result of advances in combustion technology, transmissions, weight reduction, aerodynamics and power management.

Battery costs will plummet by 64 percent over the same period, but even that reduction will leave a minimal 20 kilowatt/hour pack at $9,600 in 2020, and a bigger battery will be needed for a truly customer-friendly driving range. As a result, just 2 percent of American drivers will choose an electric vehicle in 2020, the report predicts.

Chinese and European buyers are expected to be more receptive to EVs. Forecast market penetration of EVs in China at the same time is 7 percent and 8 percent of European car sales will be electric. A larger market in China means that even with its slightly lower percentage of EVs, it will be the largest market in total sales.

Even at their higher cost, EVs will find a receptive market among environmentalists who will take on the additional expense. BCG estimates that 13 percent of Chinese drivers fall in that category, compared to 9 percent of Europeans and 6 percent of Americans.
Increasing low-cost domestic supplies of natural gas make it a rising star, too. “[Compressed natural gas] could expand beyond its current strongholds with transit buses and airport shuttles and see growing adoption by delivery vehicles, government fleets and taxies,” the report observed.

Of course, even the most well-researched predictions of future events can be rendered obsolete by dramatic unforeseen changes, such as a substantial change in the cost of oil or a new dictate by Chinese policymakers. For example, a spike in oil prices to $250 a barrel would spark increased government and consumer support for EVs.

But the effectiveness of government policies alone is suspect, points out report co-author Marco Gerrits. The Chinese government plans for 500,000 EVs on the road by 2015 and 5 million of them by 2020. As is typically the case in planned economies, reality isn’t following the script. Despite Chinese central government subsidies of as much as $9,000, only 2,000 consumers bought electric cars in 2010.

“To secure a higher adoption of EVs, China’s government may resort to measures beyond the current incentives — for example, driving restrictions on non-electric cars,” suggested Gerrits. “This makes the Chinese market a major wildcard.”

The popularity of electric cars in the Chinese market is relevant to American drivers because the production volumes could help make EVs more cost-effective in the U.S. It is also possible that large volumes of the raw materials and components needed to supply the Chinese market with electric cars could have the opposite effect, making EVs more expensive than they would otherwise be because of supply shortages. — Dan Carney, Motor Matters

Manufacturer photo: As internal-combustion engine development leads to cleaner and more efficient engines, the green car of the future will include gasoline vehicles. The 2011 midsize sedan Chevrolet Cruze Eco achieves 42 mpg highway and starts at $19,175. The Chevy Volt, priced at $40,820 (before tax credit) is the world’s first mass-produced electric vehicle with extended range gasoline engine. The Volt delivers between 25 and 50 miles of electric driving with a battery and up to 344 miles of extended range with an onboard 1.4L engine.

Copyright, AutoWriters Associates Inc., 2011

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