Price is a sticking pointResults of the survey indicate that in almost every jurisdiction the majority of survey respondents advised that they would not be willing to pay a premium for electric vehicles over similar internal combustion engines. The United Kingdom and Belgium consumers appear to demonstrate the most price sensitivity, both with 71 percent expecting to pay the same price or less for an electric vehicle. Countries including China, India, Japan, Korea, Germany, France, Spain, Italy, Argentina and Turkey all demonstrate considerable market segmentation in double-digit percentages, which would at least be willing to pay a modest $2,000 premium for an electric vehicle. Price elasticity seemed to be of least importance with consumers from China, Korea, and India more amenable to potentially paying a price premium, as the majority of their respondents expected to pay some level of a premium. This is an important note as countries that have an industry or a stronger familiarity with the culture of electric vehicles and lithium battery technology appear to be less price sensitive. Of significance to the lithium battery manufacturers and investors, report highlights “With the expected increase in the popularity of EVs, battery makers are expected to expand their production from a 2010 level of 172,400 units to an estimated 1.51 million units in 2015, almost nine times greater than current levels. As production ramps up, savings realized through economies of scale should help to reduce the cost of batteries. When combined with technological improvements and increased reuse of existing batteries, the price is expected to decline.” With the current retail price for electric vehicles primarily due to the costs of the battery, Secretary Chu addressed the same challenge last month at a meeting of the APEC nations, “if the energy capacity of the [lithium] battery increases by a factor of three then you can go 300 miles on a single charge and in today's electricity and gasoline prices in the United States at about one fifth the cost. If [the price] comes down by a factor of three then you can dispense with the internal combustion engine and you will have a twenty thousand dollar car with a competitive range but in operating expenses that are far less.” Reducing taxes and other policy considerations The complexity of the difficulties for policymakers in attempting to reduce the consumption of oil in the context of widespread debt reduction efforts, coupled with demands for equitable policies and rising social costs is tremendous. Government energy policies that will impact the generation, regulation and distribution of electricity and infrastructure will play a key role in the adoption rate of electric vehicles. Incentives for the adoption of electric vehicles or potential penalties for the continued use of internal combustion engines could have a tremendous impact. Global science and technology incentives, research programs, and innovation developments should also have a demonstrative effect for lithium battery technology advances. According to a recent release from Bloomberg New Energy Finance, Brazil's government is reviewing a potential plan to terminate its existing IPI tax for electric and hybrid cars to promote the advancement of more environmentally friendly vehicles. According to the report the current tax for these cars is approximately 25 percent.
Securities Disclosure: I, Dave Brown, hold no direct investment interest in any company mentioned in this article.Electric Car Demand Strong in Brazil, India and China from Lithium Investing News