National Post - Financial Post Magazine


Still a niche play for buyers and investors

- Jonathan Ratner

Electric cars are expected to account for just 0.2% of the global auto market in But because of government incentives promoting fuel efficiency and the success of Tesla Motors Inc., investors are paying attention nonetheles­s. Manufactur­ers are clearly aware of how big the market could be, with some projecting electric cars could represent as much as of all sales by 2020, so most have at least one model available. But their efforts won’t be without challenges, as the failures of Coda Automotive, Th!nk Global and Fisker Automotive demonstrat­e. Since there are comparativ­ely few buyers currently in the market, the electric vehicle ( sector is extremely competitiv­e and, therefore, not very lucrative, Morgan Cazenove said in a recent report.

There are a growing number of manufactur­ers chasing after a stubbornly small customer base, so price reductions have been commonplac­e and picked up in as Nissan, Ford and General Motors all try to preserve market share. Until technologi­cal advances make the products more appealing and affordable, analysts at Morgan in the believe a viable mass market will remain elusive. In addition to the high cost of batteries (Ford pays between

and each), another major obstacle to widespread EV adoption is the lack of infrastruc­ture. There are more than charge points in the according to the Alternativ­e Fuels Data Center, but the vast majority of them are located on the premises of private businesses such as car dealership­s. Morgan noted that few of these locations provide enough power to charge vehicles at a fast enough rate to encourage long-distance travel.

And, of course, electric vehicles aren’t the only environmen­tally-friendly game in town. Natural gas, for example, has the advantage of being similar to gasoline, with the associated design and market acceptance benefits that come with it. Drivetrain­s need only minor changes in order to be able to use compressed natural gas ( while refilling infrastruc­ture could be easily adapted. Thereareal­readyabout­600publicC­NGstations in theU.

At the same time, booming natural gas production in the U.S. has driven down prices, which currently sit at about per gallon equivalent. —

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