clear that policies aimed at promoting increased use of AFVs will have to address adequate provision of infrastructure.

4.11 IMPLICATIONS

To painlessly achieve any necessary transition to alternative light-duty cars and trucks, the new-generation vehicles intended to replace petroleum-burning LDVs will have to provide utility, value, creature comforts, style, performance, and levels of convenience in fueling and repair and maintenance service that closely replicate those of the liquid-fueled vehicles being phased out. They are going to have to fulfill consumers’ needs and desires, or consumers will have to be presented with disincentives to continued purchase of conventional ICEVs or offered various incentives to make up for the things they perceive they would lose in a switch to an alternative vehicle or fuel. Most people do not want to pay more for a green vehicle, and of those who are willing, most would expect fuel and other savings to recoup the additional purchase expense over their period of ownership. Boston Consulting Group recently found in a survey of 6,593 consumers in the United States, Europe, and China that 40 percent of U.S. and European car buyers say they would be willing to pay up to $4,000 more for an AFV but would expect full “payback” over the first 3 years of ownership (Boston Consulting Group, 2011). Only 6 percent of U.S. respondents said they would be willing to pay a premium—the average was $4,600—without expecting to earn back the money during their full ownership period (Boston Consulting Group, 2011).

So although consumers overwhelmingly say that they want fuel efficiency and energy security, they have not demonstrated a willingness to pay much extra for it or to accept inconvenience in order to attain it. Vehicle purchase price, the long-term cost of ownership, the time it takes to refuel, the availability and cost of fuels, and the perceived need to downsize and to surrender performance attributes such as speedy acceleration and cargo and towing capacity all are cited in various studies as reasons people are not interested in AFVs. Some of this is due to lack of information, and studies such as those conducted by Axsen and Kurani (2011) and Zhang et al. (2011) have shown that word of mouth and demonstrated use by neighbors, friends, and relatives all have a positive impact on consumers’ willingness to consider AFVs. That, of course, requires getting the vehicles into people’s garages and onto the roads.

Some of these barriers, of course, are likely to change over time. As additional advanced-technology vehicles are placed into service, public familiarity with and knowledge of their advantages, and will improve, perhaps mitigating perceived disadvantages. AFVs also will develop a track record for resale value—a key component in determining overall cost of ownership and one that is missing now because few of the vehicles have been in the market long enough to develop a resale value history. Early estimates published by the manufacturers and a few ratings companies and analysts show that BEVs and PHEVs are thought to have lower lease residual values, an indicator of marketplace resale value. Pike Research analyst David Hurst estimated in 2011 that both the Nissan Leaf and the Chevrolet Volt would have residuals of around of 42 percent at 3 years—lower than either the popular Toyota Prius, which has a 60 percent residual value at 3 years, or corresponding conventional ICEVs such as the Nissan Versa (a Leaf counterpart) or the Chevrolet Cruze (a Chevrolet Volt counterpart), both at 52 percent (Hurst, 2011).

The relatively rapid rate of performance improvement and cost reduction that is characteristic of some new technologies can both help and harm rapid adoption of AFVs, fostering a larger market by lessening both cost and convenience barriers. Rising production volumes for biofuels could bring down their costs and make them more widely available, similarly addressing two barriers in ways that can accelerate expanding demand. Improved batteries and battery-charging rates could help reduce or even eliminate BEV range anxiety, fostering a larger market by lessening both cost and convenience barriers. Rising production volumes for biofuels could bring down their costs and make them more widely available, similarly addressing two barriers in ways that can accelerate expanding demand. Improvements in materials and engineering could make it possible to produce AFVs that are competitive with gasoline vehicles with respect to cargo capacity, towing ability, and other performance characteristics, and without the cost premiums that would inhibit widespread adoption. Conversely, rapid rates of technology advancements could inhibit diffusion beyond an early-adopter segment. Such progress would hasten the obsolescence of earlier generations of an advanced AFV technology and also suppress residual values. For example, if ongoing improvements in battery technology, such as steadily decreasing costs and rising performance, reduce the purchase price of a newer BEV relative to older BEVs still operating within their battery life expectancies (see Chapter 2), then early AFV models could depreciate more rapidly than is typical in the car market. This could lead to expectation among consumers of additional advances in the future, and a corresponding uncertainty about how well new generations of BEVs would hold their value if additional advances do indeed occur. This uncertainty could inhibit purchases by consumers concerned about resale value or could result in unfavorable lease terms.

However, because of the time it takes for automakers to bring new technologies into their fleets and for the national LDV fleet to turn over, these barrier modifications would have to be in place by or before 2030 to have a great impact on the fleet in 2050.

Absent a national emergency that requires consumers to abandon the gasoline or diesel ICEV, achieving the volumes needed to realize sufficient consumer acceptance in the early years of a planned transition to AFVs is unlikely without significant government policy intervention.



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