Case Memo: Plugging In" the Consumer: The Adoption of Electrically Powered Vehicles in the U.S.
The non-internal combustion engine (ICE) vehicles consists of hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV), single-fuel all electric vehicles (EV), and fuel cell vehicles (FCV). Earlier attempts at non-ICE vehicles were faced with many challenges resulting in abandonment of research and development. General Motors (GM) discontinued the EV1 electric vehicle after investing about $1 billion in the development. The Toyota RAV 4-EV, which was popular among environmentalist, was discontinued based on sales not high enough to justify production costs.
The attention that non-ICE vehicles are receiving is driven by environmental concerns, scarcity of fossil fuel, high gasoline prices and others. The environmental concerns stems from the pollution from carbon dioxide emitted from the combustion of fossil fuels. In 2009, the United States used 19.6% of the world primary energy consumption and 17.7% of world carbon dioxide emissions from energy consumption ranking first and second respectively. There is a correlation between the carbon dioxide concentration and the earth’s surface temperature. There is a general increase in global temperature with increasing atmospheric carbon dioxide. The high initial cost of the non-ICE vehicles as compared to ICE versions is also an issue. The cost differential is mainly due to the technology, with battery being a major cost driver. For example, in 2009 the cost of Toyota Camry HEV was $26,160 whiles the cost of a comparable ICE version was $20,445. The price of gasoline in the U.S. is relatively cheap, thus affecting the adoption of the non-ICE vehicles. In 2008, the average retail price of gasoline in the U.S. was $3.25 per gallon, with 14% as tax component. In the same year, the average price of gasoline in the UK, Germany, and France were $7.53, $7.72, and $7.53 with tax components of 161%,...
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