This term paper deals with three main points of industry analysis (market size, market growth, and market trends) as applied to electric cars industry. The author argues that the industry may be characterized as highly promising.
Keywords: industry analysis, electric cars, automotive industry
Industry Analysis of Electric Cars Market
The increasing popularity of electric vehicles (the EVs) testifies to the growing consumer market for this segment of automotive industries. Thus, it is necessary to review the EVs’ market features in order to understand the future trends of the industry development.
Consumer market size for the EVs
As of 2011, the EVs market revenues in the USA were close to $14.9 billion, with the global sales of almost $54 billion (“Global and United States Electric Vehicles Market Forecast and Opportunities,” 2012). According to Electric Drive Transportation Association (EDTA) estimates, by December 2012, total sales of electric cars in the USA would amount to 393,938 units, with electric drive market share of 3.30% (EDTA, 2012). Compared with the 2011 annual data of 284,064 units (2.23% of the market), this represents a true breakthrough in the terms of market size growth.
The potential for the increase in EVs’ market share is underscored by various surveys where the interviewees display their willingness to switch to the EV under right circumstances. In particular, this tendency is visible in such regions as Southern California where the driving practices are different from those in more remote areas. The customers’ unwillingness to pay for expensive petroleum when they do not need it might become another factor behind the rise of the EVs in auto industry markets.
The growth in electric cars’ market seems to be based on the rising popularity of hybrid cars that are marked by ever greater fuel efficiencies and lower carbon footprint (U.S. Department of Energy & U.S. Environmental Protection Agency, 2010). While battery electric cars are less popular, they may likewise experience a hike in their sales. For instance, in January 2011, only 87 battery electric cars were sold nationally, whereas in December of the same year, 1,212 customers opted to purchase these EV models (EDTA, 2012). However, hybrid cars are generally marked by the highest growth rates, with monthly sales increase from 31,100 to 48,206 between December 2011 and March 2012 alone (EDTA, 2012).
The EVs market growth attests to the consumer interest to this industry, demonstrating that the auto companies should make greater effort at satisfying demand for such car models. In addition, swift market growth creates the opportunities for new firms to step in, potentially increasing competitiveness in this segment.
At the moment, the EV market is generally characterized by a trend towards the battery cars’ share increase, while the hybrid cars’ growth rate is still significant but no longer overwhelming (“Global and United States Electric Vehicles Market Forecast and Opportunities,” 2012). Such regions as California, with the Bay Area being more representative in this regard, demonstrate great potential for a further EV market expansion (Berman, 2010). The implementation of state and municipal programs on such issues as electric buses, etc., would further contribute to the EVs’ popularity.
Other states are still oriented toward more traditional transportation structures but the EV manufacturers have recently displayed open interest in spreading their products across the USA, with various states targeted for the EVs promotion. This trend may necessitate a conclusion that the EVs may become a fashionable transportation form in the near future.
As for the more long-term market trends, the rise in crude oil and petroleum prices, coupled with the possible resource depletion, would necessitate greater reliance on the EV technologies in modern transportation. Coupled with intensive development of the EV manufacturing in the nations ranging from Brazil to China, this may give rise to the increase in electric cars’ importance. Nonetheless, it is still premature to speak of the possible substitution of the conventional car industry with the electric-based one.