Ron Adler, an associate professor at Dartmouth's Tuck School of business and author of The Wide Lens, believes that electric vehicles are doomed to fail if companies don't alter the way they market and sell battery-powered cars. Although Adler recognizes range and infrastructure issues as limiting factors of EV sales, the author says resale values could be the biggest pitfall to mass-market acceptance.
New car shoppers tend to take a few key aspects into consideration when looking for a new vehicle - things like price, fuel economy and safety features. But resale values also tend to rank high on shoppers' lists, which could ultimately doom the current structure of selling electric vehicles.
Due to the limited life-span of today's batteries, an electric vehicle is expected to have a useful lifespan of about 8 to 10 years. Given most people tend to hang on to new cars for about 6 years, that means a used car buyer might only be able to get another two years out of their purchase. A new battery pack would solve that problem, but with an estimated price of about $12,500-$15,000 a pop, that's not exactly a feasible purchase for a value-focused used car shopper.
And, in addition to the battery lifespan conundrum, electric vehicle owners also face the challenge of advancing technologies. Battery technology is moving forward at an incredible rate, meaning the battery pack in an EV built in 2012 could be completely outdated by 2017. Adler notes the used computer market as an example of what could happen to the prices of used electric vehicles. In fact, a study conducted in 2010 estimated that electric vehicles would hold just 10 percent of their original value after five years due to the factors outlined by Adler.
But all hope for electric vehicles joining the mainstream isn't lost. Adler proposes that EVs can succeed with the right selling structure, which involves separating the actual vehicle from the batteries. Adler cites the model laid out by Better Place, which essentially rents battery packs to owners so they never have to take the hit of depreciation. Better Place's model also includes "switch stations"ť that allow EV drivers to swap out their flat batteries for a freshly charged unit, eliminating the need to wait hours for a full charge. Better Place is teamed up with Renault-Nissan, so its possible that kind of battery philosophy could eventually make it to the Nissan Leaf.
Clearly something needs to be done about the limiting factor of an electric vehicle - the battery - but it remains to be seen how long it will take the industry to come up with a viable solution.