Global Scenario of Electric Vehicles

The number of EVs are increasing across countries year on year with the ever-increasing concern for the environment amongst masses. Add to that the added bonus of government initiatives and falling battery prices, the coming years looks extremely lucrative for the EV industry, globally. There are over 400,000 electric vehicles in the USA currently, which is a massive increase in numbers as compared to 2010. However, China, the giant of Asia, has overtaken every other country last year to become the world’s largest market for electric vehicles amongst rising environmental concern amongst the population. Europe continues to hold its ground as the most stable market for EVs globally.

Important to note in this context is the story of Tesla Inc., which became the world’s third largest vehicle manufacturer (by market capitalisation) behind only from Daimler AG and Toyota, which remains the world’s largest passenger vehicle manufacturer. The success story of Tesla Inc. may be attributed to the changing mindset of current passenger vehicles across countries as reflected by the number of vehicles sold by the company at end of 2017. It sold over 90,000 electric vehicles across global markets to become the largest EV manufacturer by the end of last year and the coming years look only brighter with heightened ecological concerns, industry technology innovations and lucrative government incentive.

Research Focus, Scope and Relevance

The primary focus of this project is to understand the adoption of hybrid technology for the purpose of transportation across countries and how the business model has helped in the growing eco-friendly automobile market and identify the main barriers for the diffusion process in the geographical areas of Dubai and Sydney. This study shall further identify and analyse the key adoption drivers for the technology across countries with a specific focus on the identified geographies and shall conclude with brand-specific recommendations for Toyota Prius after the necessary qualitative and quantitative study.

Scope

The research findings of this project that emphasises the adoption of Toyota hybrids may be applied to other automobile hybrid/electric car manufacturers, especially when the landscape is set to be revolutionised through increased and focussed R&D, significant government initiatives and global regulations which advocates ‘GREEN’ and the changing mindsets of consumers. This work shall cover the following:

• • An overview of the global passenger vehicle and PHEV industry including current scenario and main manufacturers
• • An overview of the passenger vehicle industry in Dubai and Sydney with special emphasis on PHEVs
• • Identify key trends in the passenger vehicle industry in the near future
• • Identify the barriers and enablers of the PHEV technology diffusion in the leading countries and the identified geographies of Dubai and Sydney
• • An overview of the current initiatives taking country and region wise in order to increase PHEV adoption rates
• • Secondary and primary data collection and analysis in-order to understand demographic, physiographic, qualitative and quantitative preferences of customers for the PHEV technology and enhance brand adoption and perception for Toyota Prius in Dubai and Sydney
• • Specific recommendation for higher segment-wise adoption for Toyota Prius

Relevance

• • Prioritise the needs and wants of consumers and society at large, as opposed to simply focussing on product features or the company leading to natural alignments
• • Effective engagement with consumers in order to understand their preferences covering a wide database of the passenger vehicle population
• • Recommend growth strategies and advantages for Toyota and the overall automobile industry where safe and green shall be the way to go
• • Recommend ways to increase adoption rates for hybrids by end consumers

Literature Review Background

A lot has been said and written about alternative drivetrain technology in the past. Traditional automobiles are powered by ICE whereas BEVs are powered by rechargeable battery packs. However, there exist trade-offs between acceleration performance, limited range coverage during detour times, emission levels and fossil fuel used for generating the electricity for charging PHEVs. PHEV is a combined propulsion system, where both the ICE and normal electricity ‘plug-in’ is used to recharge the battery.

Hybrids were produced for more than 100 years (Ferdinand Porsche designed the ‘Mixte’ in 1901). However, they became commercially available in late 1990s when Toyota first introduced the Prius in Japan. Gallagher and Muehlegger examined the effect of federal, state and local incentives on consumer hybrid adoption. Sallee focussed on tax incentives for hybrid cars but estimates the incidence of those incentives specifically for sales of the Toyota Prius. Kahn stressed on the effect of preferences for environmental quality on hybrid purchases. As per Anita Garling (2000) there have been renewed interests in EV technology primarily because of increased pollution levels, societal demand for alternative energy sources spurred by the oil crisis and the fact that oil is a finite resource. The last reason is by far the most pressing in the future.

Many studies and research papers prior to 2000 stated attitudes and intentions to buy without the experience of EVs. Turrentine and Kurani explained that when consumers know little or nothing about the electric drivetrain technology, their preferences might be negatively influenced by unfamiliarity. Chaston stressed on the process of market segmentation by identifying the variations in customer needs and finding ways to fulfil such needs. Further, by identifying specific groups within the market and using socio-demographic, psycho-graphic and behavioural variables for identification of such segments can a market campaign for PHEVs be aptly tailored to fit identified segments.

Kristinka Wilmink (2015), refers to the McKinsey report to state that the adoption of EVs took place in 2013, which further expanded in 2014. EU leads the world in terms of PHEV and EV adoption rates. Wilmink (2015) further states that the adoption of EVs is mainly driven by consumer demand, industry developments and government stimuli.

The adoption of the technology is stimulated by several factors, viz. annual cost savings (which includes fuel price saving along with government financial incentives), driving range, detour times (time lag for recharge along with infrastructure availability), charging times and finally PHEV price.