Government Support Critical for Powering the Electric Vehicle Market, Says Frost & Sullivan

By 2015 the European market for electric vehicles (EVs) could potentially grow to 480,000 units. Frost & Sullivan has revised this forecast from the prediction of 250,000 EVs by 2015 made last year due to changing supply dynamics.

While vehicle manufacturers, suppliers, utilities and other businesses have jumped onto the EV bandwagon, government subsidies and incentives will be critical to support both the supply and demand side. Although some European governments have taken some visible initiatives to support the EV market, steps towards commercialisation of EV are vague in some cases.

“Considering the current state of the auto industry, oil dependence and available technologies, it is time for change and EVs are the right choice,” states Frost & Sullivan (http://www.automotive.frost.com) Senior Research Analyst Anjan Hemanth Kumar. “We believe that Federal governments will play a pivotal role in realising the dream of pure green mobility.”

Most European governments fall short in offering EV-related subsidies and other incentives to consumers. The German government does not offer incentives to EV customers, except for a car tax exemption for five years.

France, Netherlands, Belgium and Austria offer vaguely defined subsidies on green vehicles. In Italy, tax exemptions and subsidies are limited to only specific regions within the country. Denmark’s only monetary incentive for buying a new EV is to waive the 180% tax on purchased vehicles.

In contrast, the UK government announced a subsidy of up to €5,600 for EV buyers. This marks the first plan to encourage consumers at such a high degree.

“Frost & Sullivan believes consumer subsidies should have detailed budgets and clarity,” Kumar says. “Furthermore, governments should also ensure that an adequate number of vehicles is available. This has been a problem, as there are not enough EVs on the road to utilise subsidy benefits. Most models will not even be ready for purchase until 2011 at the earliest.”

In addition to monetary incentives, authorities need to try to resolve regulatory matters. To promote widespread use of EVs, governments need to ensure the availability of at least four charging points per EV in the first year, thereafter reducing to 2.5 charging points per EV by the fifth year.

A fast charging infrastructure is also needed. Governments have the power to influence the standardisation of batteries and EV infrastructure and empower the green movement in the automobile industry.

“A key opportunity for European governments with EVs is to take the lead in developing battery technology,” Kumar concludes. “Incentives could be provided to local manufacturers to encourage them to create and keep jobs in Western Europe instead of moving them to the Far East, as is currently the case.”

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