The electric car and what it means for Malaysia’s auto industry

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An electric car such as the Nissan Leaf has so many things going for it: it is environmentally friendly, technologically advanced and is said to offer a “whole new level of excitement and convenience”. (Photo credit: Nissan)

An electric car such as the Nissan Leaf has so many things going for it: it is environmentally friendly, technologically advanced and is said to offer a “whole new level of excitement and convenience”. (Photo credit: Nissan)

By K.T. Thamby

Yes, most of us harbour the ambition of going green, saving the environment and leaving a decently habitable planet for our children but just how far would we go for this ambition? How does switching to an electric car sound to Malaysians these days?

2013 seems to be the year of ‘going electric’ in Malaysia. In the first quarter, Mitsubishi Malaysia launched its Mitsubishi i-MiEV,  the battery-powered small hatchback retailing for RM136,000 and, in third quarter of this year, Nissan is schedule to launch its fully electric car Nissan Leaf which has created some buzz in the industry and among car enthusiasts.

Electric cars is not something new, this niche vehicles have been competing with the internal combustion engine for the longest time and, despite the touted benefits of going electric , they have not quite won over the mainstream masses globally… well, not yet anyway.

In recent years, however, there has been a concerted push towards electric cars from governments around the world, forcing manufacturers to re-strategise on their electric car plans.

The Obama administration, for example, has embraced a goal of having one million electric-powered vehicles on U.S. roads by 2015, while others have proposed a medium-term goal to a time when electric vehicles would consist of 20% of all passenger vehicle fleet by 2030, or approximately 30 million electric vehicles.

2The governmental push is in America, Europe and Japan, with the rest of the world is catching up, said Frost and Sullivan partner and head of Asia Pacific Automotive, Transportation & Logistics Practice, Kavan Mukthyar (pic).

“Push here comes in the form of stricter regulation for emission control and other incentives, including rebates and tax exemptions for manufacturers, infrastructure providers and even consumers,” Kavan told Business Circle.

In Malaysia for instance, there is an exemption for import and excise duties for hybrid and electric car until December 2013. The emphasis for the development and promotion of green vehicle are in both the National Automotive Policy and the National Green Technology Policy.

An electric car has so many things going for it: it is environmentally friendly, technologically advanced and (usually) backed by government incentives. However, the one great obstacle that may derail the national plan for going electric is the lack of consumer buy- in.

Never mind saving the environment, but the questions in the minds of most customers would be affordability, access to power and its features compared to conventional cars.

For any consumer who wants to go electric, cost is the biggest obstacle. Difference of cost can be as high as 63%, causing many to argue that the high purchase cost of an electric vehicle will place consumers on a spending disadvantage that they may never recover from despite cheaper mileage.

There is also a question mark on maintenance, especially when it comes to replacing the battery, which is the most expansive part of the car.

The issue of costly batteries may be resolved through the new business model of battery leasing used by brands like Renault Zoe and Nissan Leaf, among others, said Kavan, who added that this may significantly push down the cost of electric vehicles and making it a viable option for consumers.

The worries on access to power for these vehicles can be abated with the easy availability of charging infrastructure either by the manufacturers’ themselves, as in the case of Tesla Motor Inc which is expanding its network of fast charging stations, as well as other service providers including petrol stations.

The industry challenge is in getting private industries and even the manufacturers of electric vehicles themselves to invest ahead of demand to ensure that infrastructure is readily available when demand matures. Here, the government would need to play a greater role by encouraging private manufacturers to pursue their electric car plans via subsidies, rebates or by initiating public-private joint ventures.

As for the performance factor, until battery technology improves, one has to keep in mind that electric cars are meant for urban short distance mobility. A large majority of us use our vehicles mostly for short distances such as between our homes and workplaces and, as such, the performance of the electric car should not be an issue. The latest Nissan Leaf model, has a range of 195 kilometres and motorists who travel 25,000 kilometres a year would need to recharge their car only every third day.

Despite the challenges in owning an electric car, demand for it has increased.

Nissan has already sold 70,000 of its Leaf model worldwide, with combined Leaf sales in China and Japan amounting to 3,000 units sold in a single month. Kavan believes that the growing demand will push manufacturers to invest into producing much improved electric car models. He expects 50 to 60 electric vehicle models to be introduced globally in the next five to seven years.

Apart from the Nissan Leaf and Mitsubishi i-MiEV, other electric car brands out there include  BMW Active E, Ford Focus Electric, Honda Fit EV, smartfortwo electric drive, Tesla Model S, Chevy Volt and VIA Motors VTrux

Improved battery technology and price reduction due to economies of scale could eventually grant electric cars the place it deserves.

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