Powering Autos to 2020: The Era of the Electric Car?

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Internal combustion engines are improving their ability to cut CO2 emissions at a lower cost than expected, and, as a result, carmakers should be able to meet 2020 emissions targets mainly through improvements to conventional technologies, according to the new report by The Boston Consulting Group.

Internal-combustion-engine (ICE) technologies offer the potential to cut tailpipe emissions of carbon dioxide by approximately 40 percent at a cost to consumers of $50 to $60 per percentage point of reduction for an average passenger car – roughly half the cost of what was expected three years ago, the report says. But original equipment manufacturers (OEMs) will need to pull multiple levers simultaneously to achieve such dramatic reductions. Modifications to combustion technologies, transmissions, vehicle mass, aerodynamics, and power management will all be necessary.

The report is based on proprietary economic analysis, BCG’s consumer research, and interviews with industry experts. It examines the challenges and opportunities facing EVs – including pure battery, range-extended, and plug-in hybrids – and identifies wildcard scenarios that could have a major impact on demand. It also looks at prospects for traditional ICEs and hybrid electric vehicles (HEVs), with a focus on the advanced ICE-technology choices carmakers will face as they wrestle with tightening emissions standards.

The study concludes that China and Europe, not the United States, will be the largest markets for EVs in 2020, driven by strong government support. However, China is a major wildcard. Significant public support from the government on EVs has yet to lead to either promised breakthroughs in battery technology or significant sales outside of public fleets. The government’s efforts have, however, increased consumers’ awareness.

 The report is available to download from the Boston Consulting Group web.