Motorized Vehicle Manufacturing
for comparable models of hybrid electric and conventional light vehicles, using data from the Energy Information Admin- istration (EIA) and Department of Transportation. IBISWorld also analyzes the effects of improved battery technology on the automobile-manufacturing sector, assuming that improved electric vehicle batteries will reduce auto manufacturers’ dependence on gasoline prices.
Electric cars in the US date back to the 19th century, during the infancy of the automobile industry.
The following factors are applied to the scenario. Gasoline prices are baseline forecasts sourced from the EIA’s Annual Energy Outlook 2013. Vehicle data also are sourced from An- nual Energy Outlook 2013 baseline and favorable technology change scenarios. The number of miles driven per year and average length of car ownerships are assumed to be constant
in the five years to 2018. These assumptions are based on the latest data from the Department of Transportation, which states that consumers drive an average of 13,476 miles per year, as well as data from market-intelligence firm Polk, which estimates that consumers own new vehicles for six years. All other costs, such as insurance and financing, are assumed to be constant across all vehicles.
Under the baseline scenario, the total cost of ownership over a six-year period for HEVs is estimated as 2.7% higher than conventional vehicles in 2013. During the next five years, the cost differential will decrease at an annualized rate of 5.7–2.0% in 2018, signaling improved competitiveness for HEVs. If favorable technological advances in batteries are achieved, the cost differential is forecast to fall from 2.5% in 2013 to 1.7% in 2018, at a declining average annual rate of 7.6%. This narrowing cost differential will fuel consumer demand for HEVs.
Even without any technological developments during a six-year period, HEVs will cost an estimated $718.2 more than conventional vehicles in total ownership costs. As a result, the scenario proves that HEVs are relatively mature and will enjoy stable demand during the next five years. However, the ownership costs of EVs are projected to remain 36.5% higher than comparable conventional vehicles in 2018, which is a considerable improvement from 57.7% in 2013. IBISWorld estimates that EVs will have difficulty gaining market share during the five years to 2018 due to high ownership costs.
Impact on the Overall Automobile Manufacturing Industry What effect will the above factors have on the many disparate parts of automobile manufacturing? A look at risk scores will give an indication of the direction in which things are heading. A risk score is comprised of structural risk, growth risk and sensitivity risk. Structural risk accounts for the impact of fundamental characteristics common to all indus- tries, such as international trade and competition. The growth risk measures an industry’s projected revenue growth, while sensitivity risk accounts for external factors affecting industry performance. The score is measured on a scale from one to nine, where a lower risk score indicates a less risky industry. The $87.0 billion Car and Automobile Manufacturing category experienced the largest decrease in risk because it is the one most directly impacted by consumer demand, which is driven by gasoline prices. On average, the 10 industry seg- ments examined experienced a risk decrease of 0.04, driven
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ManufacturingEngineeringMedia.com | June 2013
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