Image Source: FrankH, Flickr CC
Ever since Henry Ford used the assembly line to introduce the Model T in 1908, cars have been the poster child for mass manufacturing. At the same time, consumers have become used to a great deal of choice when if comes to cars.
Cars are differentiated along several lines: make (compact, sedan, SUV, pick-up, stationwagon, etc.), price range, fuel efficiency, and power are among the most notable.
The young electric vehicle (EV) market hasn’t reached the point of either mass production or deep market segmentation yet, but it’s not too early to start planning the industry’s future. Consulting giant McKinsey offers some advice to the EV industry in a recent article featured in the McKinsey Quarterly.
Electric Commuter & ‘Around Towner’ Options
The central message offered by authors Nick Hodson and John Newman is that two distinct segments dominate the personal vehicle market–commuters and around towners–and that the EV industry can better serve its customers by creating specific products for each segment.
A major difference between an EV and a traditional gas vehicle is that a major cost driver for EVs is energy storage. For pure EVs, the authors conclude that driving around town requires roughly 1/3 the battery capacity of commuting, due largely to increased driving speeds on highways used for commuting.
For plug-in hybrid electric vehicles (PHEVs), the optimal all-electric range for driving around town (16 miles) is considered less than 1/2 of that for commuting (38). People who use their EV to drive around town will be overpaying for a commuting model.
What Does This Mean for You?
For the consumer, the implication is that a household may need two vehicles with two distinct uses (of course, public and/or self-powered transport are viable options in many cases). Many households already have two or more vehicles, and may already use them for slightly different purposes. Others may have a lifestyle that demands two multi-use vehicles.
Although the EV industry is still in its early stages, it has naturally grown up a bit around the incentive structure Hodson and Newman describe: neighborhood electric vehicles (NEVs) are low-speed and good for getting around town, while many EV and PHEV manufacturers–like GM with the Volt–are focused largely on consumers’ commuting needs.
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