The Future of Electric Powered Vehicles

AgMRC Renewable Energy Monthly Report
May 2015

Don HofstrandDon Hofstrand
retired Iowa State University Extension agricultural economist

Electric powered vehicles have the potential to transform the world’s transportation sector.  Although the industry has a good start, led by dedicated people, impediments remain.  In this article we examine the current status of the electric vehicle industry and its products.  We discuss some of the impediments facing electric powered vehicles and how technology is overcoming some of these impediments.

Definitions of Hybrid Electric Vehicles, Plug-in Hybrid Electric Vehicles and All Electric Vehicles

Hybrid electric vehicles (Hybrids), plug-in hybrid electric vehicles (Plug-in Hybrids), and all-electric vehicles (Plug-in Electrics) use electricity to either improve the efficiency of Internal Combustion Engine Vehicles (Conventional Vehicles) or provide the only power source.  Plug-in hybrid electric vehicles (Plug-in Hybrids) and all-electric vehicles (Plug-in Electrics) are collectively known as plug-in vehicles (Plug-in Vehicles).

Hybrid Electric Vehicles -- Hybrids are primarily Conventional Vehicles with electric motors that use energy stored in a battery to supplement the internal combustion engine. When in operation, the Hybrid is powered by the internal combustion engine, electric motor or both at the same time.  The battery is charged by regenerative braking and the internal combustion engine.

Plug-In Hybrid Electric Vehicles – Plug-in Hybrids are Hybrids that have the additional option of charging the battery by plugging into an electric power source.  Plug-in Hybrids also differ from Hybrids in other ways.  For example, Plug-in Hybrids are powered only by electricity until the battery is depleted and then the vehicle switches to the internal combustion engine.

All-Electric Vehicles – Plug-in Electrics are powered entirely by electricity without the use of an internal combustion engine.  The motor to power the vehicle uses electricity stored in a battery.  The battery is charged and the battery stores electric energy until it is used to power the vehicle. Plug-in Electric Vehicles are charged by plugging into an electric power source.  

Plug-in Hybrids and Plug-in Electrics qualify for a $2,500 to $7,500 federal tax credit.  Find tax credits and incentives for your state.

Greenhouse Gas Emissions

Vehicle emissions can be categorized as either greenhouse gas emissions (e.g. carbon dioxide) or as air pollutants (e.g. smog and haze).  The sources of vehicle emissions are categorized as direct emissions from the vehicle or more broadly to include the creation of the fuel and generation of the electricity used to power the vehicle.  This broader category is known as well-to-wheel emissions. 

Direct Emissions – These emissions are primarily tailpipe emissions resulting from the combustion of the fuel (e.g. gasoline) in the engine.  However, they also include emissions from the evaporation of the fuel from the vehicle's fuel system and evaporation during refueling.  Conventional Vehicles produce direct emissions but Plug-in Electrics don’t.  Hybrids produce direct emissions because they use an internal combustion engine in conjunction with the battery, but fewer emissions than Conventional Vehicles.  Plug-in Hybrids do not produce tailpipe emissions when running exclusively on electricity (but still produce evaporative emissions).

Well-to-Wheel Emissions – Well-to-wheel is a more comprehensive measure of emissions. In addition to direct emissions, well-to-wheel emissions also include emissions from the production, processing and distribution of the fuel.  For gasoline and diesel fuel, this includes fossil fuel emissions from the crude oil extraction, refining and distribution.  For corn ethanol, this includes fossil fuel emissions from production of the ethanol and the production of the ethanol feedstock (e.g. corn).  Although corn-ethanol produces well-to-wheel greenhouse gas emissions, the emissions are considered to be less than those from fuels produced from fossil fuels.  A large amount of carbon dioxide is created from the corn as it is processed into ethanol.  However, these emissions are part of the “natural” carbon cycle and do not permanently add to the amount of atmospheric carbon dioxide. 

The amount of emissions produced from generating electricity for electric powered vehicles depends on the composition of the energy sources used in generating of the electricity.  As shown below, coal is the primary energy source for electricity generation, accounting for half of the electricity generated.  The fossil fuels of coal, natural gas and oil collectively account for about 70 percent of the generation. 

Emissions from electricity generation are expected to drop in the future as the trend of substituting natural gas for coal continues (natural gas has lower emissions than coal), and the trend to more renewable sources increases. 

Electricity Sources
Natural Gas
Other Fossil
Source:  Alternative Fuels Data Center, USDOE
Even with the prevalence of fossil fuels in the generation of electricity, electric vehicles (Plug-in Hybrids and Plug-in Electrics) have lower greenhouse gas emissions than Conventional Vehicles as shown below.  On average Hybrids emit 30 pounds less greenhouse gases per 100 miles (35% reduction) than Conventional Vehicles.  Plug-in Hybrids also have lower emissions than Conventional Vehicles but slightly more than Hybrids.  This occurs because all of the electricity for the Hybrid is generated internally while the “plug-in” feature of Plug-in Hybrid brings in electricity from outside sources where fossil fuels are utilized in electricity generation.  The Plug-in Electric has the lowest greenhouse gas emissions because it has no direct emissions.  However, emissions are still created because electricity is utilized from outside sources. 
These numbers will change in the future as electricity generation moves to sources with lower emissions (as discussed above).  Emissions will also decline as electric vehicle owners utilize personal electricity generation (e.g. solar rooftop).  Emissions from internal combustion engines will decline as they become more fuel efficient.  Although the numbers will change, the relationships will probably remain the same.
Greenhouse Gas (GG) Emissions by Type of Vehicle (100-Mile Trip)
Vehicle GG Emissions
(compact sedan) (lbs. of CO2 equivalent)
Conventional 87 pounds
Hybrid Electric (Hybrid) 57 pounds
Plug-in Hybrid Electric (Plug-in Hybrid) 62 pounds
All-Electric (Plug-in Electric) 54 pounds

Source:  Alternative Fuels Data Center, USDOE


Electric Vehicle Sales

Analysts predict the sale of electric vehicles will grow significantly over the coming decades.  For example, Plug-in Vehicle sales are expected to grow quickly in the Asia Pacific region and become the largest market.  The combined market of North America, Europe and Asia Pacific is projected to grow to 1.8 million by 2023.  In China the number of Plug-in Vehicles sold during January and February was 4.2 times the number sold during the same period of the previous year.  The number of Hybrids sold increased by 2.2 times during the same period.  China offers tax breaks and other incentives for the purchase of Plug-in Vehicles.  A major reason for the push for electric powered vehicles is because vehicle exhaust makes up 30 percent of the emissions in Beijing. (5)

Although the sales of electric vehicles is expected to grow substantially in the long-term, electric vehicles face short-term growth impediments.

Hybrid Electric Vehicles – Hybrids have been on the market longer than the other Plug-in Vehicles, with the first significant number of sales in 2000.  Starting in 2005, U.S. Hybrid sales grew rapidly as shown on the right.  However, since 2009 the growth trend has been relatively flat.  

HEV market share of new vehicle sales

Source: Scientific American, Explaining Stagnation in the Hybrid-Electric Vehicle Market, Will Sierzchula, Feb. 6, 2015.

Reasons for the growth reduction include lower gasoline prices and more fuel efficient internal combustion engines.  These changes reduced the economic advantage of driving a Hybrid.  Also, many individuals who purchased Hybrids because they were the latest in auto technology have moved on to the next generation of electricity vehicles such as Plug-in Hybrids and Plug-in Electrics.

However, the biggest reason may be the up-front higher cost of a Hybrid versus a Conventional Vehicle.  Because Hybrids need both an internal combustion engine drive train, and an electric drive train the cost of a Hybrid is higher than a Conventional Vehicle.  Consumers are reluctant to pay more for a car at the time of purchase in return for lower gasoline outlays sometime in the future. 

Although the price difference between Hybrids and Conventional Vehicles has narrowed over the years, as shown below, the difference is still significant.  To make Hybrids economically attractive to car buyers, the price differential will need to narrow further. 

Hybrid Electric Vehicles Purchase Price Premium Relative to Conventional Vehicles

Hybrid electric behicles purchased price premium relative to conventional vehicles

Source: Scientific American, Explaining Stagnation in the Hybrid-Electric Vehicle Market, Will Sierzchula, Feb. 6, 2015.

The table below shows the payback period for the purchase of a typical Hybrid compared to a Conventional Vehicle.  Assume the added cost of purchasing a Hybrid is $3,000 and the Hybrid gets 40 miles to the gallon while the Conventional Vehicle counterpart gets 28 miles per gallon.  With a gasoline retail price of $3.00 per gallon, it will take 93 thousand miles of gasoline savings to repay the $3,000.  Assuming a person drives 12,000 miles per year, it will take 7.8 years to repay the $3,000.

Most consumers will probably require a payback period no longer than three or four years before they seriously consider the purchase of a Hybrid based on economics alone.  To achieve this, the price differential needs to decline to $1,500 or less. 

Payback Period for Hybrid Investment
Payback Period
New technology is expected to continue to bring down the price differential in future years.  Another factor that may impact the differential is the CAFÉ standards that require car manufacturers to improved gasoline mileage in future years.  Manufacturers may need to narrow the price differential to entice consumers to purchase Hybrids so manufacturers can meet their CAFÉ mileage requirements.
Electric Powered Vehicles – Sales of Plug-in Vehicles were up slightly during the first quarter of 2015 compared to 2014.  Sales of the Tesla Model S (Plug-in Electric) were up significantly. However, sales of some mainline electric cars, including the Chevy Volt (Plug-in Hybrid) and Nissan Leaf (Plug-in Electric), were down. Many analysts believe the lower operating costs of Conventional Vehicles due to lower gasoline prices are a major contributor to the tepid sales.  However, crude oil prices tend to be volatile, leading to higher price in the future, while electricity prices are more stable.  So “cheap gas” may not be a factor in the long-run. 
The cost of battery packs are an expensive part of the cost of an electric vehicle, comprising from a quarter to a half of the vehicle cost.  However, battery prices are declining. Battery packs have declined by about 14 percent per year between 2007 and 2014. Costs have declined from over $1,000 per kilowatt-hour (kWh) in 2007 to about $410 per kWh, with some battery electric vehicle manufacturers even lower at $300 per kWh.  It is possible that $150 per kWh can be reached by 2020 (11).
Another hindrance to the Plug-in Electrics is the lack of consumer information.  Automobile companies have not focused on extensive marketing campaigns to promote plug-in electric vehicles.  However, as Plug-in Electrics become more price competitive with Conventional Vehicles, companies will find a greater pay-off from marketing campaigns. 
Mileage range is a concern for Plug-in Vehicles, especially Plug-in Electrics because they have no internal combustion engine to power the vehicle when the battery is depleted.  However, many Plug-in Electrics now have ranges that are similar to those of Conventional Vehicles.

However, car manufacturers continue to improve electric vehicles to be more competitive.  In 2017, Tesla and General Motors plan to introduce an electric vehicle that can go more than 200 miles on a single charge and cost less than $40,000 (16).

Recharging the Vehicle

Recharging stations are another concern for Plug-in Vehicles.  The home is the most important location for recharging Plug-in Vehicles, followed by the workplace.  For distance driving, access to recharging stations may be a problem. However, the number of recharging stations is increasing rapidly. ChargePoint, the world’s largest Plug-in Vehicle charging network, has 20,000 spots to plug in.  Its top ten most Plug-in Electric-friendly cities are the San Francisco Bay Area, Los Angeles, Seattle, San Diego, Honolulu, Austin, Detroit, Atlanta, Denver and Portland. (8)

The Plug-in Electric manufacturer Tesla provides high speed charging stations for Tesla owners.  Tesla charging stations need about 20 minutes to charge half way.  Tesla has 2000 superchargers located in 400 stations worldwide. (9)

Tesla is adding solar panels to its charging stations to assist in power generation while also providing shade.  Tesla also plans to provide battery-swapping capacity where your depleted battery is swapped for a fully charged battery.

Other Electric Powered Vehicles

Nissan is introducing a 7-seat Plug-in Electric minivan with luggage capacity of 2.94 cubic meters.  Launch of the vehicle has been moved forward due to demand from taxi companies, hotels and other users (12).   

Cars are not the only electric vehicles.  Electric truck and bus sales are expected to increase over the coming years, although penetration rates will remain relatively low.  Highest penetration will be in dense urban areas with lots of stop-and-go driving.  Diesel hybrids are expected to be the most popular (13).  However, an electric bus has recently been introduced with a range of 190 miles (14). 

A neighborhood electric car called the Strati is produced by 3D printing.  The car has a top speed of 40 mph and a range of 120 miles (15).

It appears as though Apple is working on an electric car to be introduced as early as 2020 (16).  This introduction by Apple will bring more momentum to the electric powered vehicles.  


Electric powered vehicles have the potential to transform the world’s transportation sector.  Although the industry has a good start, led by dedicated individuals, organizations and companies, impediments remain.  However, as the cost of battery technology continues to decline, mileage range between charges increases,  and a recharging infrastructure is built, the industry will move forward.  It is easy to see why it will be the predominant transportation technology of the future.


1   Alternative Fuels Data Center, U.S. Department of Energy

2   Scientific American, “Explaining Stagnation in the Hybrid-Electric Vehicle Market”, Will Sierzchula, Feb. 6, 2015.  
3   Fortune, “Is Cheap Gas Pulling the Plug on Electric Cars”, Brad Tuttle, April 22, 2015  
5   Cleantechnica, “Electric Vehicle Sales Expected to Grow Globally to 1.8 million by 2023”, Joshua S. Hill, August 12, 2014
6   National Academy of Sciences. "Vehicle cost, lack of consumer information hinder purchases of plug-in electric vehicles." ScienceDaily. ScienceDaily, 22 April 2015. 
7   E & E News, Climatewire, “Battery costs for electric vehicles are falling faster than industry estimates – study”, Umair Irfan, Tuesday, March 24
10  Alternative Fuels Data Center, U.S. Department of Energy
11  ClimateProgress, “Electric Car Batteries Just Hit a Key Price Point”, Joe Romm, April 13, 2015 
13  EV Obsession, “Electric Truck & Bus Sales To Boom”, James Ayre, February 5th, 2015 
14  Cleantechnica, “BYD C9 – First 200 Miles Electric Bus Unveiled”, James Ayre, Feb. 3, 2015  
16  Bloomberg Business, “Apple Wants to Start Producing Cars as Soon as 2020”, Tim Higgins, Feb. 19, 2015