Rising oil prices is likely to force automakers to rethink their strategy on EVs, says a recent PwC survey

Regulatory policies and increasing fuel costs likely to spur demand of electric vehicle segment

NEW DELHI, May 24, 2011 -- Collaboration between industry participants will be essential to bring alternative fuel applications to market, according to PwC's latest publication Charging Forward: Electric Vehicle Survey. While automakers continue to bring electric vehicles (EVs) to the marketplace, governments, local bodies and utility companies are challenged with building the infrastructure required to support these vehicles long before mainstream consumption will take hold.

PwC surveyed over 200 executives across multiple industries, including automotive, technology, utilities, energy and government. Approximately one-third (33.8%) of respondents felt the lack of investment to modernise the grid is a primary roadblock preventing the widespread support of EVs. In addition, the lack of capacity during peak energy consumption hours also is a concern, as indicated by 31.1 percent of those surveyed.

While there is little doubt that collaboration between relevant parties such as the government, utilities, local bodies, and private interests is needed to develop a sustainable EV infrastructure (35.3 percent of respondents felt each should share the financial burden), government agencies in particular will be creating ample financial incentive to other participants. In fact, this is already a reality as governments around the world have offered billions of dollars in the form of loans, grants, and rebates through various stimulus programmes.

Abdul Majeed - Leader Automotive Practice, PwC India says:

“Earlier EVs in India were thought to be a viable opportunity in the long term (post 2020) scenario, but rising oil prices is likely to force automakers to rethink their strategy on EVs and explore option of an early launch like Reva. Reva plans to launch its two new models in India (NXR and NXG) by end of 2011.

Indian Government should also offer more subsidies to EV manufacturers, create an atmosphere for greater consumer awareness and help the industry in R&D to boost EVs in India. Currently, only the Delhi government is offering subsidy to the extent of 29.5%.To gauge consumer perception towards EVs, they can be promoted in few select cities / townships by developing the necessary infrastructure before selling them in other parts of the country. Decision by the Indian government to set up and execute a National Mission plan for EVs and Battery operated vehicles in India is a step in the right direction.”

Companies continue to work on achieving a balance between investing in development of new technologies and passing the costs on to the consumer. In addition, bringing the cost of EVs in line with internal combustion engine (ICE) vehicles remains a key challenge to achieve widespread adoption. Almost half of the respondents to the survey (41.6 percent) indicated that long-term cost savings is the primary reason consumers would be willing to pay a premium for an EV.

Nearly 68.8 percent of respondents believe hybrids and plug-in hybrid electric vehicles (PHEVs) are the most appealing to consumers overall.

In terms of the assembly outlook for hybrids and EVs, Autofacts is forecasting that annual production will reach approximately nine million units by 2020, representing roughly nine percent of global market share. Of that, nearly one third, or three million units, will be plug-in and pure electric vehicles. Significant volume increases are expected in the 2017-2020 timeframe as second and third generation EV systems and supporting technologies are rolled out.

For more information about PwC's sustainability capabilities and to download PwC's publication Charging Forward: Electric Vehicle Survey, visit: www.pwc.com/auto.

Notes to the editor

About PwC's Charging Forward: Electric vehicle survey methodology

PwC's Charging Forward: Electric Vehicle Survey surveyed more than 200 executives from 10 countries from the automotive, utilities, energy, technology, government, finance, education and other sectors. Key results have been included, along with additional thoughts from PwC on the present and future outlook of EVs.

About PwC

PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.

In India, PwC (www.pwc.com/India) offers a comprehensive portfolio of Advisory and Tax & Regulatory services; each, in turn, presents a basket of finely defined deliverables. Network firms of PwC in India also provide services in Assurance as per the relevant rules and regulations in India.

Complementing our depth of industry expertise and breadth of skills is our sound knowledge of the local business environment in India. We are committed to working with our clients in India and beyond to deliver the solutions that help them take on the challenges of the ever-changing business environment.

PwC has offices in Ahmadabad, Bangalore, Bhubaneswar, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune.

PwC has changed its brand name from PricewaterhouseCoopers to PwC. 'PwC' is written in text with a capital 'P' and capital 'C'. Only when you use the PwC logo is the name represented in lower case.

"PwC" is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.