Alternative Power

5 Critical Factors That Will Impact the Adoption Rate of New Transportation Technologies

In 10 or 20 years from now, the nation’s transportation landscape could be vastly different than it is today. Technologies that are currently under development or have only just recently hit the market—like electric vehicles, hybrid-electric vehicles, and natural gas trucks—suggest a more energy efficient, lower carbon emission future.

Will this future come to pass?

For those with environmental concerns, interests in energy efficiency, and developers and investors, these advanced transportation technologies certainly are promising, but their widespread adoption is far from guaranteed. And if they are adopted, the timeline to that happening is unclear.

We believe there are five major factors that will influence the adoption rate of new transportation technologies.

1. Cost of the Technology

Cost is critical in the transportation market. Buyers of cars and trucks are very sensitive to initial costs and will be reluctant to pay significantly more for energy efficient vehicles than conventional cars and trucks in similar performance categories.

Currently, electric vehicles tend to cost more than conventional vehicles. The MSRP for the Ford Focus Electric, for example, is $29,170, while for the conventional Focus S Sedan the MSRP is $17,170. The cost of the battery is a major reason for the price difference. As a result, manufacturers like Tesla are working to develop less expensive battery technology.

2. Performance of the Technology

People care about how well their vehicles perform. Attributes like speed, handling, and even comfort are important to car buyers. To compete with conventional vehicles, manufacturers of fuel efficient vehicles must build cars that perform the same or better than conventional vehicles, at a similar cost.

One of the most important attributes is fuel efficiency. To justify higher initial costs, buyers want to be sure their operating costs will be lower.

3. Energy Prices

The price of oil directly impacts the operating cost of conventional vehicles. As gasoline prices increase, so might interest in alternatively powered vehicles. On the other hand, an increase in electric rates will increase the operating cost for electric vehicles, making them a less desirable choice on a per-mile basis.

4. Government Policy

The Corporate Average Fuel Economy (CAFE) Standards are set to encourage the manufacture of fuel efficient vehicles in the U.S. These standards are expected to increase significantly in the next several years, which may lead manufacturers to produce more electric and natural gas vehicles.

5. Infrastructure Availability

For natural gas-powered trucks especially, the availability of fueling stations will play an important role in the adoption of the technology. According to CNG Now, a website that promotes the use of compressed natural gas in transportation, there are only about 500 natural gas fueling stations in the U.S. Many regions of the country are only sparsely covered by natural gas stations, including large parts of the West and Northwest. For this technology to gain widespread adoption, fueling stations will have to become more available. For Hydrogen fueled vehicles, the fueling station situation is a greater challenge.

How to Learn What the Future Holds for New Transportation Technologies

It’s important to remember that none of these five factors should be considered separately. Rather, they form a complex web of interactions; changes in one factor may stimulate or dampen activity in another. In our recent white paper, we discuss how to untangle this web using a technique called integrated modeling.

By using the most technologically advanced and respected modeling package (currently the NEMS Model), combined with years of experience in the relevant industries, and by using up to date information and data such as the 5 critical factors outlined above, collated from the various industries, the team at OnLocation, Inc. can use their expertise to predict the adoption rates of Advanced Energy Technologies.

Projections produced by OnLocation, Inc. include energy supply & demand, imports, conversion, and prices to the year 2040. Projections are based on the NEMS model which was developed and is maintained by the Energy Information Administration (EIA), but also take into account policy trends, current legislation, and technology evolution which can greatly affect the outcome of any modeling, and generally a sound understanding of the energy market.

To learn more, access the white paper “7 Key Factors Influencing Market Adoption of New Energy Technologies” for free.

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