This article evaluates the challenges electric vehicles face on their way to mainstream use and the repercussions for the global oil demand and world economy if and when they are finally accepted by the public on a grand scale. Electric Vehicles (EVs) are one of the options considered helpful in reducing dependence on imported foreign oil. They are not new, but the political will to promote them has only recently gained momentum. China, EU member countries and the US among others, are providing investment and research in order to bridge the gap between today’s flawed models and tomorrow’s high performance machines.

The transition from gas fired vehicles to EVs has already begun. The political will that exists in countries with highest consumption of energy is the driving force behind this ongoing trend. Governments around the world are providing generous subsidies, tax breaks, and other incentives. Scientific research is directed at removing obstacles that still remain in EVs path to widespread use. All major automakers around the world are competing for a share of the EVs future market.

But there are a number of problems that must be dealt with before EVs could actually compete with cars that run on gas. The recharging infrastructure is not in place, the performance is not as good as the competition, the technology is a work in progress, and the price is too high.


Electric car prices are higher than comparable gas fired automobiles; part of the reason for this is the battery pack. Current pack prices are approximately $600 per kwh. If an EV has a 16 kwh pack, the price for battery alone would be around $9,600. In many cases the cost of the battery pack is one half of the price of electric vehicle itself (Table 1 compares prices of electric and internal combustion engine [ICE] vehicles).

However, not all EVs are expensive, with cheaper models already on offer at prices that are comparable to those of gas powered cars (Table 2 lists affordable EVs now available).

A range of performance issues are associated with electric vehicles which include the following:

• In terms of maximum speed and acceleration, electric vehicles will not differ significantly from today’s cars. However, EVs can only run at top speed for a very short time due to overheating issues, which limits their application to city only transportation.

• When batteries are charged, EV acceleration is good, but as charge weakens acceleration also diminishes.

• Charging times are long and cumbersome, and an EV’s range is short or about one third of gas powered vehicles on average (See Table 3 for range and charge time for well known EV models).


The infrastructure is not in place for EVs, and many problems must be overcome:

• Major growth in popularity of EVs would place significant strain on electricity grid and distribution systems. Early adopters could be accommodated with little impact but, as the numbers increase, there could be a real possibility of local distribution networks being overwhelmed.

• The business case for investment in recharging infrastructure is a major issue. Infrastructure development might not kick start the market and investment may eventually be limited to government projects.

• Key technologies such as batteries, electric motors, and motor controllers are still undergoing improvements.

• International cooperation in setting standards, including for charging interfaces, safety requirements and payment mechanisms are yet to be developed.

• Collaboration between utilities, distribution companies, vehicles manufacturers, and national regulators do not exist yet.

• Further uptake of EVs will tend to be heavily supported by governments and industry programs thus, also threatened by national austerity programs.

• The political will to invest in promoting the widespread use of electric vehicles is evident in important legislation signed in to law in the past few years (see Table 4 for laws ratified by the US Congress).


Most people are reluctant to accept EVs’ poor performance and lack of existing infrastructure; furthermore many people see electric vehicles as ugly. Early models looked odd, not trendy, and not chic. The design of newer models has improved considerably; but much promotion is needed to overcome EVs’ image problems and the general public’s resistance to change. Car buyers expect high performance, reasonable prices, and an attractive design in return for their money.

The main feedstock for producing electricity is non-crude fossil fuels, thus despite claims to the contrary, electric vehicles’ impact on the mitigation of greenhouse gases is considerably less than what is currently perceived. Based on the EIA consumer energy report (Figure 1), currently non-crude fossil fuel makes up 68% of the feedstock used to generate electricity in the US.

Although renewable energy’s share in producing electricity will increase over the years (Figure 2), coal will be the most prominent feedstock for generating electricity 20 years in to the future.


If and when electric vehicles manage to gain widespread acceptance and use, major consumers of energy will need less crude oil and more coal and natural gas (feedstock for generating electricity). However, in view of improved fuel efficiency in ICEs, EVs are not expected to significantly cut into demand for ICE vehicles in the short- and mid-term. But there is a chance that in the long-term, part of the transportation sector now populated by ICE vehicles will be taken over by EVs; especially if innovative and new technologies emerge.

With all the support EVs receive from governments and auto-makers, and judging from continuous progress they have made during the past few years, a slow but steady growth followed by a steep rise in popularity some years down the road is possible. Oil producers should monitor the development of EV industry and its success in shifting demand from crude oil to other sources of energy so that decisions regarding investment and production targets could be modified accordingly.

*Mr Ghaffari is a Senior Energy Policies Expert in the Energy Policies Department of the Iranian Ministry of Petroleum. These are his personal views and they do not represent the views of the ministry.