Electric vehicles are still in their infancy, and while we’ve seen some recent model introductions, consumer demand has so far been modest. While we can expect no more than modest demand in the foreseeable future, we can also expect OEMs to intensify investment, fully appreciating what is at stake in a very competitive industry.

—Gary Silberg, National Automotive Industry leader for KPMG LLP

Despite the relatively modest sales projections for electric vehicles over the next 15 years, automotive executives in the KPMG survey indicate that a wide range of electric technologies will be an increased focus of their investment matrix. Over the next two years:

• 83% say automakers will increase investment in e-motor production;
• 81% say investment in battery (pack/cell) technology will rise;
• 76% expect increased investment in power electronics for e-cars; and
• 65% predict increased investment in hydrogen fuel cell technology.

Additionally, executives expect that hybrid fuel systems, battery electric power and fuel cell electric power will be the alternative propulsion technologies to attract the most auto industry investment over the next five years.

What’s interesting is that automakers are placing bets across the board, and large bets at that, because no one knows which technology will ultimately win the day with consumers.

In last year’s KPMG survey, execs told us it would be more than five years before the industry is able to offer an electric vehicle that is as affordable as traditional fuel vehicles for mainstream buyers. It will be interesting to see how consumer adoption progresses as automakers discover ways to offer these electrified cars at better price points and the infrastructure for these vehicles becomes more robust and accommodating.

—Gary Silberg

Despite the investment and effort on electric platforms, 61% of executives say the optimization (e.g., downsizing) of internal combustion engines (ICE) still offers greater efficiency and CO₂ reduction potential than any electric vehicle technology based on the current energy mix.

When asked to name the electrified propulsion technology that will attract the most consumer demand until 2025, auto executives were as mixed as their projected investments. The variation in response rates between fuel cell electric vehicles (20%), battery electric vehicles (16%), full hybrids (22%), plug-in hybrids (21%), and battery electrified vehicles with range extender (18%) was slight.

The industry faces a tough decision about whether to place more trust and resources in fuel cell or battery vehicle concepts, and these results show that it’s way too early to call right now. Clearly hybrids, whether plug-in or full, are more mature and have more market presence, but this battle for the dominant technology platform will continue for years to come.

—Gary Silberg

For the KPMG Global Automotive Executive Survey 2012 , KPMG interviewed 200 C-class global automotive executives, including 25 from North America, representing vehicle manufacturers and suppliers, from October through November 2011. KPMG has released an annual survey of automotive executives expressing their views on the state of the industry since 1999.