This article found in the September issue of The Economist titled "Plugging Away", discusses the European market for electric cars. The article specifically mentions a French firm by the name of Groupe Bollore' and their approach to this rising market. The article discusses how Bollore' has focused it's efforts not on the electric car market itself, but on the management and storage of the energy that will make such cars run. Bollore' claims to have manufactured a battery that is more powerful and more resistant to external temperatures than the lithium-ion batteries currently being used by electric car manufacturers. Whether or not Bollore' indeed makes a superior battery is not the imposing question however, the question is where do we think the market for electric cars is heading?
In looking at what the electric car market may or may not do in the future there are many economic factors to consider. The first and most prominent factor is whether governments will even allow a major transition to electric vehicles. Just as important is evaluating what the implications would be to the price of oil for existing automobiles that run on gas? In looking at a supply and demand curve for oil, if you introduce a supplement in the form of electric cars, what can we expect to happen to the curve? If an affordable option is streamlined and introduced into the market you can expect the demand for oil to shift to the left. This shift would inherently cause a drop in price for oil. If on the other hand the electric cars continue to be higher priced than gas powered automobiles we can expect little to no change to the demand for oil.
In examining the demand for oil and the effects of what the pricing of electric cars will do to the demand we can see the risk that Bollore' is taking. Bollore' is currently spending billions of dollars to push forward the manufacturing and marketing of their new batteries. If the market for electric cars does not take off as Bollore' is expecting and electric cars do not become more affordable to the public, Bollore' will crumble. On the other hand, if Bollore' can indeed provide a cost affordable battery for electric cars that is better than the current option and the electric car market does take off and gain significant market share in the automobile market then the billions of dollars spent by Bollore' will have paid off in a very big way.