In five years, Sergio Marchionne will be viewed as either one of the great prophets of the automobile industry or the guy who missed the boat on one of its most revolutionary technologies.
While the FCA chairman’s competitors are rushing headlong toward rapid electrification of their fleets, Marchionne sounded a welcome word of caution this week at the North American International Auto Show in Detroit about chasing a future consumers aren’t yet ready to embrace.
“Making an announcement at the Detroit auto show that we’re going to have X-number of vehicles that are electrified in the future ... is that a wise economic thing to say?” he asked. “The answer is probably ‘no.’ ”
While promises of a fleet of new electric models are grabbing headlines, the show floor provides ample evidence to support Marchionne’s concern. The displays are filled with SUVs and pickup trucks; EVs are scarce.
The fully electric future is still a ways off, and demand for it is sorely lacking. Further out still is an economy built on autonomous vehicles.
Electric vehicles make up about just 1 percent of the current auto market, and though that’s expected to rise, they still comprise only about 200,000 of the 17 million cars and light trucks sold in North America.
Meanwhile, demand for SUVs and trucks in the U.S. is growing, even while overall sales dip.
Ford Motor Co. Chairman Bill Ford said earlier this week at NAIAS that his company is committed to electrification. The company’s new goal is to develop 16 fully battery electric vehicles and 24 hybrid and plug-in vehicles by 2022 — and to offer electric versions of its most popular models. It had previously pledged $4.5 billion to this endeavor, but announced this week it will more than double that investment to $11 billion. Currently, Ford only makes one fully electric model, a version of the Focus.
“We’re going to electrify even our most iconic vehicles,” he said at Cobo Center. “The only question is, will the customer be there with us?”
That’s a question Mark Hogan, a director of Toyota Motor Co., added that as long as gasoline is in the mid-$2 range, customers won’t turn to EVs.
If that’s the case, the pragmatism Marchionne advises seems a smart course.
And while Bill Ford has consistently backed green initiatives, the company is pushing for a review of strict Obama-era fuel economy standards.
Automakers have made it clear the 54.5 mpg standard by 2025 is unattainable, and the Trump administration has said it wants to offer automakers some relief, and it should follow through with more realistic targets.
Meanwhile, automakers should continue working to improve fuel economy and reduce carbon emissions in their vehicles, and they are.
A recent report from the Environmental Protection Agency found that in 2016, SUVs reached record high market share, while also achieving record low carbon emissions and record high fuel economy. Cars and trucks all improved.
CO2 emissions and fuel economy have improved 10 out of 12 years, and that includes big fuel gains in large SUVs and trucks, according to the report.
Balancing continued improvements in the performance of the internal combustion engine with efforts to make EVs marketable seems a prudent course for the automakers.
They must stay responsive to consumer demand in this country, lest they end up with showrooms filled with vehicles customers have no interest in buying.