Carmakers hedge bets with electric vehicles
Automakers are moving aggressively to develop electric cars as governments in key markets in China, India, Europe — even California — consider banning gas and diesel engines.
Paris officials this month announced a plan to ban gasoline-powered cars from city streets by 2030. The move came after the city’s mayor said diesels would be banned by 2024, when Paris hosts the Summer Olympics.
California Gov. Jerry Brown is considering a ban on sales of internal combustion engines in that state — perhaps in a decade. Bans in China and Britain would take effect in 2040, while India says it is setting an “aspirational target” of all-electric sales by 2030.
The flurry of activity comes at a time when the Trump administration is focused on rolling back stringent gas mileage rules put in place under former President Barack Obama. Those rules — which encourage development of electric and fuel-cell powered cars — would require automakers to produce fleets that average over 50 miles per gallon by 2025.
Electric-vehicle boosters worry the Trump administration will eliminate a federal tax credit that provides up to $7,500 to drivers who purchase electric cars. And they say the U.S. lags in creating the charging stations necessary to drastically boost the number of EVs on the nation’s roads.
Automakers say they can’t wait for Washington to move forward because they have to compete in foreign markets where the future of gas and diesel engines looks dim.
General Motors Co. earlier this month said it was planning for a future in which none of its cars or trucks are powered by gasoline or diesel. It said it would introduce at least 20 new all-electric, zero-emission vehicles by 2023, including two in the next 18 months that are based on the all-electric Chevrolet Bolt.
That same day, Ford Motor Co. said it would introduce 13 new electric or hybrid vehicles globally in the next five years.
Speaking in Washington, GM CEO Mary Barra reiterated that GM is “very committed to an all-electric future.” But she said drivers still have to be persuaded to want electric cars, even in places where the government mandates their use.
“Clearly we believe that the Chinese market will have the highest electric vehicles most quickly because of the regulatory environment,” she said. No matter the mandate, she said, “You still have to make customers happy and you have to fill their needs.”
Barra touted the technological improvements automakers have made with electric cars in recent years, although she said governments will have to have a play a role in making them financially viable.
“I think we’re getting cycles of learning and the experience to make it affordable,” she said. “I think it’s going to be part of the solution, both from what customers want to drive because we look at what the customer really cares about, but also from a regulatory environment and doing the right thing for the environmental perspective.”
Michelle Krebs, executive analyst for Autotrader, said automakers and U.S. regulators will have time before most of the global gas and diesel engine bans go into effect. But she said China will play a key role in shaping the global market for electric cars.
“China is going to be the key factor because China can regulate it,” she said. “China is the largest car market in the world, and everybody that wants to do business there will have to get on board.”
Krebs said automakers will have to “get to where electric vehicles cost the same as a gas car.” But she said estimates show that could be a decade away.
“Automakers who are global can’t afford to back down,” Krebs said. “The U.S. government may roll back fuel economy standards, but global players have to move forward with their plans because they want to play there.”
Appetite for SUVs
Drivers in China have have demonstrated a preference for larger cars like their counterparts in the U.S., according to Paul Lewis, vice president of policy and finance at the Eno Center for Transportation, a Washington think tank with a mission of improving transportation safety and sustainability.
“China is trying to encourage electric vehicles, but what they’ve found is that consumers in China really want SUVs,” he said. “Consumers have an appetite, particularly as fuel prices remain pretty low, for big automobiles. That’s what consumers want to drive — and that’s not just for Americans, but for consumers all over the world.”
Lewis said the overall number of electric cars that were sold in the U.S. in 2016 was smaller than the increase in the number of small trucks and SUVs between 2015 and 2016.
He said two big obstacles remain for potential EV buyers: cost and the distance that can be traveled on a single charge.
“Electric vehicles are plain and simple more expensive than gas-powered cars,” Lewis said. “One thing the auto industry has done well is making the internal combustion engine very affordable. It’s going to be hard to justify the purchase of something that costs a lot more that’s not going to take you as far.”
But even those barriers are dropping: The all-electric 2017 Chevy Bolt starts at $36,620 before the $7,500 federal income tax credit and can go up to 238 miles before needing a recharge.
Exporting electric tech
“Electric vehicles are going to be the future,” said Andrew Linhardt, the Sierra Club’s associate director for legislative and administrative advocacy. “Everyone knows the direction this is going, both for technological reasons and the fact that we have to do something with the climate.”
Linhardt said boosting the use of electric cars in the U.S would allow automakers to reap the economic benefits of producing them for both domestic and international consumers.
“We need to probably replicate at least as many fueling stations as there are in the U.S. with charging stations,” he said. “If the U.S. can this get right, we can export it around the globe. It’s not something that’s going to happen overnight, but if we don’t start now, we’re never going to get emissions from transportation down to the levels that we need.”
Luke Tonachel, senior vehicles analyst for the Natural Resources Defense Council, said the Trump administration should protect the tax credits put in place to make electric cars more affordable.
“Electric vehicles are relatively new on the market, and we should continue to accelerate their growth,” he said. “The infrastructure is beginning to roll out. If we sit back and fail to focus on new vehicle innovation, other markets are going to move quickly to be the producers of the cleanest vehicles.”