Subaru, Mazda happy being EV latecomers
Subaru owners are a green bunch. They tend to bike, camp and kayak more than other drivers and inordinately live in the parts of the U.S. with the toughest emissions mandates. The company plays to this ecological image by producing more than 1 million vehicles each year without sending any waste to landfills. Yet the Subaru set can’t buy a battery-powered version of its favorite car.
Today’s Subarus run exclusively on fossil fuels. Later this year, the company plans to introduce a plug-in hybrid version of its Crosstrek SUV, combining gas engines with electric motors. A fully electric car is still years away.
“If we put one out now, we’re going to be competing in the teeth of the market with everybody else,” Subaru Corp. U.S. Chief Executive Officer Tom Doll explained in an interview. “This way, we can let them kind of sort it out, then we can come in.”
Subaru is among a small group of automakers setting a casual pace in the global race for electric vehicles. Mazda Motor Corp. is on a similarly relaxed timeline — at least two years from introducing a battery-driven motor. Mazda could not be reached for comment, but the company has said the relative efficiency of its gas-powered cars afford it the luxury of moving slowly and deliberately. The far larger Fiat Chrysler Automobiles NV currently offers just two vehicles featuring battery technology: the Chrysler Pacifica Hybrid minivan and the all-electric Fiat 500e.
These laggards appear content to let other research and development departments perfect the technology while consumer demand slowly merges with accelerating emissions mandates. Demand for electric vehicles outside China is weak, with battery-powered models accounting for only 1 in 50 or so vehicle sales worldwide. Battery technology is still expensive, and charging infrastructure is sparse in many parts of the world. Above all, it’s hard to find examples of manufacturers wringing profits from the electric revolution right now.
Slow sales haven’t deterred others from charging into what may be the auto industry’s biggest growth story in decades. Volkswagen AG is in front, with 17 battery-powered models available right now, followed by BMW’s 13 plug-in vehicles. Even a more cautious U.S. automaker, such as General Motors Co. expects to have 20 all-electric options by 2023.
A slow roll to electrification can make sense. An automaker gets to save in the near term by allowing rivals to pay for electrification R&D. In a few years, when the costs of batteries have dropped drastically, a latecomer can then try to hammer out deals with the best suppliers and be right back in the electric race.
“That is the bet,” said BNEF analyst Colin McKerracher. “Basically, they think they can wait and see.”
While skipping the EV infancy has advantages, there are risks to being late. Subaru, for instance, could tarnish its halo among the environmentally sensitive drivers now placing hundreds of thousands of reservations for emission-free Teslas. Latecomers also risk missing out on recruiting top electric engineers and establishing vital battery-supply deals.
Battery prices have fallen by 79 percent in the past seven years, a pace that will make electric vehicles cost-competitive with internal combustion cars by 2024, according to BNEF. “Once this happens, things will shift quite quickly,” McKerracher said. “Even now, you’re starting to see more and more automakers say, Yes, we can actually make money on these things.’”
Subaru, meanwhile, will make its late debut as the manufacturer of a battery-powered vehicle by co-opting hybrid technology from Toyota, which owns almost 17 percent of its shares. That partnership and Subaru’s relatively small size enables company leaders to believe they can afford to be patient.
“I’d rather be last in and get it right,” said Doll, Subaru’s U.S. chief, “than be first in and destroy my brand image and reputation.”