The coming weeks offer big new showcases for the humble electric-vehicle.
Auto makers, rushing to meet tightening emissions standards, are unveiling new battery-powered vehicles at the Los Angeles Auto Show this week, mirroring last month’s flood of such cars by European companies. These curtain-raisers will be followed by first shipments of General Motors Co.’s Chevrolet Bolt, a $35,000 Tesla fighter that goes on sale next month.
What’s missing are consumers, however. Auto makers are suffering from a glut of U.S. sedan and coupe inventory amid strong demand for light-trucks. The coming addition of electric-vehicle capacity could worsen that oversupply if shoppers continue to prefer pickups and sport-utility vehicles to plug-in cars.
Globally, sales of plug-in electric cars are up in 2016, driven by Chinese customers taking advantage of aggressive tax rebates and other incentives. But total volumes remain less than 1% of the 83 million light-vehicles likely to be sold this year. Tesla Motors Inc.’s pricey electrics aside, cars like Nissan Motor Co.’s Leaf and BMW AG’s i3 haven’t widely caught on, and many auto makers say it is unclear when demand for electric vehicles will blossom.
That is sobering news for executives hoping they will help meet tougher emissions standards. China, Europe and the U.S. have established regulations prodding development of electric cars. Whether tax incentives and extensive efforts to lower battery costs can spur demand in the short term isn’t a sure bet.
Moody’s Investors Service predicts 19 new electric models will go on sale in the U.S. alone by 2020, potentially tripling what is currently available. Auto makers presenting in California this week, including Tata Motors Ltd.’s Jaguar and Hyundai Motor Co., are expected to give updates on how they will compete in this electrification race, and Fiat Chrysler Automobiles NV will show off a plug-in version of its popular Pacifica minivan for the first time just before the Los Angeles Auto Show opens.
European auto makers have gotten more optimistic on electrics in the wake of Volkswagen AG’s emissions-cheating scandal, which tarnished diesel’s image as a green alternative to gasoline. Volkswagen and Mercedes-Benz parent Daimler AG, which combined sell 13 million vehicles a year, predict electrics will account for between 15% and 30% of all vehicle sales by 2025.
Not everyone is as bullish.
At the Paris auto show, for instance, BMW AG sales chief Ian Robertson said diesel will remain the preferred energy source in Europe even in the wake of Volkswagen’s problems. “We see some gasoline plug-in hybrids replacing diesels, but it’s inconclusive,” he said. “There doesn’t appear to be a tipping point…anytime soon.”
Researcher IHS Automotive expects the launch of new EVs to quadruple annual U.S. electric-car sales to around 320,000 by 2020, still less than 2% of the current market. Selling them will require heavy government incentives amid continued cheap gasoline and America’s love for SUVs, it believes.
“There really isn’t enough of a market to do justice to all of the development and effort being put into EVs,” IHS analyst Paul Lacy said.
Toyota Motor Corp., a critic of pure electric vehicles and heavily dependent on sales of light trucks and hybrid vehicles that require gasoline for most travel, said on Tuesday it is reluctantly changing course. “Though electric vehicles have many issues such as its range, and the length of recharging time and battery performance, depending on the energy situation in each country and region, and infrastructure, we would like to get ourselves ready to commercialize them,” said Takahiko Ijichi, Toyota’s executive vice president.
The International Energy Agency, an energy policy advisory group whose 29 members include the U.S., Germany and Japan, said in its 2016 electric vehicle outlook that it “will require substantive policy support to accelerate the momentum” of adoption of electric cars. Highlighting the difficulty of matching ambitious sales goals with real demand, Japan this year slashed its targets for electric vehicles and charging stations in half to one million electric vehicles and more than one million charging stations by 2020.
There are positive developments, including big investments coming in the U.S., China and Europe for charging stations. Costs for lithium-ion batteries have fallen 65% since 2010 — to about $350 per kwh in 2015 — and are expected to continuing falling, say analysts.
This could lead to a decline in EV development costs even as the cost to create cars with conventional engines rises. “At some point these two curves will cross,” Volkswagen Chief Executive Matthias Müller said. “Exactly when that is we can’t say,”
Hyundai’s vice president of product planning, Mike O’Brien, last week said the company isn’t looking for governments or oil-price fluctuations to drive change. “The market is going to switch and the dominant player in the marketplace will be millennials,” he said. Shifting demographics and urbanization “will by themselves contribute to a significant change of electrified vehicles adoption, separate from fuel price and regulation.”
–Adrienne Roberts contributed to this article.
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