Automakers Gearing Up for Electric Car Push Weighted By Concerns Over Growing Demand

Automakers are gearing up for the next round of tougher emission standards in the U.S. and beyond with electric car showings at the Los Angeles Auto Show this week.

That will be followed soon by first shipments of the $37,495 Chevrolet Bolt, which goes on sale next month.

The question remains over whether enough car buyers will follow the lead set by regulators and global automakers. The Wall Street Journal suggests there may be a glut of plug-in electrified vehicles for now as consumers prefer pickups and SUVs over PEVs as gasoline prices stay low. While Chinese automakers and customers have been driving up sales, total sales volumes for global PEV sales will still make up less than one percent of the 83 million new light-duty vehicles sold in 2016, according to Journal.

Tesla has built an enthusiastic audience, but other automakers have seen PEV sales stall. Electric cars such as the Nissan Leaf and BMW i3 haven’t widely caught on as automakers wonder when demand for PEVs will blossom.

At the LA Auto Show, Jaguar and Hyundai are expected to make presentations on how they’ll be competing in the electrification race. Fiat Chrysler Automobiles will be showing a plug-in version of its popular Pacifica minivan for the first time just before the show opens.

European automakers are feeling pressure from Tesla and regulators in the wake of Volkswagen’s diesel emissions-cheating scandal. VW and Daimler unveiled electric concept cars recently at the Paris Motors Show, with both companies anticipating PEVs to make up between 15-to-30 percent of all vehicle sales by 2025.

Moody’s Investors Service predicts 19 new electric models will go on sale in the U.S. alone by 2020.

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Some industry executives are skeptical about PEVs reaching strong sales anytime soon. At the Paris auto show, 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,” Robertson said. “There doesn’t appear to be a tipping point… anytime soon.”

Research firm IHS Automotive expects the launch of new PEVs to quadruple annual U.S. sales to around 320,000 by 2020, which would still less than 2 percent of the current market. Selling them will require heavy government incentives amid continued cheap gasoline and America’s love for SUVs, IHS Automotive said.

“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.

While Toyota has been a critic of pure electric vehicles, the company 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.

There are positive developments for PEV adoption in global markets, including big investments coming in the U.S., China, and Europe for charging stations. Costs for lithium-ion batteries have fallen 65 percent since 2010 – to about $350 per kwh in 2015 – and are expected to continuing falling, analysts say.

Declining battery expense could lead to a decline in PEV development costs even as the cost to create cars with conventional engines rises.

“At some point these two curves will cross,” VW Chief Executive Matthias Müller said. “Exactly when that is we can’t say,”

Wall Street Journal