Honda Executive Questions Policy Support for Electric Cars

John Mendel, Honda’s executive vice president, yesterday called for policy makers to refrain from promoting “the virtues of one technology and demonizing another.” Speaking at the Moving Ahead 2010 conference at Ohio State University, Mendel suggested that government agencies are “laying all their chips on the technology du jour.” Without explicitly pointing fingers at EVs, Mendel made it abundantly clear that he believes support for electric cars and next-generation batteries represent “a rush to select a winner that could lead us in the wrong direction.”

The Department of Energy has invested $1.4 billion in plug-in cars and battery research and development grants, $25 billion on loan interest loans, and has created a federal tax credit up to $7,500 for battery-powered vehicles. Meanwhile, consumer incentives for conventional hybrids have not been renewed, and investment in hydrogen fuel cell technology has been slashed.

“To put the country on the course to a single technology without fully understanding its implications, including whether customers will buy it, will put us behind in achieving our objectives,” Mendel said. The Honda executive believes that government’s role should be to set goals for achieving improvements in air quality, climate change and energy sustainability, and to “leave it to industry to figure out how to get there.”

Slow Adoption of New Technologies

Mendel pointed to the slow rate of adoption of conventional hybrids, which represent less than 3 percent of new car sales, 10 years after Honda introduced the original Honda Insight in December 1999. “If we can’t convince people to move a hybrid, which is fully functioning and is as easy to refuel as an internal combustion engine vehicle,” Mendel questioned, “then we have to serious consider what we will get them to accept in terms of battery electric or plug-in hybrid vehicles with their myriad of limitations, such as cost, driving range and refueling or recharging options.”

In the near term, Honda will pursue “expanded use of hybrids,” with a focus on making hybrid technology more affordable and appealing. With the 2010 Insight, Honda tried to offer the most affordable high -efficiency hybrid, but the Prius-look-alike did not meet its sales targets—because the price tag is not low enough and the mpg is not high enough. The company could face a similar problem with its attempt at hybrid sportiness, the Honda CR-Z due this summer. Mendel reiterated Honda’s plans to offer hybrid technology in its Acura luxury brand, and said the company was investing in lithium ion battery technology for future hybrids.

Hydrogen fuel cells are the “ultimate alternative to petroleum,” according to Mendel. He pointed to the Honda FCX Clarity as a successful use of the technology, but acknowledged that will take decades to overcome market obstacles.

Reluctant Steps Forward

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Despite its questioning of policy support for and the environmental benefits of electric-drive cars, Honda is considering plug-in hybrids. “We have a few things in the kitchen,” Mendel said—although he expressed concerns about the cost, weight and durability of hybrids with larger battery packs. Honda is also researching a short-distance all-electric city commuter car, according to Mendel.

The Honda executive said that new electric cars hitting the market later this year have roughly the same driving range as Honda’s 1997 EVPlus electric car, and continue to face cost issues. “Despite legitimate advancements in [electric car] technology and infrastructure,” Mendel said, “There remain significant hurdles to high-volume market appeal.”