It’s regulation — not consumer demand — that is driving the OEMs to bring more electric vehicles to market
Gasoline is selling for less than 90 cents/litre in much of the country as we go to press — fully a third below its mid-summer 2014 peak. And sales of bigger, thirstier vehicles began to take off almost the minute the price went down the first cent.
Given that there’s no sign of any quick rebound in the price of oil, one might expect that automakers are now rethinking the urgency of their charge to electrify vehicles. It’s not as if EVs are making much noise in the market — at least in terms of sales.
At best, they have achieved tepid sales results, occupying just a tiny niche position in the market. Total EV sales in the U.S. in 2014 were less than half of one per cent of the total market — and at least one industry analyst forecasts them to decline in 2015.
Their penetration in Canada is even lower. The Nissan Leaf — Canada’s top-selling EV — accounted for around 1,000 sales here in 2014. That’s just over one per cent of that brand’s own sales and an even more miniscule fraction of the record 1.85 million new vehicles sold in this country last year.
Clearly, slowing down a little on the electric front could save automakers a fortune in development costs without causing a significant loss in sales. But it’s not going to happen. Whether there’s a market for them or not, automakers are proceeding full speed ahead with the development of more electrified vehicles.
Cases in point: In addition to the already available Ford Focus, Mitsubishi i-MiEV, Nissan Leaf, Smart and Tesla Model S electric vehicles, BMW’s i3 is now on the market; Mercedes-Benz has an electric B-Class on the road; development of Tesla’s new Model X and Model 3 is well along; Audi is said to be developing a pair of pure EVs for 2018; Chevrolet showed its Bolt EV concept at the Detroit auto show, suggesting a 2017 production time frame; and even Cadillac is rumoured to be considering a pure electric.
The question is, “why?” In the face of low gas prices and static, if not diminishing market demand, why do the automakers keep pushing electrics? The answer is, they can’t stop.
Regulation, not the market, is the real driver behind their commitment to EVs. Progressively more stringent fuel consumption standards taking effect from now until 2025 will force increased levels of electrification to meet them. Barring some unexpected technological breakthrough, there appears to be no other way.
Beginning this year in California, high-volume manufacturers are required to achieve sales of zero-emission vehicles (read EVs) equal to 3 per cent of their total sales, or acquire equivalent carbon-reduction credits (It’s complicated!).
That doesn’t mean, however, that we’ll all be driving, and selling, totally electric vehicles in the near future. While progress is being made, the limitations of EVs — the same limitations that drove them from the market a century ago — are still very real.
Limited driving range and excessively long recharge times, compared to refueling today’s gasoline and diesel powered vehicles, will continue to render them unacceptable to many if not most buyers, especially those who live outside major metropolitan areas.
So what’s the answer? In the interim, at least, it’s probably the typical Canadian way of compromise. And the compromise is partial electrification — specifically, more hybrids, both conventional and plug-in. Manufacturers from Hyundai to Mercedes-Benz showed off models of both types in Detroit. More and more, those hybrids are likely to be primarily “series” rather than “parallel” in configuration. That is, the internal-combustion (IC) engine will be used primarily to keep the batteries charged rather than driving the wheels directly.
Accompanying that move, the size of the internal-combustion engines used in both types of hybrids, as well as non-hybrids, continues to decrease and more of the workload is being carried by the electrical component. BMW’s i8 hybrid, for example, uses a modified motorcycle engine.
The i8 also illustrates one other trend worth noting: much of the action on both the EV and hybrid front is among luxury marques rather than at the lower-priced end of the market where it occurred initially. Part of the reason for that focus is that there’s a better chance of recouping the extra costs of an EV if it can be sold as a premium brand.
The bottom line is, however, low gasoline prices go, they’re unlikely to reverse the snowballing move toward electrification. Unless, that is, the U.S fuel-consumption regulations for the 2017-25 period are repealed or dramatically eased. Unlikely, perhaps, but stranger things have happened.
