An Onslaught of EVs Are Coming, But No One Wants to Buy Them
【Summary】Automakers and tech companies may be working on coming out with new electric vehicles with more range and high-tech features, but buyers still aren’t ready to trade their gasoline-powered cars in yet.
Automakers are going all in on electrified vehicles. Even ones like Toyota that thought electricity wouldn't be the way forward, are backtracking and moving ahead with EVs. Toyota, for example, is planning to sell 5 million electrified vehicles per year by 2030. That's an astonishing amount and Toyota's not alone in coming out with lofty goals for EVs. Hyundai is looking to come out with 38 new electrified vehicles over the next eight years.
Fuel economy and emissions regulations are the reasons for the push towards electrified vehicles, so automakers' hands are forced. While new electric vehicles are coming from multiple automakers in the next few years, consumers aren't ready to make the switch over from gasoline-powered vehicles to battery-powered ones.
Consumers Still Link Their Gasoline-Powered Cars
According to a report by Automotive News, EVs only account for one percent of automotive sales worldwide at the moment. Those figures are even lower for the United States. The outlet, citing research conducted by LMC Automotive, claims that the number of sales will only go up to 2.4 percent for the U.S. and less than 10 percent globally by 2025. That kind of growth doesn't bode well for EVs, but automakers don't have any plans to slow things down.
"When you hear people talk about the tipping point, it's really that they're counting the number of product offerings," said Hau Thai-Tang, Ford Motor Co.'s global head of product development and purchasing. "Nobody can cite what the actual demand will be."
The global assault of battery-powered machines will continue thanks to the rapidly declining costs of batteries, claims Auto News. With that in mind, it shouldn't come as a surprise to hear a total of 127 battery-electric vehicles will be introduced globally in the next five years, claims Thai-Tang. LMC, according to the outlet, believes that 75 models will be available for consumers to purchase in the U.S. by that time alone.
"There's certainly more hype that real growth in sales volume," said Jeff Schuster, senior vice president of forecasting for LMC in an interview with Automotive News. "How long have we been talking about EVs? We're now finally seeing them in numbers, but the sales numbers are not taking over the industry by any means."
Why Automakers Continue To Pursue EVs
There are a few reasons as to why automakers are all looking into electric vehicles despite the glaring fact that consumers aren't interested in them. According to Automotive News, one of the reasons is to stay on course with market leaders like General Motors and Tesla. As the outlet points out, GM's CEO Mary Barra is targeting 2026 as the year the automaker sells more than 1 million EVs profitably. To help reach its goal, GM is going to introduce 20 new EVs by 2023.
Tesla is also another leader in the EV segment, as the automaker looks to build 500,000 battery-powered vehicles in 2018, which could either be spurred on or deterred by the upcoming Model 3 sedan.
Wall Street is another large reason for the continued movement towards EVs, as Auto News reports that it continues to reward and value electric-car manufacturers like Tesla as being worth more than traditional ones from Detroit. According to the outlet, Tesla's shares are up approximately 60 percent this year while Ford's have only increased by five percent.
"Tesla has a cult following and that helps build the hype," said Schsuter. "Other companies say, ‘How do we capture some of this buzz Tesla has? Can we do it by electrifying our lineup, too?'"
Automotive Suppliers Aren't Sure About The EV Push
Automakers may see improvements in battery technology and the low cost of batteries as motivating factors to build new EVs, but automotive suppliers have their doubts. As Auto News claims, suppliers are having to invest in developing battery-related components and build factories to keep up with automakers' plans.
The outlet points towards Magna International Inc., which became one of the first to take an autonomous vehicle across international borders, one of the largest automotive suppliers in North America, as having some large concerns over the move to EVs. Magna International INC doesn't see demand for EVs increasing over the next few years. The company, as Automotive News reports, predicts the electric-vehicle segment will grow between three and six percent globally by 2025, claims Jim Tobin, chief marketing officer.
With that kind of growth, LMC, according to Auto News, forecasts gasoline-powered vehicles to account for approximately 85 percent of U.S. new car sales by 2025. The only thing the outlet sees that could switch the shift to EV's favor is an increase in gasoline prices. Citing Bloomberg, the outlet claims that owning an EV could reach parity with gasoline-powered ones by 2029.
Some Are Optimistic About EVs
Despite all of the research and evidence pointing towards EVs not being popular in the near future, some individuals are optimistic. Rick Haas, a former chief engineer with Tesla who is now in charge of North American operations of Indian automaker Mahindra & Mahindra, believes there's a lot to be optimistic about. According to Haas, stricter regulations in China and high-tech features that are coming to EVs first will bring some attention to electrified cars.
"Things move about 10 times the speed that they moved 25 years ago," said Haas. "As soon as the ball crests the hill and everyone thinks, ‘I'm comfortable with this,' then the whole industry will flip."
Every automaker and tech company is afraid of falling behind too, which could result in some being labeled as winners and losers. "There will be a lot of winners and losers," said has. "Companies will die because of this."
Ford doesn't want to be in the camp of losers, as Thai-Tang claims the automaker's engineers and suppliers are working on ways to develop a cost-efficient battery that's cheaper and better than lithium-ion batteries that are currently available. While batteries are one of the major components of EVs that need to be improved, Automotive News claims that marketing may be a larger hurdle for automakers.
"The question we've been asking ourselves is, "OK, if you're going to launch in that clutter of 120 competitive products, what's going to allow somebody to want to even consider your product?'" said Thai-Tang. Ford's betting on the design of its vehicles to help it stick out of the crowd. "But not in some weird science-fair kind of provocative" way, he said.
Automakers and tech companies are going to have to find a way to make electric vehicles attractive to consumers or be prepared to have hundreds of brand new EVs sitting idly on their lots.
via: Automotive News
Vineeth Joel Patel
Joel Patel has been covering all aspects of the automotive industry for four years as an editor and freelance writer for various websites. When it comes to cars, he enjoys covering the merger between technology and cars. In his spare time, Joel likes to watch baseball, work on his car, and try new foods
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