Electric, Hybrid Car Sales To Soar, With American Reluctance

Electric, Hybrid Car Sales To Soar, With American Reluctance.

“EV questions remain, but we believe it is the sharply rising cost of regulatory compliance that is pushing (manufacturers) to change their strategy towards EVs, as much as improvements in battery technology”

Americans won’t buy as many electric cars and hybrids as sales soar around the world, while the market share of battery powered vehicles will hit almost 25 per cent by 2025.

That’s the verdict of a couple of newly published reports, which also contain the following unsaid sub-text, which should please Americans.

These big increases in market share won’t be because consumers have fallen in love with electric cars and hybrids because of the great job they do, their affordability and flexibility. They will be dragged kicking and screaming into the showrooms because governments will have regulated gasoline powered cars so much they are affordable only by the rich, or simply physically banned from city centers.

In Europe at least where the price of gasoline is more than twice the price in the U.S., there is a ready-made incentive to find a cheaper way to fuel your car. But even here, electric vehicle sales are stumbling because they cost about twice as much as a similar-sized vehicle, and are still plagued by the dreaded range-anxiety. Companies like Volkswagen of Germany have announced they will be selling more and more electric cars with big claims for range, but that remains to be proven.

Diesel sales in Europe, which rose to more than 50 per cent of the market over the last 20 years because of their superior and subsidized fuel economy, are on the decline, plagued by reports their emissions can be fatal, the after-effects of the Volkswagen dieselgate scandal, and actions by countries and cities to curb their use.

Sales of so-called “alternative” vehicles though are about to accelerate. According to a report from Britain’s JATO Dynamics, sales of alternative vehicles globally will hit 11 million by 2023, accounting for 14.2 per cent of all sales compared with less than four per cent now. The U.S. won’t be much of a player in this race with sales reaching 11.2 per cent of that total by 2023 compared with 2.9 per cent in 2016. Europe will account for 19.4 per cent or 3.91 million of the sales.

Hybrids and plug-in hybrids will take the lion’s share of alternative vehicle sales, accounting for two thirds. In Europe this will account for around half of all sales in 2023, 36 per cent in China, and just 14 per cent in the U.S.

Three times higher
Another report, from investment banker Morgan Stanley, suddenly raised its estimate for battery-only electric car sales to between 10 and 15 per cent of the global market by 2025, more than three times the current average of expectations.

And not because people are falling over themselves to buy them.

“Although many questions over EVs remain, we believe it is the sharply rising cost of regulatory compliance on existing internal combustion engines (ICE) that is pushing (manufacturers) to change their strategy towards EVs, as much as improvements in battery technology,” Morgan Stanley said in the report.

The report said big manufacturers like Volkswagen and Daimler’s Mercedes Benz have recently revealed more ambitious plans for building electric cars, while BMW, General Motors and even Toyota, seemingly eschewing battery only technology for hybrids and fuel cells, are turning to battery power.

The potential success of battery power though is still clouded by doubts, according to the report.

“Battery costs remain very high. Battery range remains too small, and batteries are still too heavy. Battery charging infrastructure has not been sorted out in many countries. Are EVs actually environmentally friendly given through-life cost and environmental impact?”

“And, consumer demand seems to have been very limited for most EVs launched to date – presumably excluding Tesla. Despite this, we now have a situation where some of the largest (manufacturers) in the world are investing heavily in this technology, and setting aggressive targets for their take-up,” the report said.

At the Paris Car Show in October Volkswagen and Mercedes showed new battery-powered concept cars, the VW I.D. and Mercedes Generation EQ, which will be launched within 5 years. Other electric vehicles on the launch-pad also include the Audi E-tron and Porsche Mission E. BMW has launched its “i” brand cars and is heavily into plug-in hybrids.

Chevrolet Bolt
And leading the way in 2017 will be the battery-only Chevrolet Bolt, with over 200 miles of range and costing under $40,000. Korea’s Hyundai and Kia are also to the fore with all forms of alternative powertrains, the Renault-Nissan alliance and Ford.

VW has said its own-name brand would be selling one million electric vehicles a year by 2025, and the whole group targets 30 new EV models by then with annual sales of between two and three million.

In a previous report this year Morgan Stanley pointed out that VW’s target implies EVs will make up around 25% of its sales in 2025. Industry estimates then centred-around just 4%.

Europe has already implemented rules for average vehicle fleet emissions of 130 grams per kilometer of carbon dioxide (CO2) – the equivalent of around 43 miles per U.S. gallon. This will tighten to 95 g/km by 2021 or 57.4 miles per U.S. gallon. The U.S. requires a less aggressive 54.5 mpg by 2025.