Auto Exec Pessimistic on EV Industry

5 years ago by Lyle Dennis 20

The truth is, EV sales have started slowly and demand is not yet as great as some EV advocates have hoped.  Most industry watchdogs and other firms have downgrade expectations of EV sales, such as the government’s hope of 1 million on the road by 2015.

Early this week an industry panel on EVs took place in New York City.

That panel included Delphi CEO  Rodney O’Neal and several other industry leaders.  O’Neal described consumer reaction to EVs as “carnage.”  Borg Warner’s CEO Tim Manganello said EVs were “not ready for primetime.”

Both execs cited low ranges, battery reliability, lack of charging infrastructure and cost as major hindrances to adoption.  Both believe EVs do not make financial sense for consumers or companies at this time.

These sentiments fit with what automakers are doing such as quietly rolling back projections, and recent events such as bankruptcy of battery supplier A123.  Hearing these comments directly from the CEOs of the two largest auto suppliers in the world however does offer a  stark reality.

Executives from Daimler and Volkswagen weren’t as blunt but also provided a cautionary tale.  Jonathan Browning of VW America thinks consumer acceptance will remain poor, projecting EVs will keep to a small role only accounting for 3% of sales by 2018.  Daimler chief Martin Jäger thinks the government needs to provide even more incentives beyond the current $7500 tax credit.

Even the hope that battery technology will eventually improve to increase both range and acceptance was not shared among these leaders.  “I’m not as hopeful battery technology will get better,” said O’Neal.

Reference: Car and Driver

20 responses to "Auto Exec Pessimistic on EV Industry"

  1. Schmeltz says:

    Their opinions are bewildering to hear. I find myself agreeing with many of their statements, but not their spirit on the matter. EV ranges are too low for most people to be comfortable. Charging infrastructure is very rare or even non-existant in most places outside of the home. Costs of an EV or PHEV are indeed too high for most people to consider. Sales have been lower than expected for these vehicles.

    However, the last sentence is what I latched onto. They are not hopeful that battery technology or cost will get better. This is what I mean when I say I dis-agree with the spirit of their argument. They look at a snapshot of the Ev industry in its infancy, and make a judgement that it is a waste of time and money. I can point back to computers of the 1980’s as an example. To type a letter on one of those early personal computers was a major accomplishment. So I think it will be with Electric vehicles. It will take a lot of time and investment. Sales will be slow for a number of years. Improvements will be gradual. Some companies will come and go. The strong will survive. It takes time.

    1. BlindGuy says:

      Pessimistic people think too much inside the box and probably should not be CEOs.

      1. Bonaire says:

        Wildly-optimistic CEOs either grow enormous companies or fail. Most commonplace CEOs live in a risk-avoidance world and lock-down creativity and failure from occuring within their organization. Just look at what happened at JPMorgan when they had one trader go outside the bounds of the box. Hurt pretty bad – but came back super-strong after that. JPMChase felt the “carnage” of the London Whale while trying to take extra risk that in many cases will fail but when it goes well, is enormously profitable.

        Tesla, for example, is in that position. Either they will fail miserably or grow fantastically. Still hard to tell what is going to happen. But I have my popcorn and am watching it unfold.

        1. kdawg says:

          Sound like a bunch of Debbie-downers to me.

    2. Stuart22 says:

      If one doubts EVs will find success in the market, it would follow that one would doubt battery tech would improve. Success breeds success, and without success there is no momentum to drive development forward.

      This pessimism is no surprise; I’ve long said pure BEVs are not ready for prime time while at the same time believing the EREV concept introduced by GM’s Volt would find success in today’s market, and it is. Any true EV advocate needs to understand the importance of supporting the Volt’s success, for that success will bring other auto manufacturers into the game with their own EREV versions, all coming together to provide the momentum, the incentive required to drive forward EV technology toward that eventual day when a pure BEV has what it takes for mass market acceptance.

      The LEAF has been a distraction to this journey, a red herring. Without its presence, the Volt could have found its success quicker than it has taken, the Energi and others would be in showrooms right now and maybe even A123 would have survived another day or two. Given these suppositions and given all its problems, if Nissan cancelled the LEAF and started over with a new EREV design, it would be beneficial to the EV cause.

      1. KenZ says:

        I hear your argument (against the leaf) but respectfully disagree with it. Yes, it may in fact somewhat confuse consumers, but it’s what _I_ am going to buy. Some of us, granted enthusiasts, want a second car that uses no gas, ever. This is a quasi-niche market, likely populated by many of the types that were building their own EVs (in their minds, if not in practice).

        Yet, just today, another one of my non-EVangelist friends arrived at work driving her new Leaf (which she got on the leaf). With a round trip of EXACTLY 73 miles to/from work, and a charging station in our parking lot (relatively forward looking Menlo Park, CA), it’s a great solution for her, even if she doesn’t give a damn about EVs. The volt… she would not have selected. Just sayin’.

      2. Mark H says:

        The Leaf is a great car, but your point is a good one in that the CEOs seem to be referring to BEVs in regards to range with total disregard to PHEVs like the Chevy Volt. The PHEV will carry the first decade and the EVs ARE affordable IF you drive the miles!
        http://insideevs.com/what-does-an-ev-really-cost/

  2. What I’m really surprised to see is how people (including these industry experts) seem so surprised that sales of electric vehicles haven’t been so much better than they have been. As someone that has watched the industry very closely for quite a few years now, I’m not really surprised at all. There are quite a few things at play here and I think the combination of a lack of a robust public charging infrastructure, the general aversion to change, the higher price and lower utility of the current EV’s and quite honestly a mediocre crop of initial plug in offerings are the main reasons we are where we are.

    Battery technology is and will continue to improve regardless of what the Delphi CEO says. We will begin to get better plug in cars very soon. The Model S while expensive is a great example and so are the Cadillac ELR, the BMW i3 and the Infinity LE which will all launch within the next 15 months. All of these cars are huge improvements over what we have available now. Infrastructure continues to improve and public charging stations are being installed every day. Sure I wish we were selling more plug-ins, but all things considered I think we are just about where I thought we would be. I think there are still 3-5 years of pretty rough waters ahead, but by 2017/2018 I believe plug in cars, especially PHEV’s are going to be a very common sight on our roads.

  3. Jay Cole says:

    Well, it could be 6-7 years ago and we would have to put up with executives saying that you can’t sell an electric vehicle at all.

    /baby steps

  4. WBrooke says:

    There is going to be a confluence between electric cars, renewable energy sources, grid stability, and smart phone technology. Once the public starts participating in something that benefits them directly and financially, EVs will take off virally.

    Renewable electricity will only take off when there is grid-scale storage. That storage has been a holy grail that many people and companies have been searching for, but it has always been way too expensive. But EVs are combined storage/transportation appliances. If 20 or so EVs are attached to the grid, suddenly you have 1 MWh of stored electricity on tap. If a city of people has EVs then the amount of stored electricity goes way up. And the beauty is that the cost for this grid-scale storage is gladly borne by the distributed populace since they are interested in using the car for personal transportation.

    I can see a time when a smart phone app continually monitors the spot electricity price and sends you a text when your threshold price is met. Then your smartphone will ask if you want to join the “virtual powerplant” by hooking up your EV to the grid at a two-way charging point. You click “yes” and set your level of discharge that you are willing to part with, and you get paid for your service through your PayPal account. How much would you get for your peak-time electrons? $10 to $20 depending on the size of your battery and the spot electricity price. Not so much, but my gasoline car has NEVER paid me $10. And what if you were able to attach your EV for every daily peak in the month? Suddenly you have 300 bucks in your pocket just for keeping your car in the driveway attached to the grid.

    I am optimistic about the future of EVs. The first time a driver feels the pull of instant torque offered by an electric motor, the gasoline engine will seem like an antique technology. Combine this driving pleasure with the self-interest of earning some cash for stabilizing the electricity grid and EV ownership will take off.

  5. Daveinolywa says:

    its no wonder EVs are suffering and its due to misinformation and articles like these where the objections are so absolute. What the article fails to mention is long term TCO favors EVs over any other vehicle with the possible exception of the cheapest econo boxes.

    What is also not mentioned is that nearly all current EV owners have not abandoned gas vehicles either but have found the gas powered cars filling much smaller than anticipated roles with an EV in the house when they realize just how little range they do need most of the time.

    My LEAF over the last 23,000 miles has been $1300 cheaper than my 50 mpg Prius to drive. http://daveinolywa.blogspot.com/2012/10/gas-anxiety.html

    Now, I cant get rid of the Prius but that does not change the fact that if I only had one car and one driving need, that with the $1300 I saved, i could have rented a pretty nice gasoline car for those rare times the LEAF did not work

  6. Delta says:

    It still amazes me that these people that should know better, can’t see what is happening. Just look at the cellphone development over last 20 years. I say the world in 2025 will be electric transport but the next 3 to 5 years will be the slow buildup. But we have to remember, the iphone is only 5 years old and so is Twitter. So there is just no way to know what fantastic products will be transforming our lives in the next 10 years. Whole industries could disappear and others take over.

  7. Shawn Marshall says:

    Despite the enthusiasm of enthusiasts, EVs will have to compete in the marketplace against $15k cars that get 40+mpg.
    There is plenty of oil or natural gas(methanol fuel per Shell ex-CEO) for ICE cars.
    There is no reasonable expectation that batteries will improve like computers or cell phones.
    Solar cells are stillexpensive and still have a low efficiency.
    It’s all about the batteries – is the sweet spot a $20k EV with 150 mile range?
    As a US national energy strategy, our nation could commit to a nuclear rebirth subsidized by royalties from coal, oil and natural gas. We could encourage the development of all the neglected nuclear technologies and underwrite the construction of new nuke plants and sell them to the highest qualified bidder(attempting to remove the fiscal risk and red tape and environmental snafus in the courts).
    But will we?
    Never, unless we get a serious government. Some day soon we will have to.
    Peace be with you.

  8. Marc Lee says:

    The fact is that for many drivers with certain usage patterns EVs make economic sense right now. Never mind any arguments about not sending money overseas to people who volunteer to get on our planes and crash them into buildings.

    We are here because the Oil Industry Execs tell us we are at Peak Oil. So the question is not will there be EVs, the question is will America have an option to buy EVs from a domestic company or will we buy them the Asian producers?

    As far as these auto industry suppliers go, I nominate them for the Watson Award.

    “I think there is a world market for maybe five computers.” Thomas Watson, Chairman of IBM

  9. Bonaire says:

    I don’t see nearly 7000 plug-in cars sold last month as being slow. That’s pretty good. And the sales trend is pointing upward in a bit more steep upward graph. I keep telling people that EV sales “are not Apple”. You can’t release a product and sell a lot of them unless people are compelled to buy them. Since people think, many times, in terms of “monthly payment” only, they see cheap new cars as “better” than more economical, efficient more-expensive cars.

    Almost every time I drive now, I see a Volt out there. 5-6 years ago, I might see 1 Prius on my daily drives. Now there are times when I will see 3 at an interesection at the same time.

  10. Independent Observer says:

    While it is easy to blame right wing media, for scaring people. Or big oil finding a way to block and tackle EV’s, those are really victim type statements. In reality it is about the money. The cost to buy an EV, and if needed a second car for those days when you need either more room (Volt too small) or more range (Leaf 70 miles). In reality you have 175 million licensed drivers in the 25-64 age group in the US. (2008 USDOT data – could not find more recent). Now everyone knows that the country is pretty much 50/50 split on every topic. So the Rush Limbaugh, and Fox News are pretty much preaching to the choir of their 45%. Much like MSNBC, Air America and the Liberal Left have their 45% (I say 10% are probably independent but lean one way or another). 45-50% or about 85 million licensed drivers are not going to be swayed by the right wing. You can go to the Gallup polls website and look at a plethora of polls. And essentially you will find about 35% of these drivers are hard core greens. That gives you a market of about 27 million people that should be going crazy for these cars. Now I will give you that maybe that number is high, because some people may call themselves hard core green, but in reality that means recycling aluminum cans. But in the end you still should have at least 15-20 million drivers ready to make the move. But why don’t they buy? Every blog out there says the cost is low when you take into account total cost. So why don’t these hard core greenies take the plunge? It is because they cannot afford the technology. Until the price drops to $18K for a leaf and $24K for a Volt, you will continue to have the market which you have today.

    1. Bonaire says:

      Part of being hardcore green is living a “light tread” lifestyle. Green people might have low incomes, work in coffee shops and can’t buy new EV technology with the tips they make. But they love living “lightly”. Sometimes, you do find “rich green” people like James Cameron, Larry Hagman or other moviestars who have the money to go off-grid in their 6000 sq ft homes and drive EVs. However, I think the greens are a mixed bag, just like every market segment and many won’t be able to drive green until they buy used EVs or EREVs. Which they will go for once they are on the used-car market.

      And, who is going to build the first EREV VW Bus? A lot of greenies still drive them around (and live in them) – pretty good gas mileage out of those, what, 50? horsepower engines? 🙂

    2. Mark H says:

      It is partly a mind set that is stopping the masses. Continual education is required. If you drive the miles the math works. A very general statement is that the 15,000 mile driver will save $15,000 over the life of the warranty. So that would make your Leaf $3000 and your Volt $9000. So it is not the cost, it is the “perceived” cost which requires the continual education. Your 27 million’s monthly payment would be the same, but they can not get past the initial number, but that will change in time as people understand the savings.

      For those of us who own one (or more), we pave the way for those to come. And for the 30% of us that power our own, we know “true energy independence”. $12 per month for 25 years and the price paid forward feels great every day.

      So only time will fix this. Still at least 5-7 years away from the first million EVs. It gets here when it gets here. For now, every month brings more.

  11. Roy_H says:

    These executives are businessmen, and as such have a strong eye on the bottom line of what they are selling today. If they knew there was a new battery about to be released in the next few months they would be eager to say so, but longer than that they worry about current sales taking a nose-dive if customers decide to wait for the next big development. You will see this type deny the next generation battery is within sight until they are ready to sell it to you.

  12. Bill Howland says:

    Who appointed these guys as experts anyway? I’m underwhelmed by anything Delphi and VW have done lately, and years ago I was a big VW fan, until they became hard to fix, overly complicated, unreliable, and burned excessive oil.