OEMs Still Talking About EV Future And How Burdensome It Will Be

OCT 3 2018 BY EVANNEX 22

BIG AUTO CAN’T STOP BELLY-ACHING ABOUT THE ‘BURDEN’ OF ELECTRIC VEHICLES

Legacy automakers have been hyping a future where they’ll finally electrify their fleet. Now, however, it appears they’re a bit reticent to do so. Volkswagen’s CEO, Herbert Diess recently said (via Bloomberg), “The burden for our company, such as the cost of bringing to market electric cars, will be higher than expected… This is particularly so since some of our competitors have been making more progress.”

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Volkswagen e-golf and Tesla Model S charging (Image: Green Car Reports)

Looking at this paradox, Raphael Orlove wonders (via Jalopnik), “Hm! If electric cars are so expensive why do people build them in their garages with old batteries? Seems like a hole in their logic! I don’t know about you, but I don’t really trust ‘Big ICE’ on this one. And there’s no bigger player in this than VW, which is only pivoting to electric cars because it screwed up so bad in Dieselgate.”

But it’s not just Volkswagen. According to a report in Reuters, incessant whining that electric cars are “forcing carmakers to sell them at a bigger loss to meet emissions goals… is why, on this subject more than most, European carmakers talk from both sides of their mouths.”

Above: Unlike Tesla, legacy automakers complain about emissions targets and the cost of electric vehicle production (Source: Reuters; Note: Adjust volume in footer of video)

When it comes to EVs, excuses are commonplace from Big Auto’s top execs. “What everyone needs to realize is that clean mobility is like organic food – it’s more expensive,” says Carlos Tavares, chief executive of Peugeot, Citroen and Opel manufacturer PSA. He adds, “Either we accept paying more for clean mobility, or we put the European auto industry in jeopardy.”

“Tesla is now ramping up their volumes, and it’s putting pressure on that market segment,” Bernhard Kuhnt, CEO of BMW North America told Bloomberg. And BMW Group CEO Harald Krueger remains hesitant on the idea of reducing emissions. Krueger told Automotive News Europe, “Hoping to reduce CO2 emission by 45 percent by 2030 is dreaming… we would need 70 percent of European sales being battery-powered vehicles, and the power infrastructure simply would not be able to handle it.”

Above: Tesla remains the only automaker that’s built out a robust, worldwide network of Superchargers (Image: Teslarati)

On that note, Richard Truett reports (via Automotive News), “let’s give credit to CEO Elon Musk for establishing a nationwide network of charging stations. That was a brilliant move that no one has yet duplicated. It removes a layer of doubt and uncertainty that will hover over every other brand of EV.” Simon Patel, the Jaguar Land Rover engineer in charge of battery and electric propulsion systems development admits to Truett, “Charging has been a really big challenge for us.”

Okay… so maybe it’s different with Japan’s top automakers? More excuses? With Toyota, it’s more like evasion. Orlove reports that instead of electric cars, Toyota has committed to hydrogen fuel cells. Orlove says, “I’ve heard that hydrogen cars are just around the corner since the first term of Bush Jr. You mean to tell me that Toyota has been dumping all of its EV budget into hydrogen cars for nearly two decades now? I find that hard to believe.”

Above: A look at Toyota’s Mirai hydrogen fuel cell vehicle (Image: Autoblog)

Even if hydrogen is another stall tactic, Orlove says, “Toyota has the cred to make an eco car like an EV, and it has the reputation, and it’s had the time, too…. [yet] at the moment, Toyota says that it’s working on solid state batteries, looking to leapfrog current lithium-ion battery-electric vehicles. Great! I can’t wait for these things to go on sale… whenever that may be.”

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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22 Comments on "OEMs Still Talking About EV Future And How Burdensome It Will Be"

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Mister G

Legacy manufacturers are all made members of the fossil fuel mafia CONNECT THE DOTS ON CLEAN AIR WAKE UP EARTHLINGS CO2.EARTH

Prsnep

More veiled Tesla ads.

jelloslug

“Just around the corner” is the mantra of the ICE manufacturer.

Mike

Well you can understand their problem. They have to invest billions to design and build cars with an entirely new drive train, but they still have all the costs associated with maintaining their ICE product line at the same time the ICE sales are decreasing. Add to that the fact that investors aren’t going to be very forgiving of these companies for not continuously generating quarterly profits (and possibly dividend checks), and these guys are in a tough spot.

Now what really makes me laugh is that they missed their opportunity to finance the R&D and infrastructure when interest rates were low. I see another round of bailouts during the next economic downturn.

theflew

The problem with your analysis is their ICE sales aren’t declining – just their sedan sales. At the same time their truck, CUV and SUV sales are increasing. All three of those make pour EV’s from efficiency standpoint. Why do you think Tesla didn’t start with the Model Y instead of the 3 and why the Model X looks more like a minivan than a SUV?

Mike

Oil at 100$ a barrel will put a dent in pickup and SUV sales. Ford even saw F150 sales decrease last month, so that cash cow isn’t producing like it used to.

While I don’t really understand the nuances of corporate finance, there was a story this morning talking about the 100 billion dollar future debt obligation of Ford. GM’s was even bigger. These numbers make Mercedes Benz’ 11 billion dollar investment in EVs sound small, but is does point out the difficulties the legacy automakers face.

Lou Grinzo

The legacy companies hate the idea of spending a lot of money to develop lower-profit cars that will steal sales from their higher-profit ICE vehicles. Once they realize that if they don’t cannibalize their own ICE sales other companies (notably Tesla and Hyundai/Kia) will, they’ll change their tune.

Again: The most important number in all of transportation and climate change right now is the price of batteries. It’s come down a lot and continues to drop. Eventually it will reach a point where EVs get cheap and turn the entire car business on its head. And when they get cheap enough to be much more wide used in renewable energy to turn harvested energy into dispatchable electricity, the universe will change shape again.

Deepak

Yet Bob Lutz claims that Tesla is doomed as these Fossil fuel manufacturers will QUICKLY build EV cars and even sell it at a loss to undermine Tesla.
Hey Bob, read the articles and CNBC stop FUD against Tesla. It is just a matter of time (less than 6 months maybe) that you will be made to eat your own words

Sunny Minnesota

The biggest obstacle they have is the dealer networks.

john1701a

>> You mean to tell me that Toyota has been dumping all of its EV budget into hydrogen cars for nearly two decades now? I find that hard to believe.

That’s because it isn’t true. Anyone with knowledge of EV design can easily see the investment Toyota has made in electrification.

Look at Prius Prime… 25 kWh/100mi efficiency rating… vapor-injected heat-pump… carbon-fiber hatch… aero-glass window. How are those not serious investments in EV design? There’s also the reality that all but the ECO model of Prius has been switched over to lithium batteries. This is a push into high-volume production, exactly what you need to achieve profitable sales that are sustainable.

The hype involving hydrogen interest from Toyota requires turning a blind eye to the reality that Honda, Hyundai, and GM area also investing.

Val

Honestly, I don’t understand plug-in hybrids. They are too complicated. You already have a BEV but instead of adding to the size of the battery and be done with it, you add a whole ICE power train. It’s like two cars, one on top of the other. You double the problems. Simplicity is the genius and beauty. Why mess it up like that? And don’t even get me started on hybrids with no plug in. Those are just marketing.

Ron
Plug-in hybrid: I have a ’17 Volt. 6 days a week we use no gasoline. On Saturday, I work 95 miles out of town, where there is level 2 charging. Due to mountains, I use about 1.1 gallons of gasoline going to work, and 0.6 gallons coming home. 8 gallon gas tank is refilled once a month. Occasionally I need to travel out of state – most notably, I got 44 mpg driving from Albuquerque to Ft Benning. Other than Tesla, there are no L3 chargers on I-40 in NM. Two oil changes within 2 years was included with purchase; I drive 20K miles yearly; the oil status reported >50% oil life remaining each year. Now that I am responsible, I suspect I will change the oil every 2 years. Double complexity & double the problems – a modern automatic transmission has approximately 900 moving parts; the Prius and the Volt have a single planetary gear set: Sungear, Ringgear, planetary carrier, and 3 planetary gears = 6 moving parts. The gasoline engine does not start delivering power before the oil is distributed to the valve train and partially warms up before delivering maximum power. The electric motor prevents the engine… Read more »
john1701a

Spoken like countless others here… enthusiasts focused entirely on engineering and not considering what’s involved on the business side. It’s a fundamental mistake we have watched play out by GM twice with Volt, both generations falling well short of expectations.

The problem was indeed not understanding plug-in hybrids. They are perceived as more complicated than traditional vehicles, despite the fact that their transmissions & operation can be elegantly simple. Neither dealer nor potential customer recognize this. That belief of “too complicated” makes traditional vehicles an easier sell.

This is why the “coasting entirely on name” argument against Prius success is often used by antagonists to justify lower sales of their own preferred plug-in. Their hope is to conceal the reality that Toyota found a means of overcoming the “too complicated” concern. They simply proved the reliability by demonstrating it.

The name became attributed to quality. So even though it wasn’t actually more complicated than a traditional vehicle, there wasn’t any reason to make that argument. People felt comfortable with the choice… which is why dealers stocked the hybrid models and consumers purchase so many.

john1701a
There’s a catch, of course. It must also be affordable. This is the primary reason Volt was doomed from the start. The approach taken was far too expensive. So, even though it worked fine from an engineering perspective, that high price tag screamed “too complicated” to potential customers… scaring them away… which the dealer sees as a very real problem they don’t want to have to deal with. So, many didn’t bother, choosing to not carry Volt. You’d be amazed how much of an influence MSRP makes. Enthusiasts of Volt learned that the hard way, spending years arguing “it is worth it” to an audience just plain not interested in spending a premium for efficiency. Look at the simplicity of Prius Prime. From hybrid to plug-in hybrid is basically nothing but dropping a larger battery-pack into the hatch area. Shoppers naturally equate increased capacity to an increase in electric power. How it happens makes no difference to them. It just makes sense… simplicity at its finest. They consider the option based on price tag, not engineering. Like it or not, legacy automakers are in the business of making profit. That means appealing to dealer & consumer, not enthusiasts.
Spider-Dan

So you are attributing the sales of the Prius Prime, not to coasting on the Prius name, but to the “reliability” of Toyota’s… plug-in hybrids?

Trying to claim the “reliability” of the Plug-In Prius (and its nearly 43,000 sales!) as cause for the Prime’s sell-through rate is absurd. It’s coasting off the name brand of the non-plugin hybrid Prius. Period.

john1701a

That isn’t at all what I said.

Spider-Dan

The problem was indeed not understanding plug-in hybrids. They are perceived as more complicated than traditional vehicles, despite the fact that their transmissions & operation can be elegantly simple. Neither dealer nor potential customer recognize this. That belief of “too complicated” makes traditional vehicles an easier sell.

This is why the “coasting entirely on name” argument against Prius success is often used by antagonists to justify lower sales of their own preferred plug-in. Their hope is to conceal the reality that Toyota found a means of overcoming the “too complicated” concern. They simply proved the reliability by demonstrating it.

Given that Toyota did not significantly “demonstrate reliability” of their plug-in hybrids prior to the Prime, in what way did that plug-in hybrid overcome the concern of “too complicated” to achieve its current sales? Seems to me that you are agreeing the Prime coasted off the name-quality attribution of the (non-plug-in) hybrid Prius.

Now, if your position was simply, “Because it’s cheaper, dummy!”, that’s at least a consistent argument. But then we’d probably need to ask why the Prime is selling more than, say, the Ioniq PHEV.

Prius Prime is obviously coasting on its name. It’s borderline delusional to insist otherwise.

john1701a

That’s a combination of not having a strong recollection/background of the history along with making some assumptions. In other words, there’s nothing clear to respond to at this point. So, I’ll just say watch for what comes in 2019. For example, the next-gen RAV4 hybrid will serve as a great platform for a future plug-in model.

Spider-Dan

I thought the question was pretty clear after I directly quoted you. You claimed that the Prime’s sales are due to Toyota’s demonstrated reliability. But that can’t be the demonstrated reliability of the Prime itself – it hasn’t been out long enough – and the extremely low sales of the PiP don’t justify that conclusion either (plus, I’m skeptical that the PiP beats the Gen1 Volt in reliability).

So, rather simply, what “demonstrated reliability” were you referring to?

P.S. “Look out for what’s coming soon” is not any sort of explanation for sales today.

Eric Cote

Meanwhile, you equate investments in aero glass to EV technology, because when Toyota does something you praise it… because you work for Toyota.

The Volt is amazing. It hands down beats the PiP and Prime. Brand loyalty and vehicle size may limit adoption, but the majority of the limitation is a lack of dealers embracing EVs. Don’t twist it to your own story.

john1701a

Declaring victory for Volt, even though sales continue to be far below a mainstream level, is denial. The rest is just feel-good fiction. As for the attempt to twist, trying to make EV investment into EV embracing is also denial

Reality is, the effort to draw interest in the mainstream market is far more difficult than the low-hanging fruit sales that have happened so far. They do serve as a great way of proven the technology is viable, but that’s only the first stage. Attracting ordinary consumers takes an entirely different approach.

Sales growth takes more than just a vague “amazing” label. What the OEM builds and what the dealers offer don’t match enthusiast criteria. Their purchase priorities don’t have much in common.

Spider-Dan

As things currently stand today, the Volt is still the top-selling PHEV in U.S. history by a long shot… and that’s even if you combine Plug-In Prius and Prius Prime sales.

I do find it interesting that while you criticize Volt’s lack of sales, you continue to praise the Incredible Success of the Prime, which has yet to crack 3000 sales in a single month (a sub-mainstream goal that the Volt accomplished nearly two years ago). I mean, the first full year of Prius Prime sales (2017, 20,936 units) were lower than the first year of the current gen Volt (2016, 24,739 units). Again, if the point you were making was that both the Volt AND the Prime are pathetic failures, I’d at least give you points for consistency. But instead, you consistently come off as a Toyota apologist.