A Slew of Electric Vehicles That Collectively Represent Billions of Dollars in Investment Are About to Hit the Market. Yet Even

Focus || ELECTRIC VEHICLES

Demand Load A slew of electric vehicles that collectively represent billions of dollars in investment are about to hit the market. Yet even with all that firepower, consumers remain lukewarm to the idea of plugging in. BY PAUL EISENSTEIN

ot long ago, battery-electric won’t look back. momentum, until the California carmaker an- vehicles could barely deliv- Not everyone is so confident, though. “It’s nounced it would finally roll out the long-await- er 100 miles of range per tough for the industry, as a whole, to know what ed $35,000 base version — something it also charge. But before the end the natural demand is,” says Joe Eberhardt, conceded will put its balance sheet back in the of this year, a slew of new head of North American operations at Jaguar red after two rare, profitable quarters. options offering up to 300 Land Rover. “Some people say it will be 25 per- Given the choice of scenarios, the auto indus- miles Nof range will be available at U.S. dealer- cent (of new vehicle sales) by 2025. I don’t think try can only hope that ChargePoint’s Romano is ships and online, including Tesla’s Model Y, Audi’s it will be that quick.” right. But that’s far from likely, warns a recent e-tron, Jaguar’s I-Pace SUV, Porsche’s Taycan Skeptics only have to point to the slow- study by AlixPartners, a multifaceted consulting sports car, and Volvo’s Polestar 2 fastback. er-than-expected growth of battery-car sales firm in Detroit. The report cautions that the in- In 2020, the rollout will continue to acceler- since the Nissan Leaf became the first mass dustry is heading for a “pile-up of epic propor- ate, with dozens of new alternatives scheduled production model back in 2010. Early in his tions.” That’s all the more concerning when man- for production. first term, President Obama confidently pre- ufacturers worldwide are planning to spend Worldwide, automakers from Acura to Zotye dicted there would be at least 1.5 million plug- some $200 billion to develop battery-based mod- are entering the all-electric market, driven by a based vehicles on U.S. roads by 2015, a figure els by 2025. If the forecast proves accurate, and mix of mileage and emissions regulations. More including both plug-in hybrids and pure bat- manufacturers continue to push forward with than a few intend to completely shift to battery-electric vehicles. The market didn’t come aggressive rollout plans, they’re at risk of wasting tery-electric models in the years ahead. That in- close. Even two years later, the figure was barely billions, according to AlixPartners. cludes General Motors Co. in Detroit, whose a quarter-million, with sales of all battery-based In turn, high prices for current electric ve- chairman and CEO, Mary Barra, says the auto- models — including conventional hybrids like hicles, driven by sophisticated battery systems maker is on “a path to an all-electric future.” the Toyota Prius — accounting for 4 percent of that are needed to prevent overheating and The question is whether consumers are ready to total U.S. new-vehicle sales. overcharging, cost thousands of dollars. Unless plug in. There are plenty of optimists, including Demand surged sharply last year, with sales something changes, sticker shock will be tough Pasquale Romano, CEO of San Jose-based Charge- nearly doubling, but a closer look at the boost is to overcome. Point Inc., the nation’s largest supplier of EV less likely to encourage confidence: The growth It’s been nearly two decades since the Toyota charging systems. “It’s an unstoppable train,” he was due almost entirely to demand for the Tesla Prius, the first mass-market vehicle offering an contends, asserting that once buyers experience the Model 3. As 2019 got underway, there were electrified drivetrain, came to market. The car advantages of long-range electric vehicles, they concerns that even that vehicle might be losing quickly developed a loyal following that included

32 DBUSINESS || July - August 2019 ELECTRIC VEHICLES || Focus

celebrities such as Leonardo DiCaprio. A de- models they’ll soon be selling worldwide will soon will offer electrified versions of every model cade later, Nissan and GM upped the game, with look like. in its lineup, as will Mercedes-Benz — the Stutt- the Japanese automaker debuting its all-elec- • The Alfa Romeo Tonale will go into produc- gart-based brand is going so far as to launch a tric Leaf and GM introducing its Chevrolet Volt tion over the next year and will offer an optional unique sub-brand, Mercedes-EQ, which will of- plug-in hybrid. plug-in hybrid drive system that will let it travel fer only all-electric models. Both had serious shortcomings, however — dozens of miles in all-electric mode, with a gas Beyond the cost for purchasing parts, the namely, high price tags and limited range, as engine firing up when the battery is drained so it AlixPartners study estimates that “by 2023 a well as the numerous sacrifices customers had can keep going. whopping $255 billion in R&D and capital ex- to make, including weak performance, slow • The Pininfarina Battista would push the penditures (will be) spent globally on electric charging times, a limited public charging in- limits no matter what’s under the hood — in this vehicles, and some 207 electric models are frastructure, and cramped passenger and car- case, its four electric motors draw power from a set to hit the market by 2022.” The problem, a go compartments. 120-kilowatt-hour lithium-ion battery pack and summary of the report concludes, is that “many The launch of the original Tesla Model S be- can produce 190 horsepower, enough to propel it of them are destined to be unprofitable due to gan to shift the conversation. It was still expen- to nearly 220 mph. curently high systems costs, low volumes, and sive, with a price tag that could top $100,000, but The Tonale and Battista underscore the strate- intense competition.” it could deliver at least 200 miles per charge — gy some premium car brands plan to execute over It’s a warning some in the industry are taking 300 with an optional battery back. the near- to mid-term. While there are more and seriously. “We have to reduce the amount of mon- Tesla also began setting up a network of “Su- more “affordable” hybrids, plug-ins, and long- ey everybody’s pouring in,” Don Walker, CEO of perchargers,” high-speed charging stations stra- range BEVs (battery electric vehicles) pushing Canadian-based mega-supplier Magna Interna- tegically placed all across North America that ever downward in price, analysts expect sales tional, said during a mid-January speech to the would enable long-distance trips — New York to growth in mainstream segments will be modest, Automotive News World Congress in Detroit. Washington, or Los Angeles to San Francisco. at best, through at least the middle of the coming For EV proponents, the good news is that That began to change once Tesla resolved decade. Perhaps counterintuitively, they’re look- sales of plug-in-based models around the world what Musk called “production hell” at the compa- ing for bigger growth opportunities in more pre- nearly doubled last year to 361,307, from ny’s Fremont, Calif., assembly plant last year. mium niches. 199,818 in 2017, according to InsideEVs.com. From there, the Model 3 quickly became the That makes sense, as luxury and performance In China, where “New Energy Vehicle” rules are world’s best-selling battery-electric vehicle. buyers are less price-sensitive. So even if saving meant to foster demand for zero-emissions ve- By the end of 2018, it was the only bat- money on fuel isn’t a key motivator, there are oth- hicles, demand grew even faster than in the tery-based model of any form generating more er benefits of electrification. Significantly, electric U.S., making it the world’s largest market for than 10,000 sales per month. And of the 94 “elec- motors generate maximum torque the moment plug-based vehicles. trified” vehicles on the U.S. market, including they start spinning, unlike internal combustion Even so, plug-ins and pure electrics accounted conventional hybrids, plug-ins, and pure bat- engines that have to rev up. That can be translat- tery-electric vehicles, the Model 3 was one of only ed into neck-snapping performance. The big Tes- Metal Shift six topping 2,000 sales a month. la Model S P100D, with its optional Ludicrous At the same time, both the pioneering Nissan Mode, can hit 60 mph in a mere 2.3 seconds. With BEVs, more than 160 pounds of casting Leaf and Prius have suffered sharp sales down- With that in mind, even traditional supercar components from a single combustion engine and turns over the past two years. The steep decline brands like Ferrari, Lamborghini, and McLaren transmission will be eliminated, presenting new led a skeptical Jim Lentz, CEO of Toyota North are racing to develop new hybrids, plug-ins, and sourcing opportunities for suppliers, according to America, to warn: “It’s going to be a battle” in the BEVs. And the majority of the luxury and perfor- data from DuckerFrontier, which has an office in Troy. marketplace. For everyone other than Tesla, he mance models that debuted in Geneva featured Aluminum Volume Net Loss by BEVs in 2025 said during a speech in Detroit this past January, some form of battery drive technology. “There’s not much growth.” The challenge going forward is to build de- 3% 6% 10% 15% 20% Perhaps not, but the onslaught of new prod- mand among mainstream car-buyers. That’s 0 ucts, including a wave of extended-range electric where the industry faces the biggest challenge, as vehicles, is accelerating. That was obvious to any- the AlixPartners study warns. (89,843) one who attended a recent auto show. But that isn’t slowing things down. Consider (100,000)

The Geneva show brought the debut of 20 bat- Volkswagen AG, which plans to invest $800 mil- (179,685) tery-based vehicles targeting every segment. The lion at its Chattanooga, Tenn., assembly plant to Thousands Pounds offerings include: produce some of the more than 50 all-electric Components (300,000) Removed • The new Mazda CX30, which uses a small models it plans to roll out in the next four years. - Block lithium-ion battery-powered motor to give a Then there’s GM, which expects to debut more - Head (299,475) boost to a breakthrough gas engine dubbed Sky- than 20 new BEVs over the same period, starting - Oil pan (200,000) Activ-X that would otherwise be too sluggish for with an all-electric Cadillac crossover in 2020. - Intake manifold most motorists. Nissan has at least eight all-electric models com- - Piston - Cam cover • The Honda e, a prototype of a small, ing over the next several years and Ford also has a (400,000) - Timing chain cover (449,213) all-electric urban runabout, which is targeted at major electrification program in place, while FCA - Bed plates city dwellers who don’t have far to travel. Produc- US, with its North American headquarters in Au- - Turbocharger tion is scheduled for later this year. burn Hills, recently announced that its Jeep - Transmission case (500,000) - Differential carriers brand soon will have four plug-in electric hybrids • Kia and Nissan each unveiled concept vehi- - Clutch housing cles — the Imagine and IMQ, respectively — that and may add some all-electric models, as well. - Extension cover (598,950) give a strong hint of what the battery-electric Among high-volume luxury brands, BMW - Valve body (600,000)

July - August 2019 || DBUSINESS.COM 33 Focus || ELECTRIC VEHICLES

than a decade ago, but now run about $9,000. That soon could fall to $6,000 — but even at Rivian Lore that price, Cole cautions, electric drivetrains still are substantially more expensive than gas- powered alternatives. A small, suburban Detroit startup is threatening A Boston Consulting Group study released a to challenge not only automotive upstart Tesla, but year ago doesn’t see battery drive technology also more established automakers. In a surprise reaching parity until the middle to latter part of February announcement, online mega-retailer the coming decade. To get there, battery prices Amazon announced it was taking the lead in a $700 alone will have to fall again by at least half, and million round of funding for the privately held Rivian. possibly two-thirds. Founded in 2009 and based in Plymouth The range issue also is being addressed. Towbship, Rivian has been one among a slew of With the exception of city cars like the Honda e, wannabe automakers focusing on the battery-elec- most future BEVs are expected to offer a range tric niche that some expect to radically transform of at least 200 miles, with some pushing 400 the industry by 2025. It unveiled its first two miles — but that’s under optimum conditions. products — the R1T pickup and R1S sport-utility In cold-weather climates, the equation changes. vehicle — at the Los Angeles Auto Show last New studies by both AAA and Consumer Re- November. ports caution that when temperatures are Like most others bringing pure battery-electric around 20 degrees, range can tumble by as vehicles to market, Rivian has adopted a skate- much as 50 percent. board-like “architecture,” with its batteries, electric Charging times also take longer in extreme motors, and other key components tucked into or cold. The good news is that the next generation of under the floorboards. That makes it a good fit for EVOLVING EVS The electric drive of EV “fast-chargers” will be able to add as much as Amazon, says a Rivian source, stressing that its goal the 2016 Chevy Volt 20 miles more range per minute under ideal con- is to create unique “top hats” for whomever it produced 111 kWh ditions, according to Porsche. The challenge will partners with. (That’s industry-speak for customized , 149 hp, and 294 be to find one. bodies.) In the case of Amazon, that would mean an lb.-ft. of torque. Consider that along the densely populated all-electric delivery truck — and, most likely, a Woodward Avenue corridor, north of Eight Mile self-driving one. The retail giant also has invested in Road, there are just three older — meaning slow- several autonomous vehicle development er — Level 3 fast-chargers within 20 miles. That companies in recent months that could build their said, ChargePoint alone plans to install more technology into a Rivian vehicle. than 1 million chargers across the U.S. over the The Amazon investment joins an announcement next five years. Competitors, such as EVgo and in April by Ford Motor Co. in Dearborn that it will for barely 4 percent of Chinese demand, and 2 the Volkswagen-funded Electrify America, won’t invest $500 million in Rivian. In addition, the percent of the American market. EVs “aren’t be far behind. companies have agreed to work together to develop ready to take over the world,” Toyota’s Lentz says. Most experts predict that the majority of an all-new, next-generation battery electric vehicle Could the pessimists be proven wrong? plug-in vehicle owners will be charging up at for Ford’s EV portfolio using Rivian’s skateboard ChargePoint CEO Romano is convinced that home overnight, or at work. If that’s true, there platform. once potential buyers experience the best attri- won’t be a need for a public infrastructure near- Ford intends to develop a new vehicle using butes of the latest EVs — including roomy cab- ly as ubiquitous as the current network of gaso- Rivian’s flexible skateboard platform. This is in ins, solid acceleration, and a quiet ride — they’ll line service stations. addition to Ford’s existing plans to develop a be hooked. Those are a lot of “ifs,” however, and for the portfolio of battery electric vehicles. As part of its Jaguar Land Rover’s Joe Eberhardt is a bit industry, it clearly creates a massive amount of previously announced $11 billion EV investment, Ford more cautious. “Electrification could become risk. Coming up with the necessary cash won’t already has confirmed two key fully electric vehicles: consumer-driven,” he says. “What it needs is for be easy, either. One reason for GM’s massive re- a Mustang-inspired crossover coming in 2020 and a the industry (to) address customer pain points: structuring — which will see five plants close zero-emissions version of the F-150 pickup. range, charge times, and costs.” and 14,000 jobs cut by the end of the year — is Of all the possible applications for an all-electric At the same time, prices are beginning to to raise some of the cash the automaker will vehicle, few would test the mettle — and motors and come down, largely driven by batteries. When need to fund both its electrification and auton- batteries — more than a full-size pickup. These GM introduced the original Chevy Volt plug-in omous vehicle efforts. trucks have to deliver every day. Rivian’s R1T hybrid, it was spending nearly $1,000 per kilo- Will GM and the rest of the industry be throw- certainly looks good on paper, with a 180 kilowatt-hour for its 24 kWh pack. According to ing that money out the window? Based on sales watt-hour battery pack that’s able to deliver up to a Mark Reuss, president of GM, that has dropped results so far, it might seem that way. And with 400-mile range. Combined, Rivian claims, its two to less than $150 for the 60 kWh pack in the long- the “epic pile-up” of new products on the way, the electric motors will make “close to 800 horsepower” range Chevrolet Bolt EV. David Cole, chairman situation actually could get more dire. and around 1,000 lb.-ft. of torque. With that emeritus of Ann Arbor’s Center for Automotive On the positive side, Tesla has shown that it’s configuration, it could tow up to 11,000 pounds. Research, says the automaker is targeting a possible to make money, even if only a slight prof- There have been plenty of promising contenders $100/kWh price tag. it, on electrified vehicles. The rest of the industry in the EV space, but the Amazon and Ford Consider it another way: Batteries in the can only hope the old adage of a rising tide lifting investments suggest that Rivian is a name to which 2019 Chevy Bolt would have cost $60,000 less all boats proves true. one should be paying attention. — Paul Eisenstein

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