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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 bat- tery-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.

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