2010. This year seems like a such long time ago, yet it was the begining of the electric cars expansion.
Tesla was about to put out its first original design for an EV, the Model S, which would go on to be named Motor Trend’s Car of the Year for 2013.
Since those times, the hopes of an electric-car revolution hasn’t just failed to materialize — it’s actually retreated.
The reason is simple: consumers don’t want electric cars. It’s the demand that is the engine. And demand isn’t there.
This market reality has collided head-on with an increase in federal fuel-economy standards, mandated by the EPA. Automakers want the government to ease up on the timetable, so that they can sell as many profitable pickup trucks and SUV in the US as possible, while sales are running at historically record levels and gas is cheap.
This is purely good business — carmakers want to increase their balance sheets now, while the bolstering opportunity is good, ahead of the inevitable decline.
Is Trump the Savior?
Auto industry leaders are now seizing a chance to get President-elect Donald Trump’s administration to give them a break, while at the same time not completely backing off the EV aspects of their product portfolios.
Here’s Bloomberg’s John Lippert and Jamie Butters:
Ford Motor Co. plans to lobby President-elect Donald Trump to soften U.S. and state fuel-economy rules that hurt profits by forcing automakers to build more electric cars and hybrids than are warranted by customer demand.
“In 2008, there were 12 electrified vehicles offered in the U.S. market and it represented 2.3 percent of the industry,” Mark Fields, chief executive officer of Ford, said in an interview at Bloomberg’s Southfield, Michigan, officeFriday. “Fast forward to 2016, there’s 55 models, and year to date it’s 2.8 percent.”
Fields is as bloodily committed make sure that Ford is part of whatever revolution in transportation occurs in the coming times, but he doesn’t have the luxury of being a dreaming visionary. His job is to make sure that Ford is profitable.
That it’s balance sheet is robust,also maintaining or even growing market share in important parts of the world, and that it doesn’t fall behind on innovation, in all areas of the business.
If you look at the simple math that Fields has presented, it’s not hard to see why he wants the EPA’s expectations to be adjusted. There’s been a more-than-fourfold increase in the number of EVs for sale in US, and yet the market for those EVs has grown by a slim 0.5%.
Agreement for its own sake
The billions being spent to develop and market EVs aren’t being completely lost — these customer-less cars have value as “compliance” vehicles to meet government regulations. But building more of them for that goal is now officially running opposite to the financial interests of the automakers.
This isn’t a situation that can be sustained for long. Almost all of the planet’s vehicles currently run on petrol fuels. That’s unlikely to change for a long time. Everybody knows that it would be good for the environment to get more gas and diesel cars off the road, but there has to be some kind of business value that the replacement electric vehicles provide.
Until consumer and carmakers can figure out how to make that happen, the automakers’ case to have the government back off its fuel-economy requirements will be strong.