I’m a car enthusiast and particularly enjoy BMWs. But I also enjoy watching the automotive industry, especially right now as the industry is going through the biggest change in the last century. The whole autonomous vehicle adoption is going slower than I thought it would, but the electrification of automobiles is progressing rapidly.
The accepted wisdom is that automobiles are going to become electric-powered and (mostly) be removed from the debate about global warming. I’m not sure that’s true, but it seems to be the accepted wisdom.
Governments around the world are pushing this with both carrots (rebates, tax credits) and sticks (mandates). The adoption of electric vehicles, it isn’t just cars after all, has gained pace in recent years.
Manufacturers
The world’s car manufacturers seem to be approaching this challenge in at least three ways. The first way, and maybe the most common, is for a company to pledge to full electrification of their model line by a specific date. The dates typically are from 2030 to 2035. That seems like a long way off, but seven years is one product cycle in the industry. Longer considering the need to reconfigure assembly plants and supply chains. That means decisions are being made now for 2030 production. Companies who have made the commitment to full electric vehicle line-ups include GM, VW, Mercedes-Benz, Volvo and Audi.
The next approach is a phased approach, with different markets getting different treatment options. Typically, electric cars will be sold in Europe and China while North America, Africa and South America will get a mix of electric, hybrid and internal combustion engines (ICE) in vehicles. Companies following this approach include Ford, Honda, Nissan, Mazda and BMW. A variation on this theme is manufacturers offering both ICE and electric vehicles in the same market and adjusting to demand.
The third approach is that of Toyota. Toyota matters because it is the biggest and probably the best automotive manufacturer in the world. Toyota doesn’t think electrification is the right solution and has held off developing electric vehicles, while concentrating on hybrids. Longer-term, Toyota thinks hydrogen fuel cell cars make more sense and is ahead of everyone else with this technology. Of course, history is filled with better technology that was never embraced by buyers. Which brings us to the most interesting point in this drama…
The Marketplace
While government leaders and many companies have fully embraced electrification as ‘the answer,’ the marketplace doesn’t seem to be so sure. Certain countries seem to be all-in on electrification—Norway is a small but striking example—while most are less committed.
In particular, the U.S. is lagging and there are already indications that ICE-powered vehicles aren’t going away any time soon, if buyers have anything to say about it. Of course, buyers have quite a lot to say about it. Those companies who are making plans to offer only electric-powered vehicles by 2030 or 2035, could find themselves missing a big slice of the marketplace.
My Experience
My family fleet consists of four cars for two drivers. I’m a car guy, so I have three cars and my wife has one. My wife has a Kia Telluride, which seats seven and does everything well. It is our utility vehicle and my wife’s daily driver. I have three BMWs. My M2 is my track car. I have a Z1 which is a special interest/collector car. And I have an i3 electric car. The M2 gets about 5,000 miles a year and the Z1 gets less than 1,000 miles each year. The electric car gets driven 95% of the time and I love it. But therein lies one of the problems. It can’t be used for a long trips. I’ve never charged it anywhere except home, although I’ve tried a couple of times. As an urban vehicle, it can’t be beat. But other than that, it just isn’t suited to the task.
Most people don’t have three cars. They have one car that is a compromise but does everything they need. That one car often is a daily driver but also can go to Eastern Washington on a weekend or make a trip to Vancouver or Portland. Most electrics just aren’t up to that task without some serious logistical planning.
Of course, that’s where Toyota comes in with their hybrids. They offer a compromise to fully electric cars. Others offer hybrids, but Toyota has the lead with their Prius models.
The Dilemma
For the manufacturers, they must make commitments now while guessing how the regulations, incentives and consumer choice are going to shake out over the next decade. There are going to be winners and losers. It should be fun to watch.
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