Just this week, General Motors and Volkswagen announced separately that they are both turning their focus to battery electric vehicles (BEVs), deeming plug-in hybrids (PHEVs) not worth the effort. And while no one can refute that the future of personal transportation is found in a battery, the question for these two companies is this: When exactly will that future be?
While BEVs are gaining traction here in North America, they’ve still got a long way to go to mass adoption when it comes to cost, range and charging infrastructure. Last year, plug-in electric vehicles (both BEVs and PHEVs) made up just over 2 per cent of all vehicle sales in North America. According to goodcarbadcar.net, GM’s only available BEV, the Chevrolet Bolt compact hatchback, sold just 2,530 units in Canada last year. Compare that with the country’s best-selling vehicle, the Ford F-150, which sold 145,694 units in 2018. That’s a lot of ground to make up, to say the least.
Not that there’s no future for BEVs. In a study released in January, auditing firm Deloitte acknowledged that the costs of owning an EV will drop to those of regular vehicles by 2022, and 21 million EVs are expected to be sold globally in the next 10 years. But its research also found that manufacturers’ investment will outpace demand. An oversupply of 14 million EVs worldwide is expected by 2030. Simply put, while technology and costs will improve, the public’s general acceptance of EVs will still be comparatively marginal. Sure, the early adopters are happy to boast about saving the planet by driving an electric car. But most car buyers are just not willing to change their driving habits to accommodate charging times, lack of infrastructure and limited range – or at least, not in the foreseeable future.
General Motors CEO Mary Barra announces a major investment at the GM Orion Assembly Plant in Lake Orion, Mich, on March 22, 2019.REBECCA COOK/Reuters
Meanwhile, PHEVs haven’t just got a bum rap here, they’ve got almost no rap when it comes to awareness of their electric possibilities. Of the 23 PHEVs available for sale in Canada, only one has an electric range below 20 km, and many have ranges of 40 km or more, meaning most of these cars have enough for a daily commute on their battery alone. And yet, the onboard gas engine solves the problem of range anxiety – fill it up just about anywhere and go on your longer drive after the battery is drained with no worries. There really doesn’t have to be any difference in driving habits, other than plugging in overnight at home.
PHEVs are also currently less expensive than their fully EV counterparts. The Hyundai Ioniq Electric Plus PHEV, for example, with a battery range of 47 km, starts at $32,299; the Ioniq EV, with a range of 200 km, starts at $37,899 (all base prices before incentives). Buyers would save more than five grand on the PHEV and still have the capability to drive every day on electricity alone – yet have the convenience and freedom afforded by regular gas-powered cars, which can fuel up almost anywhere in less than three minutes.
So for the average driver who wants some electric capability without changing their life, PHEVs are the better choice, at least for the next few years. So why are GM and VW turning their backs on this technology?
It could be China. Its government has massively subsidized the BEV market in the last few years, and sales of plug-in vehicles have reached about 4 per cent market share. Both GM and VW have a foothold in car sales in China, and they might see the market expansion too lucrative to pass on. They do, however, have considerable competition, not just from other foreign brands but homegrown car makers such as Geely and BYD. And according to Reuters, EV sales have slowed this year and are expected to slide further. Of 26.68 million vehicles expected to be sold in China this year, only 1.5 million will be alternative-energy cars. The government’s upcoming cuts to incentives – which look to be completely eliminated next year – are expected to slow those sales further.
It’s laudable for companies such as General Motors and Volkswagen to invest in the future, but they seem to be ignoring the facts of the present. As long as gasoline prices remain relatively cheap – and there is no indication that prices will rise – BEVs will remain a sideshow product for most consumers. It just doesn’t seem like good business sense to put all of your eggs into the BEV basket and ignore other options.
GM president Mark Ruess recently told the Wall Street Journal, “If I had a dollar more to invest, would I spend it on a hybrid? Or would I spend it on the answer that we all know is going to happen, and get there faster and better than anybody else?”
The only question is, once you get there, will there be anyone waiting to buy them?
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