A fork in the road to the electric future

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Canadians and car buyers around the world are not leaping at pure electric vehicles (EVs) – eyes and wallets wide open and expectations soaring. Not yet.

But the world is a simmering stew of interest in EVs and anything else that might nudge us in the direction of so-called "greener driving," reduced fuel costs and less reliance on fossil fuels. Rest assured, the car business knows this. Just in case, regulators and vocal true believers keep up a steady din about sustainable transportation – backing it with increasingly stringent vehicle emission and fuel economy rules.

This explains the recent outburst of what we'll call "green alliances" among auto makers. BMW and Toyota, reports just-auto.com, have just deepened their collaboration to develop joint fuel cell systems, lightweight technologies and lithium-air batteries that hold the promise of what you might call a "a post-lithium-battery solution." Meanwhile, Daimler, Ford and Nissan have inked a three-way agreement to accelerate the commercialization of fuel-cell electric vehicle (FCEV) technology.

So that's five world-class auto makers who have publicly agreed to spend great sums to further fuel cell technology. This is where zero emissions, and I'd argue EV technology, is headed. The point is that a hydrogen fuel-cell-powered vehicle is essentially an electric car powered by what many engineers call a "fuel-cell battery." When BMW and Toyota say they plan to share technologies as they work on commercializing fuel cells, they are stating a belief in the future of EVs – just not a belief in what is now generally considered a battery-powered EV.

In any case, the car industry as a whole agrees that much needs to be done in the area of fuel-cell stacks, hydrogen tanks, electric motors and the infrastructure to support refilling the hydrogen tanks in a fuel-cell car. BMW and Toyota want to have something market-ready by 2020, though. The Ford-Nissan-Daimler alliance has the same aim.

This makes sense as a long-term goal for EVs. Vehicles that run on fuel cells generate electricity from hydrogen and oxygen; their only emission is water.

"Fuel-cell electric vehicles are the obvious next step to complement today's battery electric vehicles as our industry embraces more sustainable transportation," said Mitsuhiko Yamashita, the executive vice-president at Nissan who's in charge of research and development. "We look forward to a future where we can answer many customer needs by adding FCEVs on top of battery EVs within the zero-emission lineup."

All five companies say lightweight technology is essential to the success of any sort of EV, too; so that's also where they are spending research dollars. Cutting weight also makes gasoline- and diesel-powered cars more efficient, thus easier on the planet.

The point is, the auto industry is accelerating its work – via alliances – in "green" technologies beyond just the battery-electric car. Sure, current electric and gas-electric options will still be offered. Yet by the end of the decade, they will have more efficient, smaller batteries that deliver greater range while at the same time car companies will have refined multi-speed transmissions, reduced vehicle weight and found ways to make engines run more efficiently, notes just-auto.com.

If you're a cheerleader for "greener" transportation in general, this is good news – despite the sad sales numbers for EVs today. Now, if you're channelling David Suzuki, hold on while I share some depressing data: according to J.D. Power and Associates' real-time dealer sales data reported by the Power Information Network, EVs represented 0.03 per cent of the total Canadian market in 2012 (not including sales of EVs from Tesla, the Chevrolet Volt and Fisker EVs).

On the other hand, Power's J.D. Ney says that thus far this year "it appears as though EV sales are on pace to certainly beat the 2012 totals by a considerable margin. Of course, that comes with the overarching grain-of-salt note that even if EV sales were to double on a year-over-year basis, the total volume would still represent less than 0.1 per cent of the Canadian marketplace."

Furthermore, he says, gasoline-electric hybrids accounted for 2 per cent of all Canadian sales last year "and, with more hybrid models being made available across almost all manufacturers, we'd expect the overall number of hybrids on the road to rise significantly, even if the ratio of hybrid to traditional combustion engine vehicles in the marketplace does not shift as drastically."

Auto analyst Dennis DesRosiers of DesRosiers Automotive Consultants, agrees. "One [marketplace] theme that is very evident: hybrid is becoming mainstream."

Last year, in fact, Toyota Canada sold nearly 12,000 vehicles that are available only as hybrids – the Prius family and two Lexus models. That means Toyota's pure hybrid sales were up year-on-year by more than 200 per cent. Overall, hybrid sales in Canada were up nearly 200 per cent based on the available data, which DesRosiers cautions is incomplete.

"No data is available for a number of other hybrid vehicles where hybrid is simply an option of an existing model," he says. What are those vehicles? The Toyota 4Runner and Highlander, BMW 5-Series, Ford's Fusion and others. "Including these would increase the totals. We estimate that sales numbers pick up about half of total sales of these types of vehicles," he says.

And new dedicated hybrids appear to be finding a home in the garages of Canadians.

Take Ford's new C-Max wagon. It's sold only as a dedicated hybrid and plug-in hybrid and, despite having just come to market late last year, Ford of Canada retailed 155 C-Max models in 2012. Meanwhile, GM of Canada managed to move 1,225 Volts, which most agree is more a plug-in hybrid than a purely dedicated EV. Pure EVs such as the Mitsubishi iMiEV (196 sold) and Nissan Leaf (240 sold) are finding it harder to find buyers willing to pay a premium to go green, what with range and recharging issues.

The popularity of hybrids – what could fairly be called "partial EVs" – is not surprising. Hybrid buyers get significant fuel economy gains and reduced tailpipe emissions with no deal-breaking compromises in performance and range. Their growing success makes sense from a consumer's viewpoint.

"First of all, I should start out by highlighting that fuel economy is an extremely important purchase motivator for Canadians today," notes Ney. "In fact, our most recent Consumer Retail Experience Study [measures sales satisfaction at the 90 days of ownership mark] found that 11.9 per cent of respondents cited fuel economy as the most important factor in their recent new-vehicle purchase decision. That puts it in second place, behind only vehicle reliability, which was cited by 12.19 per cent of respondents, and ahead of 'The deal,' cited by 11.46 per cent.

"So, needless to say, Canadians are looking for fuel-efficient automotive solutions in their daily lives."

Of course, EVs and such have their detractors. Automotive News, the industry publication, catalogued a list of negatives about EVs and hybrids. Among them, Consumer Reports and others claim the Ford C-Max Hybrid and Fusion Hybrid fail to achieve window-sticker fuel economy numbers. Both the Volt and the Leaf have fallen far short of their hoped-for sales numbers, too.

Toyota, despite enjoying strong reliability findings by Consumer Reports, recalled 670,000 Prius hybrids for steering problems late last year. And the fuel-thrifty and affordable Toyota Prius C hybrid was criticized by Consumer Reports for being noisy and sluggish, thus it was not made a recommended model.

What's clear is that while hybrids are showing promise, they do have issues. Meanwhile, pure EVs remain a tough sell. Part of that is pricing. The rest surely has to do with the "range anxiety" limitations of all EVs. On the pricing front, Nissan has already reduced the price of the 2013 Leaf by 18 per cent in the United States, and a similar price reduction will surely come to Canada.

How Ford will goose sales of its slow-selling Focus EV – built already in North America – is a more complicated matter. Automotive News reports that Ford has begun offering hefty lease discounts of more than $10,000 in the United States. However, for the time being, Ford of Canada has not gone this route and is only offering discounts worth up to $1,500 on the $41,199 Focus Electric hatchback.

Nissan and its Renault alliance partner, as The Detroit News recently noted, may in the short term be ruing the day CEO Carlos Ghosn publicly claimed that EVs would comprise 10 per cent of the whole market where they are sold by 2020 – and wondering if the $5-billion (U.S.) Nissan-Renault investment in EV technology and manufacturing has been well spent. But in the long term, those investments may pay big dividends in terms of advancing electric motors, lightweight materials, fancy computer controllers, aerodynamic designs, "green" manufacturing techniques and marketing intelligence.

Today's EVs, weighed down by heavy batteries and limited by range and charging times, will get better. In the meantime, as Frost & Sullivan analyst Nicolas Meilhan told The Detroit News, the Chevrolet Volt has shown the way for EVs that want to be functional in the city but also not limited for driving outside city centres.

"The Volt is to PHEV [plug-in hybrid electric vehicle] what the Prius was to HEV [hybrid electric] 15 years ago – the first of its kind. And there's plenty of room to improve it," Meilhan told The News.

And, as indicated by these most recent announcements of alliances between global car companies, fuel-cell vehicles, which use electricity to power electric motors, might just be ready to return from the shadows and become mainstream EVs – that is if the technology issues can be addressed and hydrogen filling stations begin to pop up in number and places suitable to make fuel cell cars viable every day.

"We are convinced that fuel-cell vehicles will play a central role for zero-emission mobility in the future," says Thomas Weber, the board member at Daimler AG in charge of research and development.

To borrow from Mark Twain, reports of the death of the EV are greatly exaggerated. We just don't know precisely what the living EV will be by the end of the decade. Regardless, the smart money is on "electrified" vehicles being a major force by 2020.

Source: DesRosiers Automotive Consultants

(Important note: No data is available for a number of other hybrid vehicles where A hybrid is simply an option of an existing model. Examples would include the Toyota 4Runner and Highlander and the BMW 5-Series. Including these would increase the totals. DesRosiers estimates that sales numbers pick up about half of total sales of these types of vehicles.)