2020: Plug-ins set to dominate the auto market?
While plug-ins dominate the auto industry by 2020?
Have electric vehicles been over-hyped or are they being under-estimated?
Over and over I hear plug-in fans and advocates claim that plug-in vehicles are going to go mainstream much faster than what industry analysts, forecasts and studies suggest. In fact, many claim that by around 2020, plug-in vehicles will make hybrid cars passe. Ironically, I used to believe the same, but the large amount of data contradicting this opinion has become harder and harder to ignore.
S0, is the data simply backwards thinking? What’s the real potential of plug-in vehicles? Could plug-ins become the mainstream automotive solution in the US by around 2020?
Perhaps all the analyst forecasts by the likes of JD Power, or the battery studies by Carnegie Melon et al, are completely wrong. Even if wrong though, automakers themselves aren’t preparing for the kind of ramp up in plug-in production that supporters seem to believe is possible. Certainly, technological breakthroughs or government incentives could push automakers to update their plans; nevertheless, it takes about 5 years to develop a new production line for just one new vehicle, and even longer to develop supply chains for huge increases in new vehicle and new technology production.
So, production change can’t happen fast. That’s simply a nuts and bolts reality, but that isn’t even what has my head spinning these days.
Today, roughly two-thirds of GM’s sales occur outside the US in a widening and growing trend. Essentially, GM is becoming significantly less dependent upon the US for success.
In fact, emerging markets, according to every automaker, are the future of the auto industry as these markets will push the world’s automotive fleet from around 800 million vehicles today, to 3 billion by 2050. However, recently even hybrid king Toyota claimed that hybrids and plug-in vehicles will not be key technologies for these emerging markets, as much cheaper vehicles will be required to increase penetration in these markets compared to the US and Europe, markets where Toyota has much more robust battery-powered plans.
Regardless, what’s the real plug-in potential even in the US or Europe?
According to Better Place’s Shai Agassi, for instance, new business models must be developed around plug-in vehicles to make them a viable mainstream solution for more than just early adopters. Yet, a recent TrendTracker report claims the numbers simply don’t add up for Agassi’s battery swapping station plans. Of course, while Agassi’s Better Place idea might be financially ineffective, his contention that revolutionary new business models might be required for widespread EV adoption could still be correct.
Then again, the TrendTracker report could also be wrong, but it still brings up a larger a point: What’s the right investment into an immature technology certain to see numerous breakthroughs in coming decades?
For instance, might it be better to invest in simple charging stations rather than an entirely new EV battery-swapping infrastructure? Might it be better to focus on basic hybrids that offer plug-in conversion potential if breakthroughs are achieved so that automakers are committed to real battery change immediately?
Ultimately, might not many EV investments end up the same as many Internet bubble investments when investors and companies rushed to grab share that simply didn’t yet exist, or at least not in the way these investors originally imagined? Consequently, shouldn’t it be assumed that automakers aren’t going to invest too heavily in any rapidly changing technology if the possibility that a breakthrough could make previous products instantly obsolete is very real?
But more alarming is the growing importance of emerging markets. If these emerging markets become more and more critical to automaker survival, yet battery powered solutions are not critical to these markets, where does that leave the focus of automakers that are completely driven by scale? Might US and European markets become more and more irrelevant if not more in line with the rest of the world, particularly if the rest of the world provides the majority of profits for the auto industry?
Recently, an Accenture study claimed that electrification domination by the US was not critical to automotive success in the future. If emerging markets are the key to future success, then it’s not hard to understand why Accenture made this claim.
Nevertheless, can America achieve any sort of energy independence without electrification, or without electrification as part of the plan?
It seems to me that the US is in between a rock and a hard place. The transition to electrification will not be easy nor very profitable in the short to mid-term. At the same time, more and more automaker profits will be found outside the US, where electrification could be far less relevant. Consequently, while plug-in vehicles are a step in the right direction, they appear to be only a piece of the solution, not the solution – at least not anytime soon.
But if plug-ins aren’t the solution for at least another few decades, what is?
Interesting thoughts. That could be good or bad. Obviously, if a small new company found success, that would be exciting. For instance, seeing a Tesla or a Fisker actually begin to provide some serious production numbers – although miniscule compared to the majors – could be the new kind of business model needed to make up for the extra costs of plug-in vehicles. Something sort of like Amazon where you need less factories, less dealerships, fewer middlemen (and women).
Of course, it probably also means that the rollout of such technologies requires a longer time horizon.
Still, I do believe that new business models are the key and this regional approach fits that mindset.
I think GM has a big following, but they have been unloved in the green community, undoubtedly. nevertheless, the volt has helped gm build some bridges back into this community.
still, i’m beginning to wonder just how important the volt really is. it’s obviously important for marketing in the interim, especially in the US, as well as an R&D platform into battery technologies. nevertheless, if GM is selling 2/3’s of its vehicles outside the US already, and emerging markets promise massive growth over the next few decades, then the Volt probably has very little to do with GM’s long term plans.
i’ve been thinking for some time that US automakers really need to help reshape the US market to be more like the world market. our vehicles, for starters, are just too big, too heavy and too loaded with horsepower. we’re burying ourselves and our future in inefficiency.
Use the same stats and calculations, but take the Big 3 out of the picture, then see what you get.
What’ll we be seeing in the US, as far as plug-in and EV makers go, will be small companies, operating in regional capacity but possibly shipping nationwide.
Ford is the only Big 3 who might have a chance in the US market by using their current “scattershot” approach. But true deployment will be by the small companies. EV fans will just have to get used to the idea of having your car shipped to you.
One point to make about GM and the U.S. Market which tends to love SUVs and SOLO car travel until gasoline tops 3 bucks a gallon and heads to 4 bucks and up and that is that the U.S. car market is not a stable market in terms of consumer preferences certainly as compared to other countries markets where the price of fuel is high has pretty much been so for a while and will remain so but somewhat better insulated from roller-coaster changes.
That, in turn, makes it easier for any auto maker, including GM to calibrate, plan, strategically plan, etc.
So the key to GM and Ford survival is to NOT keep all their eggs in the U.S. car basket.
Sad in a way. The average US person is fairly short-sighted in terms of looking ahead… lives for now and regularly throws the dice in their personal lives as far as making decisions like buying cars an houses.
Toyota decided they would not market in the US like GM did. They would offer reliable, fuel efficient cars but often stodgy cars that appeal to those with a more practical streak.
Even their Prius is pure funk… it’s so funk that it appeals to those who are themselves a bit quirky and no guy who wants a Camaro or Mustang would touch a Prius with a 10 foot pole.
So GM has learned a hard lesson but they’re learning it and besides judging from the participants in this blog anyhow..they are mostly unloved.