Auto industry's cure for electric car blues: Be more like Tesla

It took six years for Ford Motor Co. F 1.13% to sell 8,700 electric Focus small cars. It takes just three days to sell as many gasoline-powered F-Series pickup trucks.

 

Americans may not be lining up to buy electric cars, but that hasn’t stopped Ford from pushing ahead with plans to spend $11 billion to develop more compelling battery-powered vehicles. Ford’s rising commitment underscores a willingness among big car companies to experiment with the types of sexy electric cars that give Tesla Inc. its appeal.

 

Ford’s push, announced at the Detroit auto show in January, is part of more than $70 billion in planned investments into electric vehicles and batteries that global car companies have announced since the beginning of 2017. This year, Jaguar is expected to offer an electric SUV via U.S. dealerships, to be followed by new battery-powered offerings from brands as diverse as Audi , Porsche, Volvo and Toyota.

 

American buyers have shown little interest; the vast majority of vehicles leaving U.S. showrooms have gasoline engines under the hood. While deliveries of pure electric and plug-in hybrid vehicles are on pace to top 200,000 for the first time, that represents slightly more than 1% of the market even with a $7,500 federal tax credit.

 

One reason for the slow adoption is that auto makers have long made electric cars with staid designs unappealing to consumers. They did so believing the vehicles were in low demand, developing a collection of automobiles detractors often labeled “compliance cars” meant to assuage regulators rather than sell in large numbers.

 

“We will be converting our traditional, most iconic vehicles to all-electric,” said Jim Farley, Ford’s global markets chief, in an interview, adding he even sees a potential market for pickup trucks like the F-150 fully powered by batteries. The choices at dealerships for electric vehicles, now paltry, are “going to explode,” he said.

 

Among Ford’s planned vehicles is a high-performance electric SUV coming to showrooms in 2020 called the Mach 1, a name the company once used on its powerful Mustang sports cars.

 

The new strategy comes as battery costs are falling, promising to cut prices of electric vehicles, which are typically thousands of dollars more expensive than comparable gas-powered models. Stricter environmental regulations in markets such as California and China are mandating electric vehicles. An emissions-cheating crisis at Germany’s Volkswagen AG has soured many customers on diesel. The U.K., France and India have all weighed banning internal-combustion engines for environmental reasons.

 

Volkswagen, which pleaded guilty to criminal wrongdoing in the U.S. for evading emissions requirements, has committed $40 billion to electric vehicles through 2022. The German auto giant’s plans include a battery-powered version of its iconic microbus called the Buzz.

 

Mercedes-Benz parent Daimler AG plans to invest as much as roughly $12 billion in electrified vehicles. GM plans 20 new battery and fuel-cell electric vehicles by 2023, though the Detroit auto giant hasn’t revealed an investment figure. “The die has been cast,” said Mike Jackson, chief executive of AutoNation Inc., the largest dealership chain in the U.S. He predicts electric vehicles will represent up to 20% of U.S. automobile sales by 2030, up from around 1% today.

 

“This has never happened before: The three biggest markets in the world are mandating electric vehicles,” he said, referring to China, Europe and the U.S., where California and other states require increased electric sales.

 

Industrywide electrification isn’t assured. While the distance electric cars can travel on a single battery charge is increasing, there is a lack of widespread charging stations needed to ease a driver’s fear of becoming stranded. For now, many EVs remain too expensive for most buyers—Jaguar’s new I-Pace SUV will start around $70,000.

 

In the U.S., tax credits that eventually expire have propped up electric-car sales, and car companies became nervous when lawmakers weighed eliminating them in the recent GOP tax-reform legislation.  GM has called for an expansion of those credits.

 

“If it does not gain acceptance in the market, then everybody—industry, employees and politicians—have a big problem,” Peugeot Chief Executive Carlos Tavares recently told reporters.

 

It could take several years for the prices of electric cars to approach those of current gas-powered vehicles. Mass-market brands lose money on their current electric offerings. Fiat Chrysler Chief Executive Sergio Marchionne once quipped that he hoped customers would eschew a Fiat 500 electric car because “every time I sell one it costs me $14,000.”

 

The new wave of vehicles should represent a departure from cars such as Ford’s electric Focus of 2011, capable of traveling only 76 miles on a single charge, and even less when owners used their heaters in the winter. Its $40,000 price tag was nearly twice its gasoline-powered counterpart.

 

GM contends the Chevrolet Bolt released in late 2016 “cracked the code” for adoption of electric cars, boasting a range of 240 miles on a charge and a price around $37,000 before rebates. Still, the hatchback remains too small for most customers, so GM plans larger vehicles with similar electric underpinnings.

 

Jim Sepe, of Glendale, Calif., was driving a Ford SUV before leasing a Bolt, which he described as “snappy and nimble.” Mr. Sepe, a 57-year-old chief technology officer at a consumer electronics company, said operating the car “feels like I am driving the future.”
—William Boston contributed to this article.

                Source: The Wall Street Journal

Outbrain