From the battery-powered Chevrolet Bolt crossover to the hydrogen fuel cell-powered Honda Clarity to a hybrid Chrysler minivan, automakers are expected to show a parade of electric vehicles at the 2016 Detroit auto show.
A rare sight a decade ago, they will join dozens of battery-powered entries in dealer showrooms as automakers try to dazzle consumers and meet government gas efficiency mandates.
But with national gas prices hovering at $2 a gallon and SUV sales booming, battery-powered vehicles’ share of the market last year dropped to just 2.4 percent, a 20 percent decline from 2014. The trend has sent ripples of concern through an industry that must meet escalating emissions goals to combat global warming by 2020 — that is, within the current product cycle.
“The regulators are what are driving electric car production,” said Karl Brauer, an industry analyst with Kelley Blue Book. “It’s not because consumers are demanding them.”
By 2020, California, the country’s largest auto market, will require roughly 10 percent of sales be zero-emission vehicles (either EVs or fuel cells). If they don’t meet that threshold, automakers will be fined $5,000 for each vehicle under their sales target. As part of its mission to combat global warming, the Environmental Protection Agency is not mandating such stringent targets nationwide, but it is requiring that carmakers’ fleets average 54.5 mpg by 2025.
As an interim step, 2016-model cars are supposed to meet a goal of 35.5 mpg this year, but according to the EPA’s “Fuel Economy Trends” report issued last month, automakers won’t be close. In reality, the fleet average is an estimated 24.7 mpg.
Detroit automakers, however, avoided government fines by making enough hybrids and EVs to gain credits under EPA’s complicated rules. Those credits will be key to meeting the looming California and EPA goals, but they will get much costlier. Only EVs and fuel-cell vehicles will get full credits, while gas-hybrids like the popular Toyota Prius will get less.
At the Los Angeles Auto Show, General Motors Vice President for Global Product Development Mark Reuss expressed confidence that his company is well-positioned to meet California’s mandates with the all-electric Bolt, plug-in Volt sedan and other offerings such as the hybrid Malibu.
Industry insiders refer to EVs like the Bolt as “compliance vehicles,” made not in response to market demand, but to comply with government regulations. But for smaller automakers like Fiat Chrysler, Mazda and Subaru — which haven’t been able to afford the massive R&D costs of EVs — the regulatory challenges are steep.
“The entire industry is going more toward electrification,” said Reid Bigland, FCA’s North American vice president of sales. “It’s really the primary way to be compliant with the 2025 (federal) standards. That is consuming a significant amount of capital in this industry.”
The result is a two-tier market.
Read more of the original article in The Detroit News.
