Economic realities push alternatives back in favor of more efficient gas engines
While all of the world's major automakers are continuing to develop alternative fuels and drivetrains, the current economic situation very likely means that a massive move toward non-liquid fueled cars is likely a lot further out that many of you many hope. One look at September auto sales will tell you that the entire industry is in trouble including the seemingly all powerful Toyota. As the financial system continues to struggle and unemployment climbs, people are having a harder time getting car loans as well as mortgages. If people can't afford the cars that are available today, it's hard to imagine how they will be able to afford some of the alternatives that will be much more expensive to build for some time to come. Given the current financial position of many automakers, it's hard to see how they will be able to subsidize the cost of new technologies in any significant volumes. At the Paris Motor Show last week BMW Chief Executive Officer Norbert Reithofer said, "There's too much hype about the electric car." Electric vehicles may make up 5 to 10 percent of new car sales in 2020, "but not more," he said.
If the U.S. economic meltdown hadn't spread to Europe the situation might have been different. With sales dropping in Europe, even companies like Volkswagen and BMW are joining Ford and others in focusing more on shifting to smaller more efficient vehicles that will be affordable rather than building alternatives. It's a vicious circle because until alternatives gain some volume, costs will not come down. But in the current climate few will be able to afford to be the leaders. Thanks to Jonathan for the tip!
[Source: Bloomberg]
Reader Comments (Page 1 of 1)
Peter Wang 7:19PM (10/05/2008)
The real way forward for consumers is to drive less, and drive more efficiently (hypermiling), maybe even downsize from 2 car families to 1 car, or 1 car to none.
And when you drive less and hypermile, then getting that last increment of extra fuel economy seems less urgent... because you will truly pay for that llittle bit of MPG improvement.
I use a combination of carpooling, bike riding, and public transportation use to get around. I drive my car, a 1998 Corolla (30 MPG) with 70,000 miles on it, a few times per week. It was paid for the day I got it.
There is no economic argument in existence that could convince me, at my usage rates, to trade it in for a Prius or Son-of-Prius, with a big new car note. That's an unjustifiable purchase. So it will be for many people in the US as they learn to make do with less in these current economic conditions.
BTW, I live in the sprawling Houston Texas suburbs, not in a dense, compact Northeastern US city.
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EVan 8:56PM (10/05/2008)
Or... we could invest in clean, renewable, and domestically produced cellulosic ethanol. It can operate along with existing engine technology in millions of vehicles on the road today, will be cheaper than gasoline, and has the potential to replace 85% of oil use for transportation.
On top of all of that it doesn't require extensive infrastructure to be built nor is it dependent on exotic materials and minerals in limited supply.
Cellulosic Ethanol really doesn't get the respect and credit it deserves as a way out of the economic/environmental situation we're in.
rob 7:54PM (10/05/2008)
"Sales suck, so... Let's just keep doing what we've been doing before, only a tiny bit better."
Um... Yeah.
Go Tesla.
Go Pinafarina/Bollore.
Go Nissan/Project Better Place.
Go BYD.
Eat the big guys lunch on them.
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Dave 2:22AM (10/06/2008)
You forgot Aptera...
Arno 8:05PM (10/05/2008)
Consumers have driven less in the last year, so that is becoming reality. This may change as more people opt for simply higher MPG vehicles but for now, driving less is a trend.
You almost have to feel bad for the U.S. auto industry though. Here they are, thinking ahead and the market is simply not ready for them. Like I said, "almost" have to feel bad.
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Luke 8:16PM (10/05/2008)
Don't forget that with economic slowdown comes lower demand for oil, and lower oil prices. It gets harder and harder to justify spending so much money if the alternatives don't pay for themselves.
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gorr 8:37PM (10/05/2008)
It's the high price of gasoline and diesel at the pump that is provoking this economic recession worlwide. It's a monopoly that nobody know except the bush's.
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MBM 8:55PM (10/05/2008)
Bewail the situation as one might there are few economies of scale likely to result in reasonably priced high capacity batteries which inevitably need to be made with pricey exotic materials. Increasing the efficiency of the ICE is a much lower mountain to scale in terms of developing green vehicles that the average wage earner can afford now or in the foreseable future. It has taken over a hundred years of research for electrical storage systems to reach performance levels barely adequate to average drivers' needs. It may take that long again before the average driver can actually afford to buy such systems.
Trying to make manufacturers the bad guy is just pointless and counterproductive. Technology usually filters down to a lower price point in the fullness of time and stamping our feet in frustration at the seemingly slow pace of this process is not going to help much. The overheated panic about AGW and the futile quest for energy independence is no reason to bemoan the fact that due to economic realities we may have a few less overpriced underperforming hyper-efficient vehicles to choose from.
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Serge 10:46AM (10/07/2008)
exactly what "pricey exotic materials" are needed for high-capacity batteries? Please enlighten.
Nickel-MH and various Lithium-based batteries are made with common materials.
Andy 10:09PM (10/05/2008)
I've been one of the folks cheerleading for electric cars. But I do see the common sense in this article.
Higher financing costs and more expensive financing pushes out the breakeven cost for electric drive. This does push out the natural "tipping point" for PHEV's and EV's.
Don't despair.....Governments can weight the balance back in Electric's favour with tax credits and the like. The BMW chief executive knows that. He is subtely angling for more handout cash.
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Nathaniel Sears 11:19PM (10/05/2008)
regardless of the economy i still want an electric car. don't allow our current economic problems to be a scapegoat for car companies to back down on their alternative fuel vehicles.
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Matt Lenart 11:35PM (10/05/2008)
rob. u hit the nail on the head.
BMW is suggesting that since THEY don't have an electric car on the horizon and chose instead to parade celebrities around in their expensive fuel cell prototypes, that BEVs won't sell.
g.i.v.e..m.e..a..b.r.e.a.k!
let the people choose... and they will.
i always wondered how people become CEO's... i guess 'lack of vision' and 'not understanding the customer' are a must under soft skills.
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Luke 4:24AM (10/06/2008)
Let's see.....the US government is going to offer tax credits for people to buy EV's, which in turn will result in less revenue for the governement due to the lowered tax income. In addition, taxes on gasoline will be lost, resulting in less money for roads. In the end, taxes will have to go go up an up.
No sum gain, no matter how you cut it.
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andrichrose 6:17AM (10/06/2008)
I have bought two new cars this century , and would
like to inform the head of BMW I will not buy another
until I have the choice of buying a pure electric !
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kert 9:02AM (10/06/2008)
BMW ( and some car buyers ) needs to be briefed on the concept of TCO, total cost of ownership. Take an EV like Bollore B0 and compare how much it would cost you over the lease period, counting insurance, maintenance, fuel/energy prices and your average driving, and then compare it to a petrol alternative.
Then, make a decision. For lots of folks EV will work out quite a bit cheaper.
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Throwback 10:59AM (10/06/2008)
When you are struggling to make ends meet TCO means very little. Cash flow is what matters and if you can only afford a $200 per month car payment, that is what you will look for. The $400 per month EV may save you money in 5 years, but many people are just trying to make it until their next pay check.
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wave54 7:03PM (10/06/2008)
It's probably even worse than your figures, since EVs likely won't be leased as typical cars are with low monthly payments. Financing just $30,000 for a Volt (remainder paid as down-payment or trade) at 5% for 5 years will cost $600/month.
You can buy a basic Honda Fit or a well-optioned Yaris for about half that monthly payment. We haven't seen the end of the financial meltdown yet -- easy credit with no collateral and few qualifications is over for a while.
Yes, an EV can be cheaper over the log haul, but it doesn't mean much if you can't initially afford the loan or you're upside-down on your mortgage and current car loans.
Dave 12:47PM (10/06/2008)
This could be a ploy to get people to buy gas cars because that's all they have available to sell at this time. I chalk this up as misiinformation by big corps to get you to get off the fence and buy a car now and not wait for electric cars.
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Throwback 1:32PM (10/06/2008)
Dave are you saying our current economic mess is a "ploy" to sell gas cars? If the car companies are not making money now, how will they fund future electric cars? Assuming they are still in business 2-3 years from now.
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DJH 1:42PM (10/07/2008)
@EVan
You're on a potential good point, but the wrong fuel. Read about butanol and you'll find it's really got all the characteristics you're attributing to ethanol.
Ethanol DOES require new infrastructure. It corrodes pipelines, supply systems and engine parts requiring changes to all of the above. It has much lower energy density and so even fuel injectors and such must be changed.
Butanol is newer, and used to be more expensive. But recent advances make it the same price as ethanol, and it comes from the same process for the most part...from the exact same sources. So if you can do cellulosic....then make it into butanol, not ethanol.
Literally a one to one replacement for gasoline, will run in existing cars (not this "flex fuel" malarky) and can be shipped and stored in the exact same infrastructure as gasoline and can be blended with it in ANY mixture needed with no side effects.
Just trying to trying to start educating people that butanol even exists and is now cost competitive and has all the advantages we've been looking for....for real. :-)
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