Automakers bet on alternative-fuel cars for future

Sep 11, 2013 by David Mchugh
BMW CEO Norbert Reithofer gets out of the BMW i8 plug-in hybrid sports car during its world premiere at the first press day of the 65th Frankfurt Auto Show in Frankfurt, Germany, Tuesday, Sept. 10, 2013. More than 1,000 exhibitors will show their products to the public from Sept. 12 through Sept.22, 2013. (AP Photo/Frank Augstein)

Judging by the slew of electric and hybrid vehicles being rolled out at the Frankfurt Auto Show, it might seem carmakers are tapping a large and eager market.

But in fact almost no one buys such cars—yet.

More and more automakers are coming out with electric versions of existing vehicles—such as Volkswagen's all-electric versions of its Up! city car and Golf compact—or ones they have designed as electrics from the ground up, like small BMW's electric city car i3.

Analyst Christoph Stuermer at IHS automotive called Frankfurt "the first full-throttle electric propulsion show" that's about "getting electric drive cars out of the eco-nerd, tree-hugger segment and into the cool group."

To whet appetites, automakers are making high-performance, luxury versions that give up little or nothing in performance to conventional models. BMW's i8 goes 0-100 kph (0-62 mph) in a speedy 4.5 seconds. Audi's Quattro sport concept—meaning it's for demonstration, not for sale—is an aggressive looking sports car with large air intakes flanking the grille and a whopping 700 horsepower from its hybrid drive. The company says it can reach 305 kph (190 mph.)

The Mercedes S-Class plug-in hybrid version, meanwhile, has a powerful six-cylinder internal combustion engine plus an all-electric range of about 30 kilometers (20 miles). This way, owners could commute all-electric during the week, recharging overnight—but use the gasoline engine on a family vacation. The company says mileage is 3.0 liters per 100 kilometers, or 78 miles per gallon.

A man disembarks from a Mercedes S 500 Plug-in Hybrid during the second press day of the 65th Frankfurt Auto Show in Frankfurt, Germany, Wednesday, Sept. 11, 2013. More than 1,000 exhibitors will show their products to the public from Sept. 12 through Sept.22, 2013. (AP Photo/Michael Probst)

All this, to cater to a market that doesn't really exist in mass terms. Only 0.2 percent of all cars registered in Europe are hybrids, which combine batteries with internal combustion engines, or electrics, according to the ACEA European automakers association. In the United States, the Toyota Prius hybrid has broken into the top 10 selling passenger cars. However, electric vehicles have struggled to increase sales numbers because of high prices and so-called range anxiety: buyers' fear of running out of power.

Analysts and executives say there are several solid reasons to make and promote such cars now. They can help lower average fleet emissions to meet government requirements—in Europe, offsetting increasing sales of conventionally powered sport-utility vehicles. And automakers want to be ready in case governments—perhaps in heavily polluted China—push people into emission-free vehicles.

The new Mercedes S-Class plug-in hybrid, bottom, with a fuel consumption of 3 liters/100km (78.4 mpg) and the autonomous driving S500 Intelligent Drive are presented by Mercedes car development head Thomas Weber during the first press day of the 65th Frankfurt Auto Show in Frankfurt, Germany, Tuesday, Sept. 10, 2013. More than 1,000 exhibitors will show their products to the public from Sept. 12 through Sept.22, 2013. (AP Photo/Frank Augstein)

"Short term, nobody will get a return on these investments," Daimler AG chief executive Dieter Zetsche told The Associated Press. "But definitely, long term, the development will go in this direction, and if you don't learn this lesson today you will not be in the game tomorrow."

"All these technologies have to be developed further and you can only do that, including industrial processes to reduce costs, by selling them."

Volkswagen CEO Martin Winterkorn said one key to getting the hybrid and electric market moving is reducing the cost of the most expensive element—the battery. The company's goal is to cut the cost of a unit of battery power by a factor of five over the next several years.

The Volkswagen e-up! rolls onto the stage during the first press day of the 65th Frankfurt Auto Show in Frankfurt, Germany, Tuesday, Sept. 10, 2013. More than 1,000 exhibitors will show their products to the public from Sept. 12 through Sept.22, 2013. (AP Photo/Michael Probst)

Winterkorn said the company had included electric and hybrid models in the company's multi-platform manufacturing system. This standardizes parts and allows the same assembly line to produce multiple vehicles. That means a new electric could have modest sales numbers—but not involve the expense of additional plant capacity and parts design.

The U.S. government is requiring automakers to increase fleet mileage standards, and the European Union is requiring them to cut emissions by 2020. Auto analysts say electrics could get a further push if China or its biggest cities start encouraging or requiring them to lower choking pollution levels.

The Chinese Cabinet issued a development plan last June that calls for the number of electric vehicles to rise to 500,000 by 2015 and then to 5 million by 2020. Buyers of electric vehicles will be entitled to government subsidies, and exempt from restrictions on car purchases.

The Volkswagen eco up is cleaned by an employee during the second press day of the 65th Frankfurt Auto Show in Frankfurt, Germany, Wednesday, Sept. 11, 2013. More than 1,000 exhibitors will show their products to the public from Sept. 12 through Sept. 22, 2013. (AP Photo/Frank Augstein)

One of the biggest bulls is Renault-Nissan CEO Carlos Ghosn, whose company has bet heavily on the all-electric Leaf. He said much of the industry is waiting now to see what China's next move is on reducing emissions. When China acts, it will mean "the explosion of the electric car."

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antialias_physorg
3.7 / 5 (3) Sep 11, 2013
But in fact almost no one buys such cars

Look at the price of the same gasoline powered car and the specs of each - and it's a "duh" moment.

Everybody WANTS to buy these cars - from people fed up with street noise to people fed up with bad city air to speed/acceleration freaks. This pretty much covers everybody on the planet.

But as long as carmakers tell us: pay triple the price for a car that is range limited to the point where you need a second, gasoline powered car as well - then it's a non-starter.

Sometimes I think the managers have just lost all touch with the reality of most people (due to their exorbitant pay). They can't really fathom that for most people 30-50k is a lot of money.
Eikka
3.7 / 5 (3) Sep 11, 2013
But as long as carmakers tell us: pay triple the price for a car that is range limited to the point where you need a second, gasoline powered car as well - then it's a non-starter.


It's worse than that for most people, who can't even afford new cars to start with.

Who's gonna buy a used electric car with used batteries, and how little does it have to cost to make any sense? It's refreshing though that the industry aknowledges the fact that they need to make the batteries 5-7 times cheaper.
Eikka
3 / 5 (2) Sep 11, 2013
With a steady reduction of 6-8% in lithium battery prices per year, we can see the battery prices falling to 1/5 in about 20 years, and further to 1/7 in 25 years.

So electric cars should be ready for the common consumer, that is, those common consumers who can afford to buy new cars, in 2033.

So I'm kinda not holding my breath.
antialias_physorg
2.3 / 5 (3) Sep 11, 2013
Who's gonna buy a used electric car with used batteries,

Since all offers I've looked at are renting the batteries that's not so much of a problem as one might think. You just sell the plan for 70EUR/month (or whatever the premium is) along with the car.

With flow batteries that issue may go away entirely. (of course also if the batteries can be made a lot cheaper. Zinc-air looks like the best bet for that particular route)

we can see the battery prices falling to 1/5 in about 20 years, and further to 1/7 in 25 years.

That's a dicey way to calculate as if (or when) the electric vehicle market takes off demand will skyrocket.
TeV
2 / 5 (4) Sep 11, 2013
Obviously you two are just as clueless about this topic as you are about everything else you feel compelled to comment on. My Chevy Volt cost me $35K two years ago, and it's saved me $400/month in gas every month since then. By the time my 10 year/100,000 mile battery warranty ends, I'll have saved $48,000 on gas, while spending less than $1/day to recharge my car with clean hydro power.
That means my electric car (plug in hybrid technically) will pay for itself after less than 8 years. How long will it take your gas powered cars to pay for themselves? Oh, never? In fact, the longer you own them the more money they'll cost you? Wow, you guys really have thought this through.
I think I'll go buy another electric car now, since they're widely available for less than $30,000 after federal incentives, and far less after State incentives (Nissan Leaf for less than $20k, Chevy Volt for less than $27K, plus more available every day - Ford's Fusion, C-Max and Focus plug-ins, etc.)
TeV
2 / 5 (4) Sep 11, 2013
Forgot to mention, my Volt smokes other gas-powered cars in acceleration, rendering your performance argument just as flaccid as your other lies.
With no gears to shift, and 274 ft/lbs of torque, I leave Golf GTI's, Mazda 3's, Acura TL's, even many BMW 3-series and Audi A4's in the dust driving around the city. I've yet to have anyone pass me illegally on the right at a stop light - in fact, a Mazda 3 that tried to (illegally) beat me to the merge lane a few weeks ago blew his head gasket in the attempt. I guess educating the public about the 'capabilities' of electric vehicles takes many forms - too bad some unthinking zombies like you guys keep trying to tell the world a different story.
A related question: how many hours have either of you spent actually driving electric vehicles? They're now available in all the states, so you don't have any excuse other than stubborn ignorance to continue to refuse to move into the 21st century.
Oh, a replacement Volt battery is $3000 - TODAY.
TeV
2 / 5 (4) Sep 11, 2013
Plug in hybrids have gasoline engines as back-up generators, so no range anxiety or constant charging required (most people's cars are parked all night - guess when the cheapest electric rates also happen to be?).
Pure electric vehicles increasingly have quick charge capabilities, allowing them to charge to 80% in 20 minutes. Tesla's superchargers will charge their (250 mile battery range) Model S to 80% in 15 minutes, and their upcoming battery swap stations will accomplish a full-charge equivalent in less than 2 minutes.
All the arguments you guys put forward are ridiculously outdated and ignorant of the current state of the technology. Tesla's next pure electric vehicle will cost less than $30K and have a 200 mile battery range, plus the ability to recharge quickly.
Battery prices are coming down so quickly that the Chevy Volt and Nissan Leaf have dropped their prices by over $5000 each in the last year, despite ever-increasing sales.
Cling to your gas cars - they're extinct.
djr
5 / 5 (1) Sep 11, 2013
TeV - I am pleased that many are now getting excited about hybrids and ev's - and I believe we are on the leading edge of massive systems change - and it will not be too long before ev's and fuel cells dominate the market. However - your numbers are a little optimistic at this point. I recently bought a honda civic - quite reasonably equipped for around $16,000. I drive about 12000 miles a year - costing around $1400. So it would probably take around 15 years to break even on the Volt (back of a napkin calculations). Still not a bad deal - as the Volt is a nicer car - but still a lot of up front money. The numbers are definitely trending in the right direction.
ekim
5 / 5 (1) Sep 11, 2013
djr - I'm assuming that your back of the envelope calculations didn't include rising gas prices. The earth is finite, as are it's oil reserves. More oil used today means less tomorow. Renewable sources of energy rely on the sun, or earths molten core, and neither of those sources will be depleted in the near future.
djr
5 / 5 (1) Sep 11, 2013
No argument from me on that one ekim. Of course we do not know what the price of oil will be - but there is not much chance of it going down (the cost of a barrell of oil goes up - as the easy to find oil gets used). It is going to be very interesting - if the price of oil goes up too much, ev's become more economically competitive - which will accellerate the transition. This is a very interesting time in the energy world.
antialias_physorg
1 / 5 (1) Sep 12, 2013
My Chevy Volt cost me $35K two years ago, and it's saved me $400/month in gas every month

The chevy volt has an electric range of 56km. Even if you used that full range every day (which you don't) you wouldn't end up with 400$ worth of gas saved. You're making up numbers.
The volt gets 37mpg on charge maintain mode, which would actually mean it would COST me a lot of extra money in gas to switch over to a chevy volt from my current car, since 56km isn't enough for my daily commute. And my current car costs me (new) a third of what a chevy volt costs.

Now I would love to buy an electric car (and I've tried out quite a few at various dealers already. But at the moment it just doesn't make sense unless you have money to burn (which I don't)
In fact, the longer you own them the more money they'll cost you?

I completely agree. But the difference is money up front vs. money paid over time. I can afford monthly 200EUR in gas. I can't afford 30-50k for a car in one go.
ScottyB
not rated yet Sep 12, 2013
I will be looking at an elctrric Golf for my next company car if the leasing companies have them, with tax based on co2 emission electric cars definitely make sense for those of us who have to have company cars!
antialias_physorg
5 / 5 (1) Sep 12, 2013
Sure. For companies leasing makes a lot of sense - so the up front cost doesn't matter that much. Knowing your clients you can already make a good estimate whether the range will be sufficient (And for companies it's also easily feasible to keep one gas powered car in the mix for those rare, longer trips)

It's probably also good PR in the early adopter phase if clients see you pulling in with a zero emission vehicle..
Eikka
1 / 5 (1) Sep 20, 2013
That's a dicey way to calculate as if (or when) the electric vehicle market takes off demand will skyrocket.


You know what usually happens when the demand for a product goes up?

Prices go up.

It's a seller's market. If anything, increasing popularity for electric cars will just slow down the price development until the market is saturated. Then it becomes a competition of price again.

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