Americans bought about 13,000 battery-powered and plug-in hybrid vehicles in December – one of the best months on record for those kinds of cars and trucks.
But that’s only about four days worth of sales of the Ford Motor Co. F-Series pickup, underlining how difficult it is to convince drivers to buy more fuel-efficient vehicles when a gallon of gas at U.S. pumps costs considerably less than $2 (U.S.).
“This is arguably one of the biggest challenges the industry faces,” said Jeff Schuster, senior vice-president of auto consulting firm LMC Automotive Ltd., of Troy, Mich.
There’s an electric or hybrid or fuel-cell vehicle on the stands of virtually every auto maker at the North American International Auto Show, which opened to the media in Detroit on Monday, and if they’re not on display, they’re on the drawing boards or coming to market later this decade.
Among the introductions and commitments made by auto makers on Monday was the appearance of the first hybrid minivan, with Fiat Chrysler Automobiles NV (Chrysler) offering that option on its redesigned people haulers. Luxury maker Audi AG said it would offer three new hybrid vehicles over the next three years and Toyota said it would offer a fuel cell-powered vehicle in its fleet by 2020.
The impact of falling gas prices is also evident in Canada, where sales of crossovers outpaced those of compact cars in 2015 for the first time ever. Sales of the even smaller and more fuel-efficient subcompact cars fell so much that Mazda Canada Inc. stopped offering a subcompact for sale.
“The one thing we can’t control, of course, is customer demand,” Ford Motor Co. chairman Bill Ford said, although he maintained that offering hybrids and battery-powered vehicles and developing new ones makes sense even in an era of low gas prices.
But the growing popularity of crossovers and continued growth in pickup-truck sales will make it difficult for auto makers to meet the 2025 targets for fuel economy and emissions established by Canadian and U.S. governments.
Drivers “are not concerned about gas prices and they are not demanding these [new] technologies, so it’s a huge disconnect,” said Jay Baron, president of the Center for Automotive Research, an industry think tank located in Ann Arbor, Mich.
The U.S. regulations will require auto makers to sell vehicles that reach an average fuel economy of 54.5 miles per gallon across the fleet by 2025. California’s even more stringent 2025 requirements call for 15 per cent of auto makers’ fleets to consist of zero-emission vehicles.
There’s a review of the 2025 targets scheduled for next year and auto makers are expected to make the case that consumers’ lack of concern about fuel economy will make it difficult to meet the targets.
A survey released by consulting firm J.D. Power and Associates on Monday showed that fuel economy ranked third behind exterior styling and comfortable seating as reasons for buying new vehicles.
Mr. Baron believes that the prices of hybrids and battery-powered vehicles are causing sticker shock among consumers.
Government estimates are that the cost of the technology in such vehicles is about $2,000, Mr. Baron said, but he called that figure optimistic and suggested instead that it’s probably above $3,000 and likely double that number when factored into the actual prices of vehicles.
Despite those costs, Chrysler intends to make money on its hybrid minivan, FCA chief executive officer Sergio Marchionne told a group of reporters.
“The costs associated with that plug-in minivan are not inconsequential for us,” Mr. Marchionne said. “For us to remain profitable in an environment like this and still meet the emissions standards is the issue.”
Meeting the 2025 targets is possible from a technology perspective, Mr. Marchionne said, but in the market, “from a price standpoint, it’s a significant issue.”
The recent history of Ford’s assembly plant in Wayne, Mich., demonstrates how auto makers are being whipsawed by oil and the price of gasoline.
Ford ceased production of its hulking gas-guzzler SUVs – the Ford Expedition and Lincoln Navigator – when gas soared above $4 a gallon in 2008, and converted the factory to make small cars.
Now it’s planning to shift production of those small cars to Mexico and make crossovers at the plant later this decade.
At the Shell station a couple of blocks from that suburban Detroit factory, regular gas was selling for $1.70 a gallon on Monday.
U.S. politicians have rejected the idea of increasing the country’s gas tax for the first time since the 1990s as a way of encouraging sales of hybrid and battery-powered vehicles.
So Mr. Baron said governments have told the industry that auto makers and regulators need to work together to change consumer behaviour.
“Good luck with that,” he said.Report Typo/Error