Who killed the gasoline-powered car?
That’s a question we could be asking in less than a decade, if Volvo sticks to predictions made by its CEO.
“I would be surprised if we wouldn’t deliver only electric cars from 2030,” Volvo CEO Hakan Samuelsson said at an online-summit in December.
In January this year, General Motors announced that it would stop selling gas-powered vehicles by 2035, and there are reports that Volkswagen is planning to switch to all-electric by 2040.
But we’ve got a ways to go until we see only electric vehicles (EVs) on new-car lots in Canada,
In 2019, the most recent year with Canadian sales numbers available, battery electric vehicles (BEVs) accounted for roughly 1.8 per cent of new car sales.
If you include hybrids, it’s just under three per cent, said Dennis DesRosiers, president of DesRosiers Automotive Consultants.
“Electrification started with the Honda Insight and Toyota Prius 17 years ago – it took 17 years to get to four per cent,” DesRosiers said. “So when GM and others say they’re going all-electric by 2035 or sooner, it’s not about risk, you might say.”
Will people buy EVs?
While companies can announce plans to switch to all-electric in the next 10-15 years – and get a stock bump from the buzz – it won’t happen here by then unless people buy them, DesRosiers said.
“All roads lead to electric – it’s just a matter of how long and treacherous that road is,” he said.
In a survey released this week by KPMG, 68 per cent of Canadians who are planning to buy a car in the next five years said they’re considering either a BEV or hybrid.
“That’s higher than I’d expected,” said Peter Hatges, national sector leader, automotive, at KPMG Canada. “I think it’s a tipping point.”
The biggest reasons for switching? Concern for the environment. The second was lower operating costs, Hatges said.
But there’s a difference between planning to buy and actually buying.
If new gasoline-powered cars or gas-electric hybrids aren’t available at all, consumers who aren’t sure about electric may hold off buying a new car for years.
“If there are question marks, they’ll say, ‘Hey, honey, let’s just stick with our [internal combustion engine] SUV, ‘” DesRosiers said.
If Canadians aren’t buying electric trucks and SUVs, companies may have to scale back their plans to switch. Potentially, that could mean that some of these companies might still be selling new gas-powered cars in a decade or two.
In the KPMG survey of 2,000 Canadians, 59 per cent of the people not planning to buy an EV or hybrid worried about price, 51 per cent worried about battery range, 50 per cent worried about lack of charging infrastructure, 30 per cent worried about battery life, 25 per cent worried about lack of model options and 23 per cent worried about recharging time.
Out of all the problems left to solve, DesRosiers sees four key hurdles that car companies and policy-makers must overcome to get a BEV in every driveway.
Why are BEVs at least $10,000 pricier than their gasoline-powered rivals? It’s the battery. On a BEV, a battery can cost $15-16,000, DesRosiers says.
Companies are trying to bring battery prices down through research and development.
“It’s a huge challenge,” DesRosiers said. “It’s one thing to produce an inexpensive battery with long range in a lab, but we’ll have to power 80 million vehicles globally – so how do you get to that kind of scale?”
For now, BEVs make the most sense for people who can plug in overnight at home. Otherwise, you may have to wait 4 or 5 hours at a Level 2 public charger. For people who park on the street, live in condos or go on long road trips, we need more DC fast chargers that can get most batteries up to 80 per cent in 30-45 minutes.
“They’re really expensive and most residential neighbourhoods simply don’t have the power for them,” DesRosiers said. “Will people have the patience to wait for half an hour – and who’s going to pay for them, the private sector or the public sector?”
In the KPMG survey, 83 per cent said the automakers should be required to invest in infrastructure and 89 per cent would like to see chargers at every gas station.
“Canadians don’t want to have to plan,” Hatges said. “They just want to go to a gas station and fill it up.”
Need for incentives and mandates
Until the price of BEVs gets closer to gasoline cars, we may need both mandates and incentives to get people to switch.
“The incentive is the carrot and the mandate is the stick,” DesRosiers said. “The carrot approach will be controversial – we buy close to two million vehicles a year in Canada, so even a $1,000 subsidy would cost us $2-billion.”
Performance and variety
“The performance has to be greater than a gasoline-powered vehicle,” DesRosiers said. “It’s more than just horsepower and torque, it’s the type of vehicles and the size of vehicles.”
So far, most BEVs have been compact cars, including the Nissan Leaf and Chevy Bolt, or pricey luxury sedans, such as the Tesla Model S.
“They were all small vehicles and that comes back indirectly to the battery issue – a smaller vehicle got better range,” DesRosiers said. “But range is no longer 100 km – it’s getting to levels that don’t turn consumers off.”
Companies including GM and Ford are set to launch electric pickups and SUVs – two styles that count for 70 per cent of the vehicles sold in Canada.
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