By Vince Socco
The future is electric.
There is no doubt that, as far as the future of mobility is concerned, electrification is where automotive companies — and auto buyers — are heading. You wouldn’t know it, though, if we go back to when Toyota first launched its hybrid electric Prius in 1997. Despite the forward-looking goals of Toyota to help reduce dependency on fossil fuels and reduce greenhouse gases, many were skeptical. Conventional wisdom was that hybrid electric vehicles (HEV) were not fun to drive, were funky looking, and just plain boring.
Twelve million Toyota HEVs later and it seems that every automaker has embraced hybrid electric technology as the gateway to electrification. Considering that the primary components of HEV — the battery, motor, and inverter — are common to full battery electric vehicles, it just makes sense.
In my mind, there are two factors that accelerated the rush to electrified vehicles. One was the decision by the Chinese government to bet (and bet big) on electric cars as the technology of choice for the country’s rapidly growing automotive industry. While the USA and Europe began their evolution to vehicle electrification in the last century, China started its journey only in 2001.
Boosted by government incentives, however, development of and demand for electric vehicles grew rapidly. By 2015, total sales of new energy vehicles or NEVs as alternative fuel vehicles are called in China, grew from zero to 497,000 units, more than anywhere in the world. In 2017, the NEV sales reached 1.621 million vehicles. This represents 50.4% of global NEV sales, far ahead of the USA that, in second place, accounts for only 17.3% of sales.
When a market that at its peak reached over 28 million vehicles decides that it will go electric, the universe of automakers pays attention. There was no sales growth trajectory anywhere that did not include a slice of the China market. So, any forecast by any automobile maker had to include sales of electric vehicles. In the last few years, this was compounded even more by the announcement of strict Corporate Average Fuel Efficiency (CAFE) regulations that would make it almost impossible to comply without a robust electrification plan. By sheer numbers, any automotive company who dreams of even a one-percent share of the Chinese auto market needs electric vehicles of some sort in its lineup.
The other factor in the rise in popularity of electric vehicles was Tesla. The company found the magic formula that transformed battery electric vehicles (BEVs) from boring to sexy in design, performance, and appeal.
Even if, to this day, Tesla struggles to meet production targets, profit goals, and promised launch dates, the market is enthralled with the brand and its models. They continue to queue for a chance to own their cars and their shares. Perplexing but real. Since the launch of the Tesla Roadster back in 2008, electric vehicles have become infinitely more attractive — albeit with the same quiet engine that used to turn car owners off in a major way.
Suddenly, vehicle electrification is the order of the day. It has become a crusade. Automakers the world over have decided to charge down the path towards sustainable mobility for all.
The question, though, is why the sudden surge in interest in electric cars or EVs? They aren’t any more fun to drive as they could have been when the Prius first came onto the market. There was a resistance then that is seemingly gone now. Any full-blooded car-guy or gal will swear that petrol and diesel-run cars still provide the ultimate rush.
Next, EVs are more expensive to produce and, therefore, sticker prices are higher than combustion-engine automobiles. This is mainly due to the cost of batteries that, by varying measures, account for 20% to 30% of the cost of an EV. New technologies in battery production are needed to drive the cost down.
Finally, EV usership brings with it “range anxiety” because of the lack of charging stations and the length of time needed to top up the car battery. Until a robust network is built by government or the private sector, car buyers will remain wary about being stuck on the highway or in traffic because their battery ran out on them.
Yet, the clamor and lust for EVs continue to rise. Discounting the drawbacks I just enumerated above, EVs are touted as the essential lifeline to a greener tomorrow. Government lawmakers, policy institutions, and NGOs have all lined up to call for the electrification of vehicles. Well and good. This is a very welcome movement, indeed. I hope that more and more sign up.
Clearly, the call to electrification has its sights set on the need to reduce harmful emissions that will, in turn, help realize commitments to the Conference of the Parties (COP) on climate change. The need for drastic measures to mitigate the deterioration of the environment and our climate is real. We cannot procrastinate any longer than we already have.
There is one glaring flaw in this move towards electrification, though. While the call to cut tailpipe or wheel-well emissions to zero has been incessant, there has been no major undertaking to reform or transform oil-well emissions. This refers to migrating electricity generation away from dirty, coal-fired technology to more sustainable alternatives such as hydro, solar, or nuclear.
Unless the entire carbon footprint is managed from oil well to wheel well, then we might, in the end, just be increasing our total harmful emissions and, thus, defeat the very reason we are moving towards electrified vehicles.
The need for sustainable mobility is a clear and present challenge. We should not kick the can down the road again and again. Every effort taken today is something less that future generations have to worry about. While the shift to full-electric vehicles, for example, should be pushed, we should also embrace HEVs that are solutions for the here and now. One Prius saves one ton of CO2 emissions a year. Why not make that difference today even while waiting for the zero-emission EVs to become more affordable and the proper recharging infrastructure put in place?
Yes, we can make our electric dreams come true today — one step at a time.
The author is an automotive executive with extensive experience in the field of marketing and sales. Mr. Socco was significantly involved in the start-up of business operations for Toyota in the Philippines — a brand with which he has some 36 years of involvement. He also has a broad executive experience in distributor operations as well as regional and global headquarter responsibilities. He is currently Chairman of GT Capital Auto Dealership Holdings, Inc.