One Million PHEVs by 2015 Is Possible, But Probably Not Profitable
By Greg Johnson April 23, 2009
The Obama administration probably can make good on its heavily publicized campaign goal of putting one million plug-in hybrid vehicles on U.S. roads by 2015. But automobile companies aren't likely to turn a profit on the rechargeable vehicles in the process.
That's the opinion of electric vehicle and battery experts who spoke on Wednesday during a panel discussion at the Society of Automotive Engineers World Congress in Detroit.
Bill Visnic reports at Edmunds' Auto Observer that "none of the panelists would directly say the first electrified models or battery contracts will be profitable, but they did mostly agree the president's mandate for 1 million plug-in hybrids by 2015 could happen."
Panelists were pretty much in agreement that manufacturers will struggle to turn a profit from the next-generation of hybrids, plug-in hybrids and extended-range electric vehicles (including General Motors Corp.'s heavily promoted Chevrolet Volt), the rpeort says.
That prediction also holds for developers and manufacturers of the more-expensive lithium-ion batteries that will be needed to make the next generation of green vehicles possible.
Visnic notes that Minoru Shinohara, senior vice president of Nissan Motor Co., "expressed a hope that making money on early electrified vehicles might be possible."
And Prabhakar Patil, chief executive officer for battery supplier Compact Power Inc. (the U.S. company for Korea's LG Chem that won the lithium-ion battery contract for the Volt), "demurred by saying he has corporate metrics he must meet."
Part of the problem is that not even Uncle Sam can make people change their buying habits. "It takes consumer demand," said Michael Crane, supplier Continental Corp.'s managing director, hybrid-electric vehicles North America. "There has to be a 'pull' in the marketplace."
According to Visnic's report, Crane believes that the U.S. could put one million PHEVs on the road in five years if it creates the right mix of regulatory dictates, incentives to consumers and gasoline is "more expensive than the $2-per-gallon prevailing price."
But, as Steven L. Clark, senior manager of E/E core energy management at Chrysler LLC said, meeting the one-million PHEV objective will require incentives on both the demand and supply side.
Now we'll shift gears to another dispatch from the SAE meeting. The Detroit News reports that, during a Tuesday panel discussion, marketing experts agreed that automobile companies must do a better job of selling their green vehicles.
"Green alone is not going to get you there," said Alexander Edwards, president of Strategic Vision, a research and consulting company based in San Diego, Calif.
By Edwards' measure, the newspaper reported, "fuel economy didn't even rank among car buyers' top 10 priorities in a 2008 study." What topped the list? "Security, freedom and esteem through styling, safety, performance and a strong perception of quality."
The newspaper quoted Scott Miller, chief executive of Synovate Motoresearch, on the auto industry's penchant for over-promising on future technologies and attacking competitors' hybrid, electric and other advanced offerings: "You basically have told consumers to just wait, and you can't do that."
Miller said that some consumers will pay $2,000 to $3,000 more for green vehicles, but manufacturers must do more to seal deals. His wish list, the paper reports, includes guaranteeing a minimum resale value, offering attractive maintenance contracts and improving warranties to deal with consumer perceptions that new technologies are inherently less reliable than conventional vehicles.
Miller also said that car companies must tout the fact that green doesn't necessarily mean dull.
Greg Johnson, Contributor
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