THE DECISION LINE-UP: HYBRIDS VS ELECTRICS – AUTOMOTIVE INDUSTRY

Two automotive companies have made the decision to ditch hybrids in their line-ups for the future; the others are still planning on including them among their offerings.  For the past two decades, the auto makers have used hybrid vehicles in their line-ups to assist them in complying with regulations on fuel consumption.

As of now, however, General Motors and Volkswagen are concentrating their future investments solely on electric vehicles and are discontinuing their hybrids.  General Motors plans to launch 20 fully electric models, world-wide, over the next four years, including plug-in models for Chevy and Cadillac (ref. WSJ).  And VW has committed billions of dollars to producing more battery-powered models, including introducing a small plug-in in the U.S. next year and planning on releasing an electric version of the minibus around 2022.  Other automakers like Toyota and Ford, however, seem to be taking a more realistic approach by continuing to work on electric models while expanding their U.S. hybrid offerings.  Toyota, Ford and others have made hybrids a core part of their planning, seeing them as an interim product for their buyers who still want to drive gasoline vehicles and aren’t interested in the downsides of the electrics.  Ford plans to add hybrid versions of their F-150 pickup truck and Ford Explorer.  Ford’s head of power train engineering has said, “We can’t say to the customer, ‘You have to take an all-electric vehicle’ – we’re going to be aggressively chasing this space of hybrids.”  That seems like a very reasonable approach, particularly given that car companies, today, generally lose money on the electric vehicles that they sell – primarily due to the high cost of the lithium-ion batteries.  And, since there is still no solution for that problem in sight, and still a lack of plug-in locations for the electrics – along with a definite aversion to them from most car buyers – I’d side with the analysts whose view it is that going to all-electric vehicles is a risky strategy.  One set of data that I’ve not seen put forth or discussed is where all the electricity is going to come from to plug in electric vehicles and charge them once only electrics are being driven.  It seems that we might have overlooked an important part of the equation in the rush to embrace electrics.  And another set of data that I’d be interested in seeing is, of those who own and drive hybrids, how much of the time are they driving using the internal combustion engine versus how much do they plug and use the charging for their transportation assist.  Interesting questions to be asking and answering, just about now.  For all we know, those who drive hybrids are using them primarily as standard vehicles, rather than electrics.

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