Ready or Not, Here Come EVs

DETROIT – “Build it and they will come.” Auto makers building electric vehicles and their variants hope that adage proves true when their innovative products hit the market.

But the fear is that upcoming electric vehicles, plug-in hybrid-electric vehicles and the like will be on consumers’ admiration lists – but not their shopping lists.

Most major auto makers have EVs and extended-range PHEVs at some stage of product development. But questions linger about consumer acceptance, price and a host of unknowns.

The federal government is urging the auto industry to develop more alternative-fuel vehicles as a way to reduce the nation’s oil dependency. The Obama Admin. wants to see more than a million PHEVs on U.S. roads by 2015.

Hybrid-electric vehicles and PHEVs represent a bridge technology meant to move consumers from gasoline to electric power, but in a world where electric infrastructure presently is lacking.

Within the next 10 to 20 years, the world will “reach peak oil” and the demand for all liquid fuels could exceed supply,” says Jim Lentz, head of Toyota Motor Sales U.S.A. Inc.

“A century after the invention of the automobile, we must re-invent it with powertrains that significantly reduce or eliminate the use of conventional petroleum fuels,” he says.

Nissan Leaf EV goes on sale this year.

“One of many alternatives is through what is commonly called the electrification of the automobile. By far, the single most successful example of this has been the gas-electric hybrid.”

The most successful example of that has been the Toyota Prius. The Prius could spawn a new family of PHEVs and EVs, perhaps as many as eight.

Lentz confirms plans for a growing family of PHEVs, all under the Prius umbrella and slated to roll out in the next two years. “It’s a package Toyota dealers and customers have been asking for,” he says.

By next year, Toyota plans to sell a PHEV Prius that will be the same size as the nameplate’s HEV. Toyota plans to introduce an EV in 2012.

But barriers to consumer acceptance of EVs remain, Bill Reinert, TMS national manager-advanced technology, tells Ward’s.

“EVs now are the poster child, but we need to learn more about what the customer wants an EV to be,” he says. “No one really knows the market size. Any estimates, great or small, are speculative.”

Toyota’s PHEV and EV strategy is “the beginning of the beginning,” he says. “But what customers do with their dollars in the showroom” is still a guess when it comes to new technology.

“Early adopters show much enthusiasm, but that’s less so in the majority of consumers,” Reinert says.

If that’s the case, then Nissan Motor Co. Ltd. is daring as it prepares to launch the ’11 Nissan Leaf EV late this year.

EVs will make up at least 10% of global demand by 2020, assuming oil costs of more than $70 a barrel, predicts Nissan CEO Carlos Ghosn.

Chevrolet Volt may jumpstart new era for GM.

Nissan is expected to price the U.S.-made Leaf under General Motors Co.’s Chevrolet Volt PHEV that’s scheduled to go on sale around the same time.

The Volt is expected to cost about $40,000, the Leaf $25,000 to $30,000, although neither GM nor Nissan confirm pricing yet. For Nissan, the vehicle cost does not add in the estimated $10,000 battery pack, so the auto maker may take a loss on advanced technology in order to get to market early.

The 100-mile (160 km) range Leaf isn’t a PHEV that can switch to gasoline power if its electric range is exceeded. It is a pure EV with a rechargeable lithium-ion battery and zero emissions. Portable home-based charging units that qualify for tax credits are part of Nissan’s marketing plan.

All U.S. Nissan dealers will get a chance to sell and service the Leaf, says Mark Perry, director of product planning and advanced technology for Nissan North America Inc.

“We will launch in 15 to 20 markets across 12 different states our first model year,” he says. “We plan to be available for sale in all 50 states by the end of 2011.”

Dealer investments in training, equipment and charging stations are expected.

Nissan plans on production volume of 50,000 Leaf units in the first full model year, ramping up based on market needs, Perry says.

Nissan recognizes “range anxiety” is a consumer concern but “we’ve eliminated as many barriers as we could,” he says, noting the Leaf range is 100 miles between recharging. “Early adopters are waiting for us. And the next wave is the pragmatic adopters.”

Nissan expects about 80% of Leaf buyers will want to charge at home, but there will be public charging stations. Leaf navigation systems will direct owners to the nearest stations.

Perry estimates home chargers will cost $700 to $800, plus installation. A federal tax credit could cover most of that.

Dealer Richard Genthe plans to sell lots of Volts.

Dealer Brad Baker, who oversees his father’s Baker-Jackson Nissan store in Houston, TX, says customers already are asking basic questions about the Leaf’s availability and cost.

“We’ve been pushing hard to get the car here,” he says. “I’ll buy one for myself and my wife as a third car. It’s convenient, especially for city driving.”

And it’s priced to sell, Baker says. “The major complaint I hear of the Volt is it’s not cheap.”

Still, federal and state tax incentives could shave $9,000 off the cost of the Volt and vehicles like it.

Baker is optimistic about the Leaf. He calls it a bold move on Nissan’s part. “We could start ordering in April.”

Other auto makers are plugged into the alterative-fuel movement, too, as the industry and the nation becomes “greener.”

Ford Motor Co., the healthier of domestic auto makers, is pursuing an aggressive HEV and PHEV strategy. Its Fusion HEV has won an assortment of awards, including Ward’s 10 Best Engines for 2010.

The auto maker expects to roll out next-generation HEVs within four years. That includes a battery-powered Transit commercial van this year, a Focus EV in 2011 and a PHEV version of the Escape HEV by 2012.

“Ford is heading in the direction America and our customers want us to go, which is a green, high-tech and global future,” Executive Chairman Bill Ford says in a statement.

Meanwhile, GM has high hopes for its extended-range Volt that uses a 1.4L 4-cyl. gasoline engine to act like an electric generator when the battery reaches its range limit. The Volt can run 40 miles (64 km) per charge from a standard home-power outlet.

The Volt technically is not a PHEV because the two power systems are not independent of each other, Chevrolet General Manager Jim Campbell says.

GM expects to produce 8,000 to 10,000 Volts in the first full year, with the expectation of ultimately producing 50,000 to 60,000 units annually.

“We’re going to ramp it up slowly because it is all uncharted terrain for all of us once we start turning out (battery) packs in very high rates,” GM Vice Chairman Bob Lutz says.

Lutz predicts the total plug-in car market including EVs, PHEVs, and EREVS will be about 250,000 to 300,000 per year in five years.

GM also says a pure-electric version of the Volt is on the table. That would mean expanding the Volt’s battery pack and removing its internal-combustion engine.

Lutz won’t say when such a vehicle would make it into showrooms, but adds it would be “technologically trivial” to switch the current Volt to pure electric.

Some detractors claim Chrysler Group LLC has been backpedaling on its EV and PHEV strategy that the auto maker heralded a few years ago. But that’s not so, Chrysler spokesman Nick Cappa says.

He says the auto maker is pursuing a 3-prong approach of traditional HEVs, PHEVs and pure EVs even though it disbanded its dedicated advanced vehicle product engineering group called ENVI.

“ENVI quickly developed the technology to get us up to speed, and once that happened those functions were returned to normal vehicle operations and powertrain operations,” Cappa tells Ward’s. “We do have plans for late 2011 and early 2012, but commercial applications are our focus now.”

ENVI Vehicle Line Manager Lou Rhodes is active with advanced powertrain development for Chrysler-Fiat, he says.

Mark Perry says Nissan tried to reduce range anxiety with Leaf EV.

Chrysler showed its all-electric Fiat 500 minicar at the Detroit auto show. Cappa says the car will be offered for sale in the U.S. next year.

An HEV powertrain offered in 2008 on a few Dodge Durango and Chrysler Aspen SUVs will be available in the Dodge Ram light-duty pickup in 2011.

Chrysler will launch a test fleet of 100-200 PHEV minivans and pickups developed through a federal grant.

Dealers are anxiously awaiting the new breed of alternative-fuel vehicles. The dealers say they want to develop marketing campaigns and training programs, but some of them feel out of the loop.

“They haven’t told us anything about the electric vehicle” strategy yet, says Wes Lutz, who owns Dodge, Jeep and Chrysler stores in Jackson, MI, about 75 miles (120 km) west of Detroit.

In his working-class city, where the main employer is a state prison, he doubts that “people will pay a premium for advanced technology unless it’s a decidedly vast improvement on what’s already there.”

In Michigan, many people see EV product development as a way to jump start the state’s economy after the elimination of thousands of manufacturing jobs.

The Detroit auto show featured a large main-floor exhibition of EVs. The Detroit Auto Dealers Assn. and the Michigan Economic Development Corp. partnered on the exhibit called Electric Ave.

“It was to show off the technology and show Michigan as part of the research efforts going into it,” says Lexus dealer Barron Meade, co-chairman of the auto show. “This state needs to be a leader in EV technology to make up for what has been lost.”

Michigan is home to some new EV enterprises, including a plant that will make batteries for the Chevy Volt. The state is receiving more than half of the $2.3 billion awarded to all states for federal clean energy manufacturing tax credits.

Dealer Wes Lutz wonders if consumers will pay extra for advanced technology.

Richard Genthe, president of Dick Genthe Chevrolet, Southgate MI, a Detroit suburb, thinks the Volt “will be an exceptional halo vehicle for Chevrolet (and GM).” He expects to sell “every one we can get in here.”

Genthe says his base of customers, with plenty of middle-class buyers, is receptive to the high-tech Volt. Who does he see as buyers? “I wouldn’t confine it to one particular group (like tech lovers).” Because of the small initial volume, “It will be first come, first served.”

He expects GM will thoroughly train dealership staffers because of the complexity of the product.

Because the Volt is based on an entirely new propulsion system that operates on an electric motor , technician training will be intense, he says. Sales training will be specialized, but not as specific as on the technical side.

Genthe expects to start ordering in the fall as the first new products come off the line at Detroit Hamtramck Assembly, the plant chosen for Volt production.

Despite the EV enthusiasm, Xavier Mosquet, senior partner with Boston Consulting Group, says a new study suggests battery costs likely will limit widespread adoption of EVs throughout the decade.

The cost target used by many auto makers of $250 per kilowatt hour is unlikely to be achieved unless there is a major breakthrough in technology that increases the energy a battery can store without boosting material and manufacturing costs, he says.

“We see substantial challenges to achieving this goal by 2020,” Mosquet tells the Detroit-based Automotive Press Assn.

“For years, people have been saying that one of the keys to reducing our dependency on fossil fuels is the electrification of the vehicle fleet,” he says. “The reality is electric car batteries are too expensive and too technologically limited for this to happen in the foreseeable future.”

Consumer perceptions about limited range, battery recharging and cheap oil could also limit EV acceptance in the short term, Mosquet says.

Toyota’s Bill Reinert says EV barriers remain.

By 2020, though, his firm estimates 26% of new cars sold in developed markets will be EVs, PHEVs or variants.

Here are alternative-fuel models garnering the most attention.

Ford Focus PHEV: Due out in late 2011. A PHEV version of the Ford Escape HEV SUV is scheduled to be launched in 2012.

Ford Transit Connect: Transit Connect is a battery-powered electric commercial van designed for small businesses that do a lot of deliveries.

Volvo C30 EV: The Swedish auto maker expects to release 50 of these small cars to consumers around the world, starting late this year. The idea is to assess the viability of a limited-range (90 mi/144 km) EV, and how it performs under real-world driving conditions.

Chevrolet Volt: Production is to begin late in 2010. Volume is about 60,000 initially, so this is no small feat. Initial Volt launch markets will be important in validating the retail readiness for such vehicles.

Cadillac XTS Platinum: This concept car shown at the Detroit auto show hints at fullsize luxury possibilities in a PHEV. It could deliver 350 hp.

Nissan Leaf: It’s hailed as the first affordable all-electric vehicle by a major manufacturer and takes styling cues from the new Murano. Nissan says its goal is to get to zero emissions.

Mitsubishi PX i-MiEV: A cross/utility vehicle, it sells in Japan for about $48,000, nearly double the price of the traditional HEV version.

Toyota FT-CH: The PHEV concept seen in Detroit weighs less and gets better fuel economy than big brother Prius. It’s designed for city driving.

Chrysler Electric Fiat 500: It’s small, but the popular Euro electric car is three feet longer than the SmartForTwo.

Honda CR-Z HEV: The sporty vehicle shows Honda is sticking to its successful hybrid formula. The CR-Z delivers 122 hp from a gasoline engine paired with Honda’s Integrated Motor Assist hybrid system.

Hyundai Blue Will EV: It’s a concept car that would run solely on a lithium polymer battery for 20-40 miles (32-64 km).

BMW Vision Efficientdynamics: BMW AG shocked some by announcing that Formula 1 racing programs will take a back seat to its green goals. Its diesel PHEV is in the wings. BMW says top speed would be about 155 mph (248 km), fuel economy 62 mpg (3.8L/100km) and carbon emissions virtually non-existent.