Tesla Inc.’s recent Model 3 rollout is generating media excitement about the future of electric cars, but much of the auto industry doesn’t appear to be buying in yet.
At last week’s Center for Automotive Research Management Briefing Seminars , many automotive engineers and executives from around the industry were still skeptical about the near-term prospects for electric cars.
“The general perspective of speakers, policy people, and industry engineers was that we’re not anywhere near the tipping point yet,” said Brett Smith, a program director at the Center for Automotive Research , who moderated panels at the event. “We asked the panelists, ‘Is the Model 3 proof that we’ve turned a corner?’ And their response was basically, ‘If you want to spend a lot of money building a car, not making a profit on the car, and then essentially giving it away, then the answer is, yes, we’re there.’”
Brett Smith of CAR: Automotive engineers “know it’s really tough to do an automated, electrified vehicle, and have someone pay enough for it to make a profit.” (Source: Design News)
A CEO of a major supplier at the seminars bluntly suggested that the auto industry is overhyping electric and autonomous cars. “Quite frankly, auto companies can’t tell publicly what they really believe,” Don Walker, CEO of Magna International was quoted as saying in Automotive News . “They know what’s going to happen, but they have to say what is going to be popular to be perceived as a progressive company.”
The views of industry executives at the seminars, however, contrasted sharply with those of journalists covering Tesla’s Model 3 rollout, which took place days earlier on July 28. Wired, for example, wrote, “This car feels like an automotive tipping point, a sign that electric vehicles – and hopefully, the infrastructure that supports them – have finally come into their own.”
Similarly, The Washington Post wrote that “Tesla is single-handedly pulling the automotive industry into the present,” Engadget called the Model 3 “the car that will bring electric vehicles as a whole into the mainstream,” and Bloomberg said there’s “little doubt that the age of electric cars has arrived.” Finally, Motor Trend ’s Kim Reynolds opined, “Magic, I’m telling you. Magic.”
The deep division between the views of journalists and those of automotive engineers lies mostly in the economics. The majority of automakers have invested hundreds of millions of dollars in their electric car and battery development programs. Yet, sales of EVs has remained flat. In 2016, sales of plug-in vehicles (which includes pure EVs and plug-in hybrids) reached 159,139 in the US, accounting for about 0.8% of the overall, according to figures from InsideEVs. Sales of battery electric cars was similarly disappointing at approximately 0.4% of the overall. Sales this year have gone no better, with 104,863 plug-ins sold through July. Even the much-publicized Chevy Bolt has turned lukewarm numbers, with just 9,563 sold this year.
Automakers fear that the small demand, coupled with the growing number of EV programs, will lead to a glut of unprofitable vehicles and