Cleantech Market Intelligence
Retreat on EVs Not a Rout
Toyota’s announcement that it is cutting back on a planned battery electric vehicle (BEV) launch is the latest bad news for believers in emissions-free driving, but it reflects the reality that vehicle batteries still need improvements before BEVs will be ready for the mass market. While fleets with compatible driving routes and some consumers are more than happy with their BEVs today, other uses stretch the vehicles beyond their limitations.
Like several of its peers, Toyota never fully committed to bringing a BEV to the masses. The eQ (originally the iQ) was only intended by Toyota to be a limited production vehicle for fleets at best, so reducing production to a hundred or so isn’t really significant to the overall demand for BEVs. Toyota has always believed that fuel cell technology is the long-term answer for zero emissions driving, so the company pulling back from a tepid market should not be viewed as a surprise.
Of more concern is dwindling demand for the Nissan Leaf in the United States, and the company’s having to deal with dissatisfied customers in Arizona. With sales of the Leaf falling below 1,000 cars for the past few months, Nissan is wisely retooling the battery pack for 2013.
As I have said several times at industry events, the state of BEV technology in 2012 is not sufficient to create a market of a million vehicle sales annually. The automakers need to come out with battery packs that can retain a greater percentage of their storage capacity for longer, cost half as much, and have improved energy density, so that they can serve many driving cycles. Improvements are being made on all of these fronts, and second- and third-generation BEVs will perform above today’s levels.
It’s important to note that it’s not all dark days for BEVs. Renault ‘s electric vehicles are selling well in Europe, and the Fluence is being launched in South Korea as the Renault Samsung SM3. Better Place is likewise having success with the Renault vehicles in Denmark and Hawaii. And in Norway, EVs are now an impressive 3.6% of new vehicle sales.
And then there’s Tesla Motors, which is so confident about the robustness of its battery packs, that the company is curiously developing a fast charging network.
The BEV market is divided between “true believers” (Nissan, Renault, Coda, Tesla), pragmatic companies that are equally invested in plug-in hybrids (GM, Ford), and “only if we must” companies (Toyota, Fiat-Chrysler, Honda). Going all-in today or fully dismissing the market for BEVs are both dangerous strategies. The verdict on their long-term viability won’t be in until at least 2015, so until then, a pragmatic approach is likely best.