Electric cars: Race is on, and the road is jammed

Jan 13, 2010 - Brent Snavely - Detroit Free Press

The road for electric vehicles is starting to get jammed -- and no one's sure where it leads.

Every major automaker at the Detroit auto show this week offered some flavor of electric-drive vehicle, with several start-ups, such as Commuter Cars from Spokane, Wash., jostling for attention, too.

While some were concepts, a handful of the models are to go into production this year, including BYD of China's all-electric e6. A few others, such as minicars made by South Korea's CT&T United, already are on the road in California. But questions remain: Where to plug in on trips? Who will pay the higher price tag that comes with many models?

General Motors Vice Chairman Bob Lutz said that even though GM will build the Chevy Volt and eventually a plug-in hybrid, the electric movement would have to be tempered by real-world demand.

Other automakers and experts warn of a traditional industry hubris that's slow to catch shifts among consumers.

"We are an industry that summarily discounts new competition," said John Mendel, executive vice president of Honda in America.

Challenges remain.

Last year, Chinese automaker BYD made a braggadocio appearance in Detroit to tout its plug-in hybrids, electric battery technology and investment from Warren Buffett.

This year, the company, whose name stands for "build your dreams," is a little less dreamy -- and an example of the challenges facing all automakers forging an electric future.

BYD, which built batteries before entering the auto business, made waves last year with its F6DM sedan, technically the first plug-in hybrid sold by an automaker to the general public. But BYD sold only a couple hundred last year to businesses and government agencies in China, mainly because of high costs, and said it hasn't decided whether to export it.

BYD said today it hopes to launch its all-electric e6 hatchback in the U.S. by the end of this year, but hadn't started the process of meeting federal regulations. Henry Li, general manager of BYD's auto export division, said the e6 might cost $40,000 to build and would need incentives to hit the market.

Throughout the show, every reveal of a new electric-powered vehicle raised the same set of hurdles that lie outside the auto industry's control. Half of the cost of an electric vehicle comes in the battery pack. Governments around the world have supported electric vehicles so far, but many executives worry about relying on subsides.

And many consumers appear unwilling to justify the extra cost of even a regular hybrid unless oil prices surge far higher. Outside Toyota, and to a lesser degree Honda, no automaker has successfully sold hybrids in high numbers, and hybrids accounted for less than 4% of U.S. sales last year.

Several automakers admitted they were pressing ahead even though electric vehicles would not be profitable to launch. Nancy Gioia, who oversees Ford's plans for new hybrids, a plug-in hybrid and a battery-powered Focus, said the automaker's main goal was making its hybrids more affordable.

"Our goal is to have a three-year payback that makes sense to the customer in combination with other incentives," Gioia said.

Government aid "exists to jump-start" the industry, she added. "It can't exist as a subsidy over time."

Even GM attempted to rein in some expectations for the Volt, noting that its impact in production would be relatively small. At full production, GM Vice Chairman Bob Lutz said the automaker would build a maximum of 60,000 Volts. Last year, it sold 68,000 Chevrolet HHR crossovers.

The high costs and slow rollout of models leads industry research firm CSM Forecasting to predict sales of hybrids and electric vehicles will hit just one million by 2016 -- with most of them regular hybrids.

"Even with gas prices at $4 per gallon, the business case for the consumer doesn't begin to work until they've driven their vehicle 6 to 10 years," said Eric Fedewa, vice president of global powertrain forecasts.

Some executives say they are far more hopeful. Elon Musk, whose Tesla showed off the prototype of the Model S all-electric sedan, marked the production of the 1,000th Tesla roadster at the show. Tesla drove a roadster from California to Detroit, charging at homes and RV parks along the way to show how such a trip could take place.

Musk said battery improvements combined with some adjustments in habits would quickly convince many consumers to choose electric vehicles.

"In my view, the future is all electric," he said. "It's only a matter of time."

Free Press staff writer Brent Snavely contributed to this report.