The 2012 Honda Civic Natural Gas vehicle winning the Green Car of the Year award from Green Car Journal at this year's 2011 LA Auto Show surely shocked many and changed the psyche.
The start of this fading halo effect for the EV, however, actually began earlier than that; in fact, as early as the NAIAS 2011 in Detroit, in this writer's opinion. Just one year prior to that, a special setup at NAIAS called Electric Avenue captured media and public attention on the main floor. Then in 2011, Electric Avenue moved special displays to the larger basement with rides and drives (see photo), but many EVs remained on the main floor stages, in essence joining the ranks with all the rest of the mainstream vehicles. That was a pivotal moment.
Point is, halo vehicles and technologies come and go; it’s the way of all things automotive. So, the moment that EVs became integral with the mainstream, it literally defined the beginning of the dimming of the EV halo effect; and there is no relighting of the wick unless a new technological advance comes into play.
The situation became cemented even more with the official release of the Chevrolet Volt, which had won the same Green Car award in 2010. While GM touted a 35-40 mile EV range, many had forgotten that just one year earlier the range was touted by GM’s PR and the media as 40-45 miles. Furthermore, the price of the car at $42K defined economic reality and sealed its fate as too expensive for the masses, and that was despite a government subsidy that has the potential to set the vehicle up for its own economic doomsday that will surely occur the moment those subsidies stop coming.
Now the Volt is being investigated by the NHTSA for dangers of fire directly related to lithium-ion batteries, not the car itself. Still, it's a big ouch for all EVs!
Talk to any automotive marketer and it’s still all about brand image; and cost is an integral part of that image. Problem is, those OEM marketers which are often very young and highly educated, are making so much money that it often clouds their judgments; in many cases causing them to fail to understand the economic limitations and realities of their very customers.
Of course, any brand image can become tarnished; just ask Toyota about sticking pedals or GM about the negative effects of bankruptcy and government takeovers. Yet, few marketers realize that price all by itself can tarnish a brand image just the same. Witness the demise of the Chevy SSR truck, not because of lack of demand, just a lack of demand at over $40K.
Then there is the element of too much media exposure. In the case of EVs, there have been simply too many auto shows and too many trumped-up displays foisted on the same media types. Even they become jaded over time.
Still, there is a more sinister side to this halo story. The auto industry has been using the halo brand strategy for many decades, whereby each OEM, of course, has played its own style of hand. In all respects, they pour lots of cash into a vehicle with a special technology, not to sell more cars right at the outset, but to primarily create and support a public image that they represent clean and green tech, efficient, cool, stylish, modern, etc. and bold as a corporate entity. Pick your marketing keyword or term, but the goal is the same.
Witness the Ford Focus EV. Now ask why is it priced so high, when it’s smaller than the Chevy Volt, doesn’t have the range, then has to compete with the Nissan LEAF and the new kid on the block, CODA Automotive. Answer: Ford has no intention of selling lots of these full electric vehicles; otherwise the price would have been more competitive.
Ford knows its EV sales will be miniscule, and the company will not make a dime of profit for many years, no different than Toyota did at the start with the Prius. The Ford Focus EV is thus a halo marketing draw, no less than the Volt is for GM; plus it gets them in good standing with the EPA.
In other words, the EV halo effect has served its purpose, by emphasizing vision, technical capability and viability. So, as a result now the halo effect is dying out, and with good reason. The public is not stupid as it realizes there is no need to pay a premium price for an EV, because in a self-fulfilling prophecy, high prices produce a lack of volume which will simply never bring down prices to affordable levels; and the public is saying that much as it looks forward to more practical, better-priced competition in the propulsion arena.
Point is, production EVs may have shown vision, technical capability and viability, but came up short when it came to rational economic feasibility. And now that we know that, there is no need to pay special attention to them until the OEMs bring the prices down.
Then again, halo cars with halo technologies were never intended to produce anything substantial except justification for an alternative; but wait, there is more. Halo vehicles literally avail the means for a bait and switch at the dealer. For example, show a potential customer a Chevy Volt; even let the customer drive one. Then show the customer the price, by which they will likely opt for the less-expensive, but more-profitable alternative, like a Chevy Cruze for a lease less than $220 per month instead of $350 - $400 per month and up for the Nissan LEAF, a Focus EV or a Chevy Volt.
Sure, there’s another auto show left on the 2011 agenda, Tokyo. Then in January we will return to another round of the annual circuit by attending the 2012 North American International Auto Show, where the glimmer of electric cars will have to share their spotlight with even more attention getters, like clean diesels, natural-gas vehicles, downsized IC engines, not to mention HCCI and split-cycle engine technologies.
Bottom Line for 2012 EV Market
EVs are still too expensive for the masses; and will be throughout 2012 and beyond unless something changes technically and economically. Another fact is, all are dependent on government subsidies thanks to the many taxpayers who cannot afford them; I suppose to fulfill some proverb whereby the needs of the few outweigh the needs of the many.
Sure, EVs appear clean, but in reality, their shade of green is more dependent on the fuel used by the utility companies; and their costs do not support high enough volume so as to reduce CO2 levels.
Would this writer like an EV? Sure, but not at those inflated prices. It didn’t take my wife, Judi, much coaxing either to go for the Cruze instead of the Volt, although, the Volt would be great for an early-retiring couple. Fact is, the cost of the Volt made her decision for her.
So, the halo effect of green with little to no gasoline, simply cannot compete with the bottom line of regular-people economics. Get the cost down, make batteries using zinc-air instead of expensive lithium-ion and maybe, just maybe, there is a chance.
Short of those accomplishments, the halo effect for the EV will stay dimmed; and its competition will likely come from downsized IC engines with multiple turbos like Ford‘s EcoBoost, electric superchargers and some light electrification like Buick’s eAssist™, combustion ignition like HCCI, clean diesels, alternate fuels like natural gas, and the latest split-cycle engines with air hybrid capabilities in the wings, just waiting to get America to that 54.5 mpg by 2025.
Question: Does that mean we will soon have a bunch of new, non-EV halo products on the horizon?
About the Reporter: After 39 years in the auto industry as a design engineer, Frank Sherosky now trades stocks, futures and writes articles, books and ebooks like, "Perfecting Corporate Character," "Awaken Your Speculator Mind", and "Millennial World Order" via authorfrank.com. He may be contacted here by email: [email protected] and followed in Twitter under @Authorfranks
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