The US could be running on gasoline forever, leaving electric vehicles to China and Europe
Tesla's Elon Musk, right, at a groundbreaking for a factory in China. Aly Song/Reuters
In the decade I've been covering the auto industry, I've never seen a bigger mismatch between market expectations for electric vehicles and market realities.
In 2010, I was standing in the parking lot of Dodger Stadium in Los Angeles to hear Nissan CEO Carlos Ghosn proclaim that by 2020, 10% of the auto market worldwide would be electric. The occasion was the introduction of Nissan's Leaf EV, a car that's still on sale today, even though Ghosn's career is in ruins as he awaits trial in Japan on charges of financial malfeasance.
The global market for plug-in electric vehicles — and that's plug-in gas-electric hybrids as well as all-electric battery vehicles, aka BEVs — stands at about 2% on the eve of Ghosn's benchmark year.
A decade is more than enough time for a market to develop for a new type of vehicle. It's happened again and again, with everything from muscle cars to front-wheel-drive sedans to minivans. That EV sales growth has been so weak relative to expectations means people fundamentally don't want the cars.
It gives me no joy to report this. In the US — the most competitive market — people don't want hybrids either. They do want SUVs and pickups. While this trend has been great for automakers' bottom lines (SUVs and pickups are highly profitable), it's not going to rescue the planet from climate change. I have three children, and I don't want them to inherit blistering winds in summer and savage hurricanes in winter.
Hope versus reality in the marketplace
The Nissan Leaf has been on sale in the US for a decade. Hollis Johnson/Business Insider
But I also can't ignore what's happening in the car business. It's true many more EVs are on sale today than in 2010, and most of the big-name automakers are either planning to introduce or have already rolled out a variety of all-electric vehicles. If the market doubles in the next few years, however, we'll still be 6 percentage points shy of Ghosn's prediction.
Consumer reluctance to make the switch from fossil fuels to electrons for automotive transport could be blamed on everything from patchy recharging infrastructure to relatively elevated EV prices to cheap oil. Still, the extremely sluggish growth of the EV market remains vexing.
Or at least it did until I started to think about the US market, in particular, in terms of developments in sensible gasoline alternatives.
That led me to diesel.
I'm old enough to remember when diesel cars, mainly sold by European brands, were being touted as excellent alternatives to gas-powered vehicles. And that was when those diesels were noisy and polluting, belching out black smoke.
I'm also old enough to remember the advent of "clean" diesel, which solved the black-smoke problem. And who can forget Volkswagen's Dieselgate, when we learned that at least some of the clean-diesel revolution was a big fat lie?
That last part didn't really matter much, because of the roughly 17 million cars and light trucks sold in the US annually, a sliver ran on diesel fuel. Auto journalists love diesels. The torque! The acceleration! The MPGs! But apart from the VW Group, almost nobody was selling diesel passenger cars and light trucks in America.
Diesel was a Euro thing. Like with EVs, the arguments in favor of diesels were strong, but ... they were a Euro thing.
Now they might not even be that, as Dieselgate has compelled the VW Group to rethink everything and move toward electrification in its home market.
Diesel flopped in the US. EVs could too.
VW's diesel strategy for the US and Europe is in trouble. AP Photo/Michael Sohn
Still, the template remains instructive. Diesels were, in many ways, better than gas-powered vehicles, but the US wasn't convinced, despite the presence of widespread diesel-fueling options and the entire US freight system running on the stuff.
Gasoline, in other words, is strong in America. That's because of history: Gas was better than diesel for much of the automobile's evolution as personal transportation in the US, where speed was more important than low-end torque. Diesel was for tractors.
That brings us back to EVs and the USA.
For EVs to make up Ghosn's 10% of that market, we'd need to see yearly sales of 1.7 million. In 2018, fewer than 400,000 were sold. But the overall market has supported a 17-million-plus level for about five years now, almost all of it gas-powered. EVs would have to displace those gas sales, as the US market doesn't have much room for new sales growth at its record or near-record levels.
So let's just cut to the bad news, or at least a sad prediction: The US could be gas-powered, mostly, forever. Sure, you'll be able to buy an EV from Tesla, or from Porsche, or from Nissan or a General Motors or Ford brand — assuming those companies can figure out how to make money on the products.
Europe, by contrast, could witness a gradual replacement of diesels by EVs. But like today's small-engine diesels, those EVs could be modest city cars, with small batteries and limited range.
Where does that leave the electric car?
The globe's other major markets are Latin America, which is, like Europe, a diesel realm, but an economically troubled one. And then there's China. Of these, China is the EV wild card.
EVs could be big in China, and that'd be a good thing
EVs charging in China. Getty
It's already the world's biggest car market, with sales that inched toward 30 million in 2018. Some analysts think that China's yearly sales could hit 40 million or more, based on what they see in terms of vehicle ownership in fully developed economies. China's market has been retreating of late, after years of growth, but nobody expects the decline to be a permanent trend.
This is where the EV growth is likely to happen. And it might not be recognizable to anyone in the US because the vehicles could mostly be small, cheap, urban platforms. Bear in mind that I'm not even taking ride-hailing services or autonomous vehicles into account; all I'm doing is surveying the major global markets and trying to determine where EVs could make up a substantial percentage of sales.
So there you have it. The US runs on gas, Europe runs on a mix of diesel and electricity, and China takes all the EV growth. This, in my view, is the extreme realist prediction. Dozens of factors could change or spoil it. But unlike diesel in the US, which didn't benefit from government subsidies, EVs have been supported by assorted federal and state incentives. And still ... 2% of sales.
Is this a bad thing?
It's bad if you're an American and you crave leadership on electrified mobility. It's not bad if you look at another 10 million or more annual vehicle sales in China and want those cars to emit nothing from their tailpipes (because they don't have tailpipes).
Given a choice, I'd rather have an electrified China but a US where gas technologies continue to improve, lowering emissions to near zero and extracting reliably ascending fuel economy. In the same way I go to Europe now and exchange the roar of American gas motors for the rattle of diesel engines, I could visit China and hear the whisper of electrics.
That could be a bummer. But I might just have to live with it.
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