ALEXANDRIA, Va.—“Most car executives agree that a transition to electric vehicles is inevitable. How rapidly to make the switch is a central question, one that is driving divergent strategies,” reports The Wall Street Journal.
Currently automakers use the profits from the sales of their gas-powered vehicles to fund their EV rollouts, which, in general, are not profitable. That creates a difficult timeline, since automakers must simultaneously ramp up their EV offerings and continue producing their profit-making, gasoline;-powered vehicles.
“We don’t want to risk missing the market,” Volvo Car AB Chief Executive Jim Rowan said during an earnings call this month. Last year, 11% of Volvo’s vehicle sales were electric, but the company is seeking to offer an all-EV lineup by 2030.
The Journal reports that electric vehicles last year accounted for nearly 10% of global sales, “much of it driven by Tesla Inc. and other EV-only players, according to research firm EV-Volumes.com. For many legacy automakers, electrics were an even smaller part of the business. And while Tesla’s profits have surged, legacy car makers largely lose money on EV sales, because of high battery costs for their early offerings.”
“Across industries, companies are grappling with a fundamental tension of how quickly to move their business models away from fossil fuels. BP PLC, which for years championed a green revolution, this month said it would slow its transition to a lower-carbon business model and boost oil-and-gas production,” reports the Journal.
The availability of the key minerals needed to produce EV batteries and the readiness of electric grids are both complicating factors.
Ford has said it expects half of its vehicle sales to be fully electric by the end of the decade. GM is targeting 2035 as the phaseout of internal-combustion-engine sales for all but its heaviest vehicles.
Other companies are more skeptical.
“Toyota, the world’s largest automaker by vehicle sales, has been earmarking less money than its rivals toward development of fully electric models. It instead wants to offer an array of choices, including its specialty, hybrid vehicles, which combine a gas engine with a small battery and electric motor to save fuel,” reports the Journal.
Toyota’s incoming chief executive, Koji Sato, has said the car maker remains intent on pursuing a strategy that doesn’t depend entirely on EVs.
The Journal reports that Carlos Tavares, chief executive of Stellantis NV, the maker of the Jeep and Ram brands, “has been similarly hesitant about racing ahead too fast. In particular, he has raised concerns about regulators pushing car companies to convert to battery-powered cars too quickly, and has said that a potential shortage of raw materials needed for the batteries to produce enough EVs could cause the industry to fall short.”
From a c-store perspective, demand charges remain a huge disincentive to invest in EV charging.