“Tesla has a cult following and that helps build the hype,” Schuster said. “Other companies say, ‘How do we capture some of this buzz Tesla has? Can we do it by electrifying our lineup, too?’”
There’s a growing optimism that the electric market is ready for liftoff, based in part on improvements in battery chemistry and costs and in part on the Field of Dreams adage: If you build it, they will come. Still, the rush to electrify in the face of uncertain demand has left auto suppliers on edge. They have to build factories and invest to develop components of battery-powered propulsion systems to support the automakers’ aggressive ambitions.
Magna International Inc., for example, the largest auto supplier in North America, is having vigorous debates over whether to add capacity to tool up for electric cars when its executives don’t see much demand for them over the next eight years. The company predicts EVs will only grow to between 3 percent and 6 percent of global auto sales by 2025, said Jim Tobin, chief marketing officer at the Canadian company.
Industry executives convinced drivers will abruptly exit their internal combustion engine vehicles in favor of electrics may find themselves too overzealous, with LMC forecasting gasoline-powered engines will still make up about 85 percent of U.S. new car sales in 2025. But that shift could accelerate as electrified vehicles reach price parity with gasoline-powered cars, which Bloomberg New Energy Finance predicts will happen by 2029 or sooner for most models.
Rick Haas, former chief engineer of the Tesla Model S who now runs the North American operations of Indian automaker Mahindra & Mahindra, counts himself in the optimistic camp. Although today’s drivers aren’t too excited about battery cars, tougher regulations in places like China and the power-thirsty needs of driverless features could help speed the transition along.
“Things move about 10 times the speed that they moved 25 years ago,” Haas said. “As soon as the ball crests the hill and everyone thinks, ‘I’m comfortable with this,’ then the whole industry will flip.”
And no automaker wants to be left behind to sell the 21st Century version of the buggy whip: a car that runs on fossil fuel.
“There will be a lot of winners and losers,” said Haas. “Companies will die because of this.”
Ford does not want to be one of the casualties. Thai-Tang said his engineers and suppliers are working hard on developing a cost-efficient battery that is better and cheaper than today’s lithium-ion versions. Toyota is working on energy-dense solid-state batteries, seen as the next frontier in electric power, with Panasonic Corp.
Yet the greatest challenge may not be technological. It could be marketing, as more than 10 dozen models fight over a sliver of market share.