It wasn’t Honda, it was the charging stations. At least that was the explanation of CEO Toshihiro Mibe. His car brand announced this month a strategy based on hybrid cars: part electric, part fuel. As far as Mibe is concerned, the world was not yet ready for fully electric cars. For example, the charging infrastructure was still too underdeveloped for that.
For the past two years, almost all of the world’s major auto companies have disclosed how they envision their future. At flashy presentations, often punctuated with futuristic prototypes and announcements of multi-billion dollar investments, the CEOs all discussed the one pressing question that hangs over the industry: when will the electric car dominate their brand?
Honda was one of the last to comment on that earlier this month. And with the decision to focus on hybrid models, a dichotomy is definitely emerging in the car world. On the one hand, there are concerns that are fully committed to an electric future – such as Volkswagen (including Skoda, Audi and Seat, among others). Some companies have even mentioned an end date for the fuel engine. Volvo, for example: it wants to be fully electric by 2030.
On the other hand, there is a group that is more cautious, and that for the time being will continue to spread the opportunities over different types of cars, including hybrids. There you will find Toyota, Stellantis (parent company of Peugeot, Citroën, Opel, Fiat) and thus Honda.
It is not always easy to make a profit on electric cars
No one denies the future major role of electric cars. But even though unbelievers no longer exist, there are still skeptics.
The different brands present different images of how they see that future. The most prominent proponent of the electric scenario is Volkswagen CEO Herbert Diess. In recent years, he has emphatically positioned himself as an admirer of Tesla CEO Elon Musk.
According to Diess, there is no escaping the fully electric car. It is in fact already cheaper to drive one, despite the higher purchase price, because of the savings on fuel costs. Moreover, electric cars will quickly become cheaper, and the number of charging points will expand rapidly. start this year Diess said to the American The Verge that he sees – unlike the skeptics – that “the charging network is growing very quickly”. He practically never mentions the word hybrid.
Diess is even such a believer that the two truck brands that fall under the Volkswagen group, Scania and MAN, are also on a fully electric course. That is not at all common in the truck world, where hydrogen is still being studied extensively.
Also read: The German car industry is in a hurry with the electric motor
Spreading Opportunities
The consequence of Diess’s attitude is that he rarely complains about the European Union’s intentions to phase out the fuel engine by 2035. In it he finds another European top executive facing him: Carlos Tavares, chairman of the board of the officially Amsterdam-based Stellantis. That company, created in 2020 from a merger between Peugeot and Fiat-Chrysler, is considered a lot more reserved when it comes to rapid development towards the fully electric car. Tavares has regularly warned about EU policies that would send automakers too harshly towards that all-electric car. He once called the emission rules a “brutal” approach.
Tavares is the captain of the car builders’ club who, in his own words, likes to spread the opportunities, and believes that legislators should take this into account. They have all kinds of arguments for that. It will be a long time before electric cars are cheap enough for the middle class, for example. The number of charging stations will not grow fast enough. It is uncertain whether enough batteries can be made in the future. Or: as long as there is no green electricity in electric cars, they are not yet really clean.
That argument was also made at Honda this month. CEO Mibe pointed this out in a subordinate clause. However, the thinking is controversial. A 2019 study by the European environmental NGO Transport & Environment, praised by scientists, shows that electric cars are always cleaner than fuel cars, even if the electricity is dirty.
Battery uncertainty
It is not surprising that some concerns choose to keep more options open, says Rico Luman, who follows the auto sector for ING. “At the moment the real question is how fast the battery capacity in the world will grow.”
Last week, the chief executive of American electric car start-up Rivian said: 90 percent of the future battery supply chain in fact does not yet exist† Pretty scary for an auto company that has to map out a strategy for the next five to ten years. It is also uncertain whether the supply of battery raw materials such as lithium can grow quickly enough.
Luman notes something else: it is not always easy to make a profit on electric cars. The margins are now even greater on cars with a fuel engine. This can also play a role in the choice to invest less fanatically for the time being.
Environmental organizations tend to harbor a similar skepticism towards the hybrid strategy. They suspect car brands with such a policy of wanting to protect their investments in fuel engine technology – and thereby remain more polluting than necessary.
“Not all companies expected battery technology to move so quickly,” says Julia Poliscanova of Transport & Environment. “They still have investments in the fuel engine and hybrid technologies that they have to recoup. At the same time, they have not invested enough in fully electric cars.”
Also read this piece: When are you a charging station sticker?
Like Diess from Volkswagen, Poliscanova believes that the number of charging stations will simply grow with the number of cars. Companies just want to build them, as long as there are enough electric cars in a country. “That is why there are relatively many in the Netherlands and Norway.”
At Honda, they are not convinced of that. For anyone who still had doubts, Mibe repeated it again in his presentation. “Our focus on hybrids will be our strength in 2030, and maybe even 2035.”
A version of this article also appeared in the newspaper of April 26, 2022