Connect with us

Hi, what are you looking for?

CleanTechnica
The heads of major parts suppliers to the auto industry remain skeptical about electric cars. They think conventional cars will be with us for a long time yet.

Cars

Electric Cars Not Coming Soon Say Major Industry Suppliers

The heads of major parts suppliers to the auto industry remain skeptical about electric cars. They think conventional cars will be with us for a long time yet.

This story about electric cars was first published by Gas2.

We read it everywhere, from remarks by Elon Musk to predictions by industry observers — the tipping point between cars with gas tanks and those with batteries is already upon us, now that the Tesla Model 3 is here. From this point forward, electric cars will rapidly replace their gas guzzling siblings. Several nations such as India and Germany are talking about banning cars with internal combustion engines within 15 years.

electric cars

Suppliers Skeptical

“Bollocks,” say executives at several of the largest suppliers to the auto industry, as reported by Bloomberg. “There’s a lot of buzz and a lot of talk about how the world’s going to change to electrified vehicles overnight, and I’m here to tell you it’s not going to happen overnight, and it’s not going to happen for decades,” David Dauch, CEO of American Axle & Manufacturing Holdings told those attending a conference sponsored by JPMorgan in New York last week. “I’m a strong believer in the internal combustion engine. I think it’s going to continue to be here for some time.”

Magna International sells more parts to North American auto makers than any other company. Its CEO, Don Walker, told the Management Briefing Seminars at the Center for Automotive Research in Traverse City, Michigan, last week that he remains skeptical about how quickly the age of all electric cars will get here.

He says most auto executives agree with him but are reluctant to say so publicly. In his opinion, electric cars will account for no more than 6% of sales worldwide by 2025 — if that. “They know what’s going to happen, but they have to say what is going to be popular to be perceived as a progressive company,” Walker said.

Delphi Automotive is a major supplier of powertrains and electronic systems to the automotive industry. Its CEO, Kevin Clark, told those attending the JPMorgan conference that 95% of vehicles will still have combustion engines in 2025, and about 30% will have some form of gasoline-electric system. Just 5% will be purely electric, Clark projected.

BorgWarner, has invested nearly $1.3 billion to develop electric powertrains, but its CEO, James Verrier, forecasts that electrics will be only 3% of sales by 2023. In particular, he throws shade on Elon Musk’s recent prediction that half of all cars made in the US will be electric within 10 years.

“I would probably say that too if I ran an electric vehicle company,” he said in an interview Monday in New York. “We hold a view probably similar to Magna that there will be an evolution towards a range of electrification.”

Analysts Are Skeptical, Too

Such negative attitudes make sense to some financial analysts who cover the automotive industry. “Right now you have an industry that’s sort of stuck between the market and what they see from their clients,” said Matt Stover of the Susquehanna International Group in Boston. “They see Tesla with an enterprise value of $70 billion, and they see what their clients are awarding to them, and they say, ‘Wow, something doesn’t make sense here.’”

The parts makers have to walk a fine line. Consumers haven’t yet demonstrated a willingness to buy electric vehicles in droves, giving both carmakers and their suppliers reason to be conservative. At the same time, governments are beginning to demand cleaner cars to curb pollution in megacities from Mumbai to Mexico City. And investors seem inclined to reward those trying to transform transportation, with all-electric Tesla surpassing the likes of Ford Motor Co. and General Motors Co. by market value this year. Tesla shares are up 67% this year.

“They have to defend their product mix, but they’re probably being more active than they try to come across as,” said Kent Lucas, head of business development at VectoIQ, which connects suppliers and startups in the automotive space.

Price is a big part of the picture. Fully electric SUVs in the US won’t reach price parity with their gasoline powered cousins until 2026, according to Bloomberg New Energy Finance in its latest Long Term Electric Vehicle Outlook report. For small cars, price parity will take until 2027 — and longer still in Europe.

So, what will come in between traditional cars and electric cars? Plug-in hybrids — lots of them. Belittled by fans of electric cars, they will account for 20% of the market by 2023, according to the forecasters. More than anything else, they eliminate any concerns drivers may have about running out of battery power far from the nearest charger. The real constraint on battery electric car acceptance may have more to do with that lack of charging infrastructure than it does price.

The Pace Of Change

The slow pace of change may be frustrating to some. As The Eagles once said in a song, “Things in this life change very slowly, if they ever change at all.” Until they do, that is.

 
Appreciate CleanTechnica’s originality? Consider becoming a CleanTechnica Member, Supporter, Technician, or Ambassador — or a patron on Patreon.
 
 

Advertisement
 
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Written By

Steve writes about the interface between technology and sustainability from his homes in Florida and Connecticut or anywhere else the Singularity may lead him. You can follow him on Twitter but not on any social media platforms run by evil overlords like Facebook.

Comments

You May Also Like

Batteries

The solid-state EV battery feeding frenzy heats up as Daimler and Stellantis pile onto the Factorial Energy bandwagon.

Cars

In an interview with CNBC’s Andrew Sorkin this past week, General Motors CEO Mary Barra shared some interesting alternative facts about Tesla and how...

Cars

An expanded version of this article was just sent out to subscribers of our weekly newsletter. Want to receive our weekly newsletter? Sign up...

Boats

Electric boat companies are attracting major investments from corporations and venture capitalists.

Copyright © 2021 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.