North American Auto Show steps on the gas
Companies focus on SUVs and trucks despite electric promises
DETROIT— Automakers have promised to start selling hordes of electric cars in the next few years, but only two will be unveiled at the big Detroit auto show that kicks off this week — and those aren’t even ready for production.
Meanwhile, there will be plenty of SUVs and high-horsepower sports cars on display as cheap gasoline helps SUV and truck sales continue their dramatic climb.
So, how credible is the industry’s pledge to move toward fuel-efficient vehicles when it keeps cranking out more lucrative trucks and sport utilities?
Some environmental groups contend that companies aren’t really interested in efficiency because they’re making tons of money from the sales of lessefficient SUVs and pickup trucks. These groups also say that without government fuel economy requirements, automakers won’t make progress toward electric vehicles that could reduce greenhouse gas emissions.
Auto executives, however, say they’re already moving to more fuel-efficient trucks and SUVs, some now coming with gas-electric hybrid power systems.
Soon there will be many electric SUVs, they say.
“Every one of our SUVs has hybrids somewhere in the future, hybrids or electrified vehicles of some sort,” says Craig Patterson, Ford’s SUV marketing manager.
Patterson will help show off a new version of the Ford Explorer big SUV at the auto show, and it will have an optional hybrid power system. It is Ford’s first hybrid SUV in six years, and the company also has plans for a fully electric SUV based on the Mustang sometime next year. Seven battery-powered vehicles are planned for the U.S. by 2022.
General Motors plans a Cadillac electric vehicle in 2021, and more than 20 that run on batteries or hydrogen in four years. Volkswagen, the world’s largest automaker, wants to increase the number of electric models from six to over 50 by 2025. Other brands such as Audi, BMW and Porsche and Jaguar are rolling out electric vehicles. But in December, almost 72 per cent of new vehicles sold in the U.S. were SUVs and trucks, up from 49 per cent at the end of 2012. Because of the shift, Ford, Fiat Chrysler and General Motors are cancelling some or all of their sedan lines. At the same time, they are hedging their bets by planning electrics and hybrids to give people fuel-efficient SUV options should gas prices rise.
Design work on the Explorer and other vehicles being intro- duced at the North American International Auto Show began more than three years ago, when automakers thought their new vehicle fleet had to average about 36 miles per gallon by 2025 under U.S. fuel economy standards. That’s about 10 mpg more than the current standards.
But the Trump administration has proposed freezing those standards at 2020 levels, a move that will spark a court challenge and a fight with California, which can set its own gas mileage and greenhouse gas standards. A decision on freezing the standards at around 30 mpg is expected later this year.
Auto executives say they’ve been working to squeeze more efficiency out of the internal combustion engine, to the point where there isn’t much else they can do except add electric power.
Ford plans to keep working as if the government won’t freeze fuel economy standards because it doesn’t know what will happen. “You have to meet it at some point, and you’re going to have to build (for) California,” Patterson said.
Still, selling hybrid and electric vehicles is tough in an era of cheap gas. In the U.S., fully electric vehicles amounted to less than 1 per cent of new vehicle registrations through August last year. Yet globally, Navigant Research predicts huge growth in the next seven years, from just over a million sales this year to 6.5 million by 2025. The surge is expected due to government incentives in China. momentum seen for Brazil and Russia.
Stable growth remains the assessment for the industrial sector in India and China, even though customs data Monday showed an unexpectedly steep decline in Chinese exports to the United States in December. The OECD data shows a twelfth consecutive monthly drop in Canadian economic growth — to 99.1 in November from 99.3 the previous month amid signs that growth in the U.S. may be slowing faster than anticipated. The U.S. indicator fell for the third straight month to 99.6 and further below the 100 mark that points to steady growth.
By contrast, China’s indicator rose slightly to 98.8.
The leading indicator for the Eurozone was below 100 for a fourth straight month, pointing to a continuation of the slowdown that began last year.
Canada’s economy is expected to expand by 1.9 per cent in 2019 compared with 2.1per cent last year, according to a survey of economists in early January by Bloomberg that sees a 20 per cent chance of recession within the next 12 months.
The survey sees 1.5 per cent growth in the first quarter versus an estimated 1.9 per cent in the final three months of 2018.
U.S.-China trade tensions along with indications that global economic activity is approaching capacity “have taken some of the steam out of exports and put commodity prices on the defensive,” RBC chief economist Craig Wright said in a 2019 outlook, adding that consumers are being squeezed by three rate hikes in 2018 that pressured the housing sector, although RBC expects the central bank to hike rates two more times this year.
Statistics Canada says GDP rose 3 per cent in Canada in 2017 — ahead of all the other Group of Seven countries — as household expenditures jumped by 3.5 per cent.