LA Auto Show: Automakers cautious about electric cars as SUVs and Trucks take the front seat

Electric cars are taking a back seat to more profitable trucks and sport utility vehicles at this year’s Los Angeles Auto Show, a venue that recently has been a showcase for green cars. Despite Tesla Motors’ bold bet on consumer demand for all-electric vehicles, traditional automakers at the show are pushing the trucks and SUVs that generate fat profits, in a reflection of how cheaper gasoline is influencing consumer spending. To view the upcoming all-electric Chevy Bolt, billed by General Motors as the future of electric vehicles, a potential buyer must first wade through myriad displays of trucks and SUVs at the Chevrolet section. Underscoring how trucks are still the meat and potatoes of the traditional auto industry - and extremely popular in Southern California - Chevrolet constructed a rugged off-road circuit on Tuesday to show off the power of its off-road pickup, the 2017 Colorado ZR2. Chevrolet Marketing Director Steve Majoros told Reuters brands such as the Bolt “are important to our business, important to our image, but they kind of live on the fringes when it comes to volume.” Majoros said there was “a lot of built-up demand” for the Bolt ahead of its Dec. 1 advertising launch in key markets. However, Chevrolet officials won’t say how many have been ordered or what planned production volumes are. Suppliers said they expect the Bolt initially will be produced at a rate of about 20,000 to 30,000 a year. Tesla Motors Inc, Silicon Valley’s luxury electric carmaker, says it has had nearly 400,000 pre-orders for its Model 3 sedan due in 2018 and is accelerating production by a factor of five to meet future demand. Tesla Chief Executive Elon Musk, speaking to shareholders on Thursday, noted the predicted low annual volume of Bolt EVs, saying Chevrolet needs to make 300,00-500,000 per year for the car “to make a difference.” Electric vehicles are currently a money-losing burden for carmakers forced to comply with federal fuel efficiency rules and even more rigorous standards in California, which mandates that 15 percent of carmakers’ sales must come from emissions-free vehicles by 2025. Market demand, however, is shifting toward trucks and sport utilities. The National Automobile Dealers Association says a predicted 17.1 million new car and truck sales in 2017 would favour light-truck sales, for an expected 60 percent of the market, up from 50 percent in 2013. Low fuel prices are behind a five-year decline in green vehicle sales, which is undercutting efforts by automakers to build economies of scale for new technology, said Hyundai Motor America Chief Executive Dave Zuchowski. “That’s a particularly disheartening metric,” Zuchowski told auto dealers at the AutoConferenceLA gathering on Tuesday. Facing expensive upfront costs and a mostly indifferent public - yet mandated to meet fuel efficiency standards - some brands are experimenting only modestly with electrification. GMC showed off its Sierra 1500 with eAssist that combines a V8 engine with a 0.45 kWh lithium-ion battery pack to improve fuel economy by as much as 13 percent. The battery, which adds $1,125 to the price, is not large enough to qualify for clean air credits in California. GMC built only 200 vehicles for 2016 for the California market and most have been sold. It is still weighing how many to make for next year, said Stuart Pierce, GMC senior marketing manager. “We’re trying to gauge receptiveness right now,” said Pierce, who added that truck customers “maybe wouldn’t be ready to go so far” as a hybrid or fully-electric vehicle. Audi and Jaguar plan to release electric SUVs in 2018, and BMW will launch an electric Mini in 2019. Audi parent Volkswagen says it will build 30 new electric vehicles by 2025. But Volkswagen’s offering this year at the show? The 2017 Atlas SUV with a gasoline engine. “We are expanding VW’s line-up to meet America’s demand for SUVs,” said Hinrich Woebcken, Volkswagen of America CEO. Reuters