Sales of sedans continue to plummet in the US as customers opt for more and more light trucks and SUVs. Through the first five months of this year, sales of sedans fell 11 percent and truck sales rose 4.7 percent. That means manufacturers in the auto industry are slashing the number of sedans produced and increasing truck and SUV production, leading to layoffs at the factories where those sedans are made.
Ford just made a corporate decision to stop building its Focus small sedan in America and shift production to China by 2019. The workers who built the Focus will transition to building SUVs instead.
Workers at GM’s Lordstown factory are feeling the pain. Lordstown is where the slow selling Chevy Cruze. Those falling sales caused the company to cancel the third shift on January 20 — the day Donald Trump was inaugurated. “This is about economics, not what Trump says,” said Robert Morales, president of United Auto Workers Local 1714 which represents workers at GM’s Lordstown stamping plant. “Even if Trump went out and bought 10,000 Cruzes a month, he wouldn’t get the third shift back here.”
The auto industry has been responsible for much of America’s productivity gains for the past several years. Mark Muro, of the Brookings Institution, has pulled together information that shows the industry was responsible for most of new US manufacturing jobs in 2015 and 2016.
In the first quarter of 2017, the auto industry accounted for only 2 percent of the 45,000 manufacturing jobs created. “There’s no argument with the idea that auto has been pulling the manufacturing sled up the mountain for the last three or four years,” Muro said. “If you take auto out, you’re left with a very tepid outlook indeed.” The Federal Reserve last week said factory output fell 0.4 percent in May, caused in part by a 2 percent drop in motor vehicles and parts production.
GM will close the Lordstown factory for 5 weeks this summer — three more than usual — in order to reduce dealer inventories of the Chevy Cruze. Some workers may transition to GM’s SUV assembly plant in Arlington, Texas but that means uprooting families, pulling kids out of school, and selling homes — decisions not taken lightly.
At Lordstown, the union and workers are trying to raise their game. The factory recently won an award for local innovation for developing a new part that helps the Chevy Cruze run better. When GM goes looking for factories to build new products, they hope their initiative will help swing new work their way. “We’re working hard to make the best product we can,” said Glenn Johnson, president of UAW Local 1112 at Lordstown, “so we can raise our hands and say to GM ‘look at what we can do.”
The solution is higher gas prices, but with the price of crude oil down and looking to go lower, that’s not likely to happen any time soon. If Congress had any leadership capability at all, it would simply raise the federal gasoline tax to $1.00 a gallon, let the chips fall where they may. $2 dollar a gallon gasoline is just ludicrous if the US has any realistic intention of addressing carbon emissions from the transportation sector. Little chance of that actually happening, though.
As exciting as the coming era of electric cars is, with its promise of swift, silent, emissions-free transportation for all, the truth is that trucks are some of the biggest polluters on the road. According to the US Department of Transportation, nearly 50% of all emissions from the transportation sector are attributable to light-, medium-, and heavy-duty trucks. So where are all the electric trucks? When will you be able to buy an electric truck? What’s going on in the electric truck startup world? For the purposes of this discussion, we will look at four categories of electric trucks — light-duty electric pickup trucks, light-duty closed electric delivery trucks & vans, long-distance heavy-duty electric freight trucks, and medium- & heavy-duty electric urban trucks.
Medium & Heavy-Duty Electric Urban Trucks
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Light-Duty Electric Pickup Trucks
America loves light-duty trucks like the Ford F-150, Chevrolet Silverado 1500, and Dodge Ram 1500. Sales of these vehicles are booming and manufacturers are scrambling to increase production to meet the demand. Chrysler is shutting down production of its Dodge Dart compact car and Chrysler 200 midsize sedan due to declining sales and focusing instead on making more Ram pickups and Jeep SUVs.
Why are there no electric trucks in the mix? Basically, the answer is that pickup trucks have a split personality. Most of the time they are used as the family daily driver. They go back and forth to work or take the kids to school. They are a passenger car with a load bed attached. But the beauty of a pickup truck is that it’s always happy to tow the boat to that cabin in the mountains or haul a camping trailer over vacation.
Lots of people also use pickup trucks in their trade or business. They haul rocks, gravel, building materials, and horse trailers. While electric motors have instant torque and are excellent at hauling heavy loads, a battery large enough to power a large vehicle loaded with cargo or towing a heavy trailer more than a few miles would have two huge disadvantages. First, it would have to be enormous. Second, such a large battery would make a truck far too expensive for most customers.
Some companies have toyed with the idea of a hybrid pickup truck. Ford and Toyota flirted with this idea for several years before Ford left Toyota standing at the altar like a jilted bride. General Motors says it is offering a hybrid Silverado in selected markets but the extra cost has kept sales from taking off. Dodge has shown no interest in electric trucks at all, preferring to meet tougher mileage rules with diesel engines.
Perennial industry gadfly Bob Lutz has been promising for years that VIA Motors would bring extended-range plug-in hybrid pickup trucks to market soon. The trucks would basically be Chevrolet Silverados fitted with a VIA-designed plug-in hybrid powertrain. News about VIA Motors has been conspicuously absent of late, however.
The only bright spot on the horizon for those hoping to drive a plug-in hybrid pickup truck comes from Workhorse. Based in Indiana, the company says it will bring a 5 passenger, 4 door extended-range electric pickup truck with 80 miles of range to market in 2018. Dubbed the W-15 (indicating is should have a carrying capacity of 750 pounds), the truck will have dual motors for all-wheel drive capability and a 60 kWh battery. No pricing details have been revealed.
The most unique feature of the W-15 is that it will have an onboard range extender gas engine — the same 647 cc two cylinder unit used by BMW in the range-extended versions of its i3 electric sedan. While purists may sputter that adding a gasoline engine goes against the whole purpose of making an electric vehicle, eliminating range anxiety is a crucial consideration for those thinking of laying down their hard-earned money for an electric vehicle. To sweeten the deal, Workhouse says its plug-in hybrid electric pickup will reduce fuel costs by 40% and routine maintenance expenditures by 60%. Those are the sort of numbers that gladden the heart of fleet managers.
Tesla’s Elon Musk has said from time to time that an electric pickup truck from Tesla is on his radar screen, but with the introduction of the Model 3 midsize affordable car expected in about a year and a Model Y CUV supposed to be after that, it may be a while before Tesla is able to turn its attention in that direction.
Light-Duty Closed Electric Delivery Trucks & Vans
When we think of trucks, we tend to overlook the hundreds of thousands of delivery trucks that scurry about every day delivering the millions of items that make daily life enjoyable. Whether it is delivery vans for flowers, packages, and mail or a work van that tradespeople like plumbers, electricians, and carpenters depend on, they are largely invisible to us. But why shouldn’t these vehicles be able to drive with fewer emissions while saving fuel and maintenance costs?
Almost no one is thinking about making electric trucks to serve this market, something Deutsche Post — known globally as DHL — found out when it went looking for an electric delivery van for its business. In the end, the company decided to just design and build its own. “We are purposely not reinventing the wheel. We do not produce a single component ourselves. Everything comes from a supplier,” Win Neidlinger, director of business development at Deutsche Post says. “We designed it as a tool. So the fit and finish does not need to be as good as in a passenger car,” he adds. “It did not cost billions to develop and produce. You will not believe how cheap it is to make.”
DHL’s bold gambit has struck a nerve. “They have opened up a new segment, one which the conventional carmakers have not discovered because they are too hamstrung by their own processes,” said Christoph Stuermer of PricewaterhouseCoopers. Volkswagen’s chief executive Matthias Mueller sulked: “I am annoyed beyond measure. I, of course, ask myself why Post did not talk to our VW Commercial vehicles division about doing something similar.” But apparently, Deutsche Post did talk to Volkswagen, among others, and was told to take a hike.
The market for electric delivery vans — with or without hybrid power — could be huge. Instead of fleets of trucks crisscrossing our cities spewing out exhaust emissions, urban skies could be forever less polluted, which would benefit everyone.
At first glance, the idea of an electric tractor-trailer hauling 80,000 lbs of cargo from Los Angeles to Long Island seems absurd. Wouldn’t that take a 20,000 pound battery? There would hardly be any room left over for the cargo. That doesn’t seem to concern the indomitable Elon Musk, however. When he revealed his Master Plan, Part Deux earlier this year, he included these thoughts: “The second part of the plan includes a Tesla pickup truck, a Tesla Semi, and new forms of urban transportation with high passenger density. We believe the Tesla Semi will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate.”
That’s it. No details, no specs, and no prices. Most people assume that the Semi will be a pure battery-electric vehicle with no range extender (engine) of any kind. It would be a betrayal of Tesla’s core values to use an internal combustion engine, wouldn’t it? That has led some to speculate that some kind of battery swapping system would need to be used.
Federal regulations limit the number of hours a truck driver can spend behind the wheel before taking a break for food and rest. Perhaps that downtime could be put to good use by swapping out a depleted battery and swapping in a new one? Or maybe Tesla will have come up with new quick-charging technology by then. A battery large enough to move a tractor trailer 400 miles or more would need to be 500 kWh in size or larger. Such an enormous battery would take hours to recharge in the absence of such a breakthrough.
Another company says it is hard at work on an extended-range electric tractor-trailer. Nikola Motors says its truck will have 2,000 horsepower, 3700 lb-ft of torque, a 325 kWh battery, 6 wheel drive with torque vectoring and a range of 1,200 thanks to an onboard natural gas—powered generator. Impressive stuff, if true. Not quite the pure electric vehicle Tesla probably has in mind, but far better than diesel emissions spewing from the exhaust stacks of all those 18-wheelers out there.
Nikola Motors “was quietly formed by founder and CEO Trevor Milton years ago to design and manufacture electric vehicles, energy storage systems, and electric vehicle drivetrain components,” according to a company press release. “By working together with some of the top engineering firms in America, we were able to design vehicles that have previously been thought impossible to design,” says Milton, who adds, “This is just the beginning of what’s ahead for America, our company and the electric vehicle market.”
That is all very interesting but will it ever actually build this electric hybrid tractor? “We’ll see,” said the Zen master.
Medium & Heavy-Duty Electric Urban Trucks
Ian Wright was one of the early members of the Tesla Motors founding team. He and Elon Musk had different ideas about how to move the electric car revolution forward. Each thought the other was looking at things through the wrong end of the telescope. Elon wanted to build a large all-electric premium sedan that would appeal to people who influence the opinions of others. Musk’s approach is logical and it has been spectacularly successful.
On the other hand, Wright believed that reducing the emissions of heavy diesel trucks that start and stop hundreds of times a day was more important. So he cashed in his Tesla stock and set off on his own to make heavy-duty plug-in electric urban trucks that would slash diesel emissions in urban communities. Wright had good reason to go in that direction. Such trucks account for about 8% of all diesel emissions even though they are just a small percentage of the overall truck fleet.
Ian started his own company which he calls Wrightspeed. Together with a team of talented engineers, he devised a heavy-duty truck that uses two electric motors that drive the rear wheels via a two speed gearbox. The instant torque provided by the motors is ideal for getting heavy trucks moving from rest and the motors can be switched to regeneration mode during deceleration to put some of that electrical energy back into the truck’s lithium-ion battery.
But the thing that really sets Wright’s trucks apart from anything else on the road is a two-stage gas turbine that is lighter and more efficient than any internal combustion engine. It can run on diesel, CNG, LNG, methane, biodiesel, kerosene, propane, heating oil, or any other combustible fuel. Because it only turns a generator and is not connected to the drive wheels, it can be set to spin at its most efficient speed — about 100,000 rpm. Wright says the turbine runs so cleanly it needs no catalytic converter to meet California’s strict emissions rules.
The truck has a range of 30 miles on battery power alone. Wright estimates that the combination of lower fuel costs and reduced maintenance expenses can save a fleet operator a half million dollars per truck during its average 12-year useful life. Slashing emissions while saving money is a winning formula for both the environment and fleet operators.
Wrightspeed currently offers the Route™ 250 powertrain for urban or suburban delivery; the Route™ 500 powertrain for city buses, beverage trucks, or other heavy delivery trucks making frequent stops; and the Route™ 1000 for refuse truck application (a product Wrightspeed wasn’t yet selling when we interviewed Ian last year).
Wrightspeed Route 250
Wrightspeed Route 500
Wrightspeed Route 1000
Wrightspeed earlier this year entered into an agreement with Mack Trucks to include its technology in Mack’s heavy-duty trucks. FedEx and others have been testing the company’s turbine hybrid powertrain for several years with positive results. It has recently moved to a larger facility and is ready to begin full production. Earlier this year, it signed a $30,000,000 deal with New Zealand’s NZ Bus to convert its diesel-powered coaches to Wrightspeed power. Diesel costs up to 3 times more on the island country than it does on the mainland. NZ Bus expects to recoup its investment in just a few years thanks to lower fuel and maintenance costs.
Summary
Most of the news regarding electric vehicles today is about passenger cars, but the most important area to focus on if the objective is to lower vehicle emissions is trucks. Light-duty trucks represent almost as much of the market as passenger cars, so carbon emissions from those vehicles deserve at least as much attention as emissions from cars. But the real benefits for the environment will come from replacing the diesel engines in medium- and heavy-duty trucks with clean electric power.
When it comes to passenger cars, the focus is on tax credits and other incentives to get people to buy. But when it comes to heavy trucks, it is just a case of economics. Diesel engine maintenance is expensive. Fuel costs can be low one year and high the next. Electric trucks protect fleet owners from variations in the cost of diesel fuel while slashing maintenance costs. The bottom line is that electric trucks are a sound business investment. The fact that they also pay big dividends for the environment is just a nice bonus for all concerned.
Companies that can bring electric trucks to market first will benefit. Those who are late to the party will suffer. If you have read this far, you will have noticed that the names of the big automakers are largely missing from the conversation. Just as with passenger cars, small innovative companies are ready to steal market share from the established industry leaders. By the time the big guys figure out what’s going on, it may be too late for them to profit from the coming electric truck revolution.
People everywhere want SUVs and trucks. According to Bloomberg, light trucks, a category that includes SUVs, accounted for 60% of the US new car market in April. When gas prices soared to nearly $4.00 a gallon a few years ago, light truck sales slipped to around 40% of the market. Now that prices are lower than they have been in a decade, sales of light trucks are surging. Manufacturers are adding more shifts at their factories to keep up.
It’s not just in America. Demand for SUVs is up in Europe. When OPEC leaders meet in Vienna later this week, they will be rubbing their hands in glee at the sight of all those Hyundai Tucsons and Renault Kadjars on the streets. SUVs are outselling passenger cars in Europe for the first time ever, according to industry consultants JATO Dynamics.
In China, light trucks and SUVs accounted for almost 35% of passenger car sales in April. That’s up from 10% in 2010 and less than 5% a decade ago. “Consumers are thinking that a period of plentiful oil supply is here to stay,” says Christopher Ruhl of the Abu Dhabi Investment Authority. “The trend of fuel-efficiency improvement of the last few years could be stopped by low oil prices,” he adds.
The average fuel economy for new vehicles sold in the United States slipped to 25.2 miles per gallon. That’s down from a peak of 25.8 mpg set in August 2014. It is no coincidence that the drop in average fuel economy started right after oil prices declined sharply that year.
Data from the Transportation Research Institute at the University of Michigan suggest 2016 could be the first year US average fuel economy is lower than the prior year since 2007. “Fuel economy improvement is really flatlining,” said Sam Ori, executive director of the Energy Policy Institute at the University of Chicago. “The gains completely stopped right at the same time that oil prices started to decline.”
Meanwhile, sales of high efficiency cars like the Toyota Prius continue to decline. The Chevy Volt is selling reasonably well now that the second generation car is in showrooms, but its total numbers won’t be more than a footnote in total vehicle sales this year.
Clearly, America and the rest of the world have a decision to make. Do we simply let market forces dictate our behavior? If so, we will continue to poison our oceans, skies, and lands with fossil fuel detritus until every molecule of carbon based energy is extracted from the earth and burned.
Is there any antidote to manufacturers’ greed and consumers’ hubris? The answer, from all observable evidence, is “No.” The Koch Brothers will win the battle to cram as many dollars as possible into their wallets, but we will all be losers in the end.
Does it seem to you there are fewer small sedans on the new car market these days? That’s because there are. “Americans are finally figuring out what Europeans have known for years, that hatchback style vehicles are more efficient in space and storage,” says Dave Sullivan, an industry analyst with AutoPacific. “That’s why a Buick Encore (crossover) can sell so well and a Buick Verano (subcompact) does not.”
In 2010, passenger cars were 52% of the market while light trucks and SUVs were 48%. Today, as gas prices have tumbled to historic lows, the new car market for passenger cars is down to only 43% of sales while trucks and SUVs have soared to 57%. Chrysler just announced that it will discontinue the Dodge Dart and the Chrysler 200, as it pumps up production of Jeeps and Dodge Ram trucks. In January, 80% of FCA sales were light trucks and SUVs, the highest percentage in the industry.
How can Chrysler afford to do that? Doesn’t it have to worry about meeting tighter government fuel economy standards?s Actually, those standards encourage companies to build less fuel efficient vehicles. There is a built in fudge factor called the “footprint adjustment” that lowers the standards for less efficient models but increases it for more efficient models. Translation — the more gas guzzlers you sell, the lower your CAFE number needs to be.
“Each manufacturer has a different target, John Graham, dean of Indiana University’s School of Public and Environmental Affairs, tells the Detroit Free Press. “If you sell more small cars, you have a stricter target.” Tell me this isn’t a government operation. The rules are set up to provide a disincentive to complying with the rules! Beautiful.
Toyota has just announced it is shutting down its Scion small car division. What Scions remain on dealer lots will now be rebadged as Toyotas, which of course they are anyway. Scion had its best year in 2006, when 173,000 were sold. In 2015, Scion moved a mere 56,157 cars.
Will other manufacturers also pare back their small car offerings? Light trucks and SUVs are the most profitable vehicles. Companies often barely break even on small cars. Given a choice, the outcome is obvious. And that sets up a coming conflict between making profits and pleasing regulators. Chuck Stevens, GM’s chief financial officer, states the dilemma clearly. “We continue to re-evaluate how we deploy capital, where we deploy capital in order to drive appropriate returns across the business. How do you effectively deploy capital in those segments with lower margins like small cars and compact cars?”
The car companies are already pressuring the California Air Resources Board to loosen its highly restrictive mandate that calls for 10% of all cars to be zero emissions in a few years. In 2017, the National Highway Traffic Safety Administration will seek public comment on whether the fuel economy standard should be revised for model years 2022 through 2025, John Graham says. A decision on whether to change the 54.5 mpg target is expected in early 2018. Of course, by that time, a new president will be sitting in the White House and the membership of the US Congress may have changed significantly after the national elections this November.
Every job in the auto industry creates many more jobs in industries that support it. If the car companies suffer shrinking sales, the national economy will be impacted directly. Will politics play a role in future emissions and fuel economy standards? Oh, you betcha.
“The industry is trying to build what people want while still complying with what the government says they should build,” says AutoPacfic’s Sullivan. “Right now, however, regulator and consumer demands are pulling in opposite directions. Now, if someone wanted to stand up and propose a higher gasoline tax, that gap might be smaller.” Hmm, isn’t that what Obama just did in his new proposed budget?
For electric car advocates, one of the factors holding back the proliferation of EVs is the decision by manufacturers to make most of their electric offerings small sedans — precisely what the public doesn’t want. Tesla is predicting great things for its coming Model 3 but that, too, will be a small sedan. Chevrolet, at least, has made its new Bolt a crossover SUV style vehicle, but even it is barely bigger than the sub-compact Chevy Sonic.
Weight is the issue. Bigger cars need bigger batteries. Bigger batteries mean higher prices. Bob Lutz has gone on record as saying the market for electric cars is “super lousy” right now, mostly because people want larger cars and are not worried about how much they cost to fill up at the pump. Who is going to win the contest between lower emissions and profits? At least for the moment, emissions seem to be losing the battle — and the war.
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