The latest sales numbers: winners and losers in Canada

Canadians gorged on cars and trucks in May, buying a record 216,861 new vehicles, and breaking all previous monthly sales records, notes DesRosiers Automotive Consultants.

Canadians have bought 835,582 new vehicles this year to date, a jump of 4.7 per cent year-on-year. Perhaps it was the wealth effect at play. Statistics Canada reports the economy grew at an annualized rate of 3.7 per cent in the first quarter. As the economy grows, so apparently do car sales.

That’s the big picture. Here’s a closer look at five winners and five losers in Canada’s car market now that the May numbers are in.

Winner 1: Automakers as a whole. May sales were up 11.2 per cent year-on-year, and trucks led the way. Light truck sales were up 16.3 per cent, while passenger car sales nudged up just 2.9 per cent. Trucks now out-sell cars by about 2:1 (141,689 trucks sold, 75,172 cars).

The all-new 2017 F-150 Raptor. Truck sales are surging and the F-Series remains Canada’s most popular vehicle.

Loser 1: Or losers. It’s a short list: BMW (-5.9 per cent), Land Rover (-0.8 per cent), and Volkswagen (-9.9 per cent). Mercedes-Benz and its smart brand landed precisely in the middle, with sales flat, month-on-month.

Winner 2: Here, we have a list of winners, carmakers whose sales simply exploded in May. Honda posted an all-time sales record for May (19,175), with an 11.6 per cent increase over May 2016, notes DesRosiers. FCA, the former Chrysler, reported a monthly sales record with 33,186 units sold. General Motors’ sales exploded, up 35.8 per cent. Other notable sales increases for May, adds DesRosiers: Jaguar (+166.2 per cent), Maserati (+77.9 per cent), Subaru (+17.6 per cent), Ford (+17.4 per cent), Audi (+16.6 per cent), Porsche (+15.7 per cent), and Lexus (+11.9 per cent).

Loser 2: The Jeep brand. FCA is really struggling with Jeep in Canada. Sales in May were down 31 per cent, and they’re off 23 per cent for the year. The Cherokee was off a stunning 64 per cent in May, while the Renegade slipped an almost equally staggering 41 per cent year-on-year.

2017 Chrysler Pacifica Hybrid cutaway. The Pacifica is a minivan success story.

Winner 3: Full-size pickups. Canadians just can’t get enough of them. Ford sold 15,307 F-Series pickups in May, making it the best-selling vehicle in Canada for yet another month. Ram pickup sales were up 62 per cent in May, to 14,990. That’s right. The Ram almost caught Ford’s juggernaut of a pickup.  At General Motors, pickup sales were up 43 per cent year-on-year, led by the Chevrolet Silverado (up 45 per cent) and GMC Sierra (up 43 per cent).

Loser 3: Cars in general, and midsize ones in particular. Sales of the Nissan Altima were off 25.3 per cent and it was a similar story with others in the segment. The midsize sedan is suffering a slow but steady death in the marketplace.

Winner 4: Minivan mania. Toyota Sienna sales were up 45.4 per cent in May, to 1,567 units. Chrysler sold 718 Pacificas.

Loser 4: Subcompact cars. For example, the Honda Fit – a very, very good small car – fell 32.6 per cent in May. Subcompact car sales have plunged 25.5 per cent this year, notes DesRosiers.

Winner 5: Jaguar in particular and luxury vehicles in general. Jag sales surged 166.2 per cent in May. But the news was also good for Audi (up 16.6 per cent); Acura (up 15.1 per cent); Maserati (up 77.1 per cent); Infiniti (up 7.9 per cent); Lexus (up 11.9 per cent); Porsche (up 15.7); and Volvo (up 2.0 per cent).

Loser 5: The Chrysler and Dodge brands, down 25.0 and 9.0 per cent respectively. Both brands suffer from aging lineups dotted with vehicles not suited for Canadians. For instance, the Dodge Journey is as old as dirt and needs a major makeover. No wonder sales were down 48 per cent.

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Winners and losers: April’s auto sales story in Canada

Okay, the full Canadian April sales numbers are in and they spin many interesting tales about the winners and losers in this market.

Losers? For starters, year-over-year new vehicle sales declined in April compared to a year ago, reports DesRosiers Automotive Consultants. Sales fell slightly, by 1.6 per cent to 197,203 from 200,384 a year ago. Year-to-date sales at 618,721 units remained 2.5 per cent above the 603,364 units sold by the end of April 2016.

Thirteen of 26 brands in Canada reported year-over-year sales decreases, including higher volume brands such as Toyota (-9.9 per cent), FCA (-9.1 per cent) and Nissan (-8.1 per cent), adds DesRosiers.

Now with a bit of digging we found some really tasty winners and some truly egregious losers. Here’s a celebration of both:

Buick Encore sales were up 23 per cent in April.

Winner: Small SUVs/crossovers: Honda HR-V and CR-V sales are up 56 and 17.9 per cent respectively this year. GM Canada’s small/compact crossover sales were up 41 per cent in April: Chevrolet Equinox (up 73 per cent), the GMC Terrain (up 35 per cent), Buick Encore (up 23 per cent).

Loser: Small cars in particular and cars in general, too: Honda Fit sales are down a staggering 55.5 per cent this year. Mazda3 sales in April slumped 26.9 per cent. Car sales at Ford were down 27.7 per cent in April, and they’re down 20.3 per cent on the year. Ford in Canada has sold 596 Fiestas for the entire year so far, versus 47,460 F-Series pickups. Nissan Micra sales were down 17 per cent in April.

Honda’s little HR-V is attracting lots of buyer.

Winner: Luxury SUVs: at Lexus, SUV sales were up 18.7 per cent in April, with the NX up 25 per cent, the RX up 11.2 per cent. Range Rover was up 48 per cent year-over-year, with the Range Rover Evoque up 69 per cent year-over-year. Jaguar sold 202 F-PACE SUVs in April, which represented about two-thirds of all Jaguar sales for the month.

Loser: Honda’s Acura luxury brand. Sales overall down 4.6 per cent, but look at these numbers: RLX sales down 44.9 per cent, TLX sales down 15.9 per cent. Acura crossovers? RDX sales collapsed in April, down 19.9 per cent.

Winner: SUVs: Toyota Highlander sales sup 20.5 per cent in April, 4Runner sales up 24 per cent. Mazda CX-9 sales jumped 184.4 per cent.

The Jeep Renegade. Jeep sales were down 35 per cent in April.

Loser: Ford’s entire car lineup: Through the end of April, Ford in Canada sold 82,354 light trucks – Escapes, Explorers, F-Series – compared to a paltry 10,751 cars, the once-popular Focus among them.

Losers and Winners: Passenger car sales decreased 8.7 per cent year-over-year in April, with 66,291 units sold, while light truck sales increased 2.5 year-over-year with 130,912 units sold, notes DesRosiers Automotive Consultants.

Winning brands: Jaguar up 157.4 per cent, Maserati up 112.3 per cent, and General Motors up 16.4 per cent, notes DesRosiers.

VW sales were down 30.1 per cent in April, due in large part to fallout from the “Dieselgage” scandal. VW vehicles powered by the company’s 2.0-litre TDI diesel engine — vehicles such as the Jetta, Golf and Beetle convertible shown here — have been tainted by the emissions cheating scandal.

Losing brands: The largest declines, notes DesRosiers: smart (-60.0 per cent), Volkswagen (-30.1 per cent), and Acura (-23.3 per cent). Mercedes-Benz Canada delivered a grand total of 22 fortwo runabouts in April.

Winner: Infiniti Q50 sales were up 80.2 per cent for April. In a market in which customers are turning away from luxury cars to luxury SUVs, the Q50 was a rare exception. A second: Mercedes-Benz is having great success with the C-Class: a 61.2 per cent increase in April and year-to-date growth of 46.6 per cent.

Loser: Nissan’s midsize cars: Altima sales in April were down 48.3 per cent, Maxima down 38.9 per cent.

Winner: Big pickups: FCA’s Ram up 10 per cent in April; Chevrolet Silverado up 27 per cent; GMC Sierra up 19 per cent; Ford F-Series up a modest 3.0 per cent, though April was still the best month on record for F-Series sales.

Loser: Fiat Chrysler (FCA) in Canada: overall, April sales down 9.1 per cent, but there were some whopping slumps amongst previously popular brands: Jeep down 35 per cent, Dodge down 13.0 per cent. If you’re searching for a bright spot, FCA sold 757 Chrysler Pacifica minivans in April.

2017 Chrysler Pacifica Hybrid cutaway. Advanced technology in a production vehicle. The luxurious Pacifica is a minivan is appealing to a surprising number of buyers.

Winner: Mercedes-AMG: 1,034 units delivered, for a 65.7 per cent jump over the same period last year. Year-to-date Mercedes-AMG total: 3,530 sold, for a growth of 80.5 per cent over 2016. The Merc numbers reflect the truly awesome power of good branding and packaging. 

 

 

 

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Trump goes to Detroit: setting the stage for the next bailout?

President Donald Trump brought his usual chaos to Detroit this week, promising to review former President Barack Obama’s decision to lock in a timetable for stricter fuel economy and emissions standards through 2025 and gut the Environmental Protection Agency that enforces them.

The President also toured a Detroit-area research and development centre — car company bosses in tow, genuflecting appropriately — and held a campaign-style rally in Ypsilanti, Mich. His promise: make Detroit “the car capital of the world again.”

President Donald Trump in Detroit, holding a roundtable discussion with industry and union leaders and various officials.

All in all, it was a very bad day for the auto industry, for auto workers, for automotive consumers, for taxpayers and for the planet. That’s how I see it and for good reasons that I will share.

Now to be fair, not everyone will agree with me. For some, Trump brought cheery news. But if you truly understand the auto industry, its long timelines and 20-year product lifecycles, and if you appreciate the industry’s need for a stable R&D investment climate, Trump’s visit has the look of something that could prove catastrophic. I’d argue we should start saving for the next taxpayer-funded bailout right now.

Let me explain by starting with a few facts.

Mark Fields, Ford Motor Co. president and CEO: slashing Obama’s plan could save up to 1 million auto industry and related jobs.

Trump is ordering the EPA to reopen a mid-term review of Corporate Average Fuel Economy (CAFÉ) standards that would require the industry to deliver a fleet average of at least 4.3 litres/100 km or 54.5 mpg by 2025 based on a complicated formula which asks car companies to improve fuel economy for cars by five per cent a year, and for light trucks by 3.5 per cent annually.

This is a big ask of the industry, no doubt, and will require R&D investments, creativity and hard work. Some car company bosses have argued – Ford CEO Mark Fields first among them – that it’s all too much for them. They, in fact, say slashing Obama’s plan could save up to 1 million auto industry and related jobs. They say Obama’s tough rules would make consumers less willing to buy the more fuel efficient vehicles. Advanced engineering will make them too expensive.

The facts suggest something else entirely. A new study commissioned by Consumers Union, publisher of Consumer Reports, found that the average price of new cars and light-duty trucks has remained relatively flat since 1997 – a period of ever-stricter regulations during which fuel economy has improved dramatically and emissions have plunged.

President Barack Obama with the Chevrolet Bolt EV. President Obama put his plan for the auto industry this way: it this way: “It is to help America’s automakers prepare for the future.” He challenged Detroit’s automakers to reinvent themselves and it worked.

And car companies have not suffered one bit. Sales have been booming this entire decade and the profits have been rolling in by the billions. For instance, last year, General Motors booked net income at $9.43 billion (US) and Ford’s full-year net income was $4.6 billion (US).

Consumers have done well, too. The study by Synapse Energy Economics of Cambridge, Mass., found that if “fuel economy had not improved from 2005 through 2015…households would have spent 25 per cent more on fuel in 2015 than they actually did.” Better fuel economy saved the average household $523 (US) in 2015, and the prices of entry-level vehicles have “remained approximately the same over the past 10 years.”

The only losers have been Trump and his fellow millionaires and billionaires. The study found serious price inflation among the most expensive vehicles – by 40 per cent for the top 30 priciest vehicles. Ah, but the average consumer has been a net winner thanks to the toughening of fuel efficiency rules.

President Obama gave Detroit’s auto industry tough love and was rewarded. Detroit’s carmakers are immensely profitable and a global force.

So it seems that Trump’s promise in Detroit is not good news for everyday consumers in particular, though already-profitable car companies stand to benefit in the short term from reduced  R&S pending on fuel economy and emissions. For a couple of years, that will be good for car companies; a decade or less from now, disaster looms.

You see, the car business is a global game. Trump’s administration may be anxious to roll back vehicle standards, but the rest of the world is not. China, for example, is the world’s No. 1 market for full electric vehicles and the Chinese government is pushing ahead with even more stringent vehicle standards.

In Europe, the German government have just passed a resolution to ban the sale of internal combustion engines in the European Union by 2030. Only zero-emissions vehicles would be allowed on the market after that time, according to the resolution.

The German Bundesrat has no direct authority over the EU, and cannot demand changes to the EU’s transportation regulations. But Germany is the richest, most powerful country in the EU and has enormous influence over EU policy.

The all-new 2017 F-150 Raptor. Ford is meeting its fuel economy goals in part thanks to the aluminum F-Series.

The point is, while Trump is vowing to roll back an Obama plan marked by consistent, predictable and achievable targets, the world is moving ahead with tougher rules on a timeline that is consistent with the former president’s initiative. And it was an initiative borne of crisis and created with great foresight.

Go back to January of 2009. In the midst of a global financial meltdown, General Motors and the then-Chrysler Corp. clung to a government financial lifeline that would eventually turn into bankruptcy and a full-scale taxpayer-funded bailout.

The new Obama administration saw that decades of mismanagement, general incompetence and narrow thinking had left Detroit’s automakers hopelessly behind by every metric imaginable. Detroit’s products were poorly built, technologically deficient, generally unappealing and unattractive and inefficiently produced. Obama could see a necessary bailout coming, but he didn’t offer a free ride.

2017 Chrysler Pacifica Hybrid cutaway. Advanced technology in a production vehicle.

Instead, on Day 6 of his administration, he instructed the Department of Transportation to finalize new fuel-economy rules for the 2011 model year, and asked the EPA to review whether California and other states should be able to write their own greenhouse gas rules.

At the time, this all seemed counter-intuitive. Why was the new president further burdening an already struggling industry with new demands and hard regulations?

President Obama put it this way: “It is to help America’s automakers prepare for the future.” He challenged Detroit’s automakers to reinvent themselves and it worked. GM, the company that has since become Fiat Chrysler and Ford reinvented themselves and are now producing world-class vehicles capable of competing around the globe.

In 2009, Obama said his administration’s fuel economy and emissions rules would prove to be “the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil,” with the added benefit of saving U.S. consumers $1.7 trillion(US) at the pump by 2025, or $8,000 (US) per vehicle.

GM resorted to mind-boggling drivetrain complexity in order to maximize electric-only driving for the Chevy Volt.

By 2015, the U.S. Energy Information Administration reported that U.S. net imports of foreign oil were at the lowest level since 1970. New and sometimes controversial oil extraction techniques like fracking have played a large role, but so have dramatic fuel economy improvements – with the added benefit of seeing established U.S. automakers become modern and profitable.

Furthermore, it’s fair to argue that the automotive business environment has changed for the better, too. Without Obama’s initiatives and the accompanying rhetoric, it’s fair to argue that start-ups like Tesla the battery-car company would never have emerged to influence the entire auto industry.

And on the broader issue of the overall climate itself, Obama’s take on the auto industry has been extraordinarily beneficial. A study by the University of Michigan Transportation Research Institute found that the cumulative amount of fuel saved from 2007-2014 came to about 15.1 billion gallons or the equivalent of all the fuel used by U.S. vehicles for about a month.

This reduction has come with a cut in emissions. From 2007-to 2014, says the U of M, 297 billion pounds of carbon dioxide have NOT been pumped into the atmosphere thanks to CAFE.

GM’s electrification chief Pam Fletcher is charged up about plans to being battery cars, plug-ins and hybrids to showrooms at affordable prices.

Trump’s announcement this week is horrifying. |It points to plans that will undo the progress of the last eight years. Obama’s initiative forced Detroit’s automakers to reinvent themselves and the vehicles they build. It worked.

The genius of Obama’s plan was that it fostered numerous realistic innovations but did not push any one particular technology. Thus, Ford now sells a lighter aluminum F-Series pickup with an advanced turbocharged engine that is notably fuel efficient. GM has adopted stop-start engine technology and cylinder deactivation that saves fuel in its hot-selling pickups, and has just launched the first affordable, mass-production electric vehicle in the world, the Bolt.

Car companies have refined their designs to make them more aerodynamic, moved to lightweight materials in everything from seat design to chassis components. They now work closely with tire makers to reduce rolling friction and have adopted more efficient transmissions. And more. All the while booking fantastic profits on record sales to customers who are benefitting from savings at the pump while driving cars that are no more expensive now than a decade ago.

President Trump, it appears, wants to change all that – to take Detroit back to when it was great – to a way of business that lead to bankruptcies and bailouts in 2009.

Trump’s vision for Detroit means we should start saving for the next bailout right now.

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Winners and losers in the Canadian car market

Audi? Winner. Ford? Bigger winner. General Motors? Much bigger winner.

2017 Buick Envision. The new Envision and Enclave SUVs led the way with sales of Buick SUVs up a stunning 93 per cent in November.

2017 Buick Envision. The new Envision and Enclave SUVs led the way with sales of Buick SUVs up a stunning 93 per cent in November.

Then we have Infiniti, Porsche, Subaru, Kia, Maserati and Smart? Massive winners across the board. Sales of all these brands in Canada jumped as much as 318.6 per cent in November (Smart) and as “little” as 13.2 per cent (Audi).

Losers? Fiat Chrysler (FCA), Hyundai, Mini and Volkswagen. All posted sales declines in a month where light vehicle sales jumped a whopping 10.4 per cent year-on-year, notes DesRosiers Automotive Consultants.

Overall, Canadians went on a car-buying binge in November, snapping up 160,573 new light vehicles, says DesRosiers. This, even as the Canadian economy continued its year-long shift to part-time work from full-time, according to the latest from Statistics Canada. New part-time jobs out-paced full-time job creation.

“Plenty of jobs in the offing, but not the kind of work we’d like to see,” Avery Shenfeld, chief economist with CIBC, said in a research note.

Jaguar sales were up 272.8 per cent. The new F-Pace Jaguar crossover led the way, accounting for 57 per cent of all Jag sales in November.

Jaguar sales were up 272.8 per cent. The new F-Pace Jaguar crossover led the way, accounting for 57 per cent of all Jag sales in November.

It’s difficult to reconcile strong new-car sales in light of the employment situation in Canada. The average monthly new vehicle loan payment is $570 in Canada, with monthly lease payments about $530, says J.D. Power and Associates. That even as 56 per cent of Canadians stretching their payments out to 84 months or longer.

Not surprisingly, the oil patch is a mess. Unemployment there is up to 9.0 per cent, a level of joblessness not seen since 1994. Naturally, vehicle sales in Alberta were down 9.2 per cent through the end of October, notes DesRosiers.

But in Ontario, sales were up 11.7 per cent, with a 5.0 per cent rise in British Columbia and a 2.7 per cent gain in Quebec. When buyers in three of the four largest provinces are cleaning out dealer showrooms, the national sales numbers look great.

And so…

“Last year, total vehicle sales stopped just short of 1.9 million vehicles sold,” reports DesRosiers, predicting a likely new annual sales record in Canada “around 1.95 million new vehicles.”

That means plenty of winners.

General Motors’ results were the most shocking; sales were up 30.8 per cent. GM? Really?

The 7-passenger QX60 accounted for one-third of all Infiniti sales.

The 7-passenger QX60 accounted for one-third of all Infiniti sales.

GM Canada is still No. 3 by sales in Canada (13.7 per cent market share), and a long way behind No. 1 Ford (15.6 per cent market share) and FCA (14.2 share). But GM’s growth is broad-based across a number of model lines, while Ford is basically the F-Series company and FCA is struggling with a generally tired lineup.

Chevrolet? Winner, with sales up 25 per cent. The new Malibu sedan is helping a lot in an otherwise dying midsize car segment, while the Colorado midsize pickup remains strong and the Silverado full-size pickup keeps percolating along.

The real shocker of a winner, though, is Buick. Yes, Buick. The new Envision and Enclave SUVs led the way with sales of Buick SUVs up a stunning 93 per cent in November. GMC, a strictly truck division, saws sales jump 41 per cent.

Ford also rode truck sales to a strong November, up 18.2 per cent. The F-Series was up 37 per cent, which is good and bad news.

The F-Series accounts for about one of every two Ford vehicles sold in Canada. Basically, Ford is the F-Series company in Canada and for now that’s worked well enough to earn outgoing Ford Canada CEO Dianne Craig a promotion to a U.S. job starting in January.

The F-Series is hugely profitable, but this sort of over-reliance on one very expensive and very large model suggests two things: a willingness to take short-term gains at the expense of long-term strength. Compact and subcompact SUVs and crossovers are on fire in Canada, yet the Ford Escape compact SUV was up just 11 per cent last month – despite a refit.

Ford won’t have anything to compete in the red-hot subcompact SUV segment (up 23.2 per cent, according to DesRosiers) until 2018 when the made-in-India EcoSport arrives. Incoming Ford of Canada President and CEO Mark Buzzell is taking over a one-model brand in Canada, one lacking competitive products in key Canadian segments.

As for other winners, Jaguar sales were up 272.8 per cent. The new F-Pace Jaguar crossover led the way, accounting for 57 per cent of all Jag sales in November. A clear winner.

Purists may hate the idea of a Jaguar truck, but it’s selling – just like the Porsche Cayman and Macan SUVs. BTW, Porsche sales last month were up 20.2 per cent.

Same story at Infiniti. The 7-passenger QX60 accounted for one-third of all Infiniti sales. A big winner, as was the monstrous QX80 SUV which accounted for another 8.0 per cent of Infiniti sales. If you want to be a winning brand in Canada, offer a range of trucks, luxurious ones included.

Losers? Mini was down 24.9 per cent. Something appears to be very wrong with Mini’s strategy in Canada – both the lineup and the marketing. FCA sales were down 1.7 per cent, no doubt reflecting a new policy regarding how sales are reported.

Hyundai was down 5.0 per cent. Ugh. The Santa Fe and Santa Fe sport are aged SUVs in a competitive SUV market and Hyundai has nothing to offer in the subcompact SUV range.

And then there’s Volkswagen, down 0.5 per cent. The fallout from the Dieselgate scandal continues. VW Canada has been largely silent on the issue, even as its U.S. counterpart has reached a deal with prosecutors. Apparently car shoppers are noticing.

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Gas guzzler binge to end; electrification is coming — and fast

Don’t believe the numbers. The age of the gas guzzler is coming to an end.

First the bad news, then the electrification story that might surprise you.

This Volt has a lighter LG Chem battery (by 9.8 kg) with better chemistry and a lower centre of gravity.

This Volt has a lighter LG Chem battery (by 9.8 kg) with better chemistry and a lower centre of gravity. The cost of lithium ion batteries dropped 35 per cent last year.

Yes, Canadians are loading up on fuel-swilling light trucks at a ferocious rate. Truck sales are up 14.6 per cent this year in Canada, says DesRosiers Automotive Consultants – and car sales are down 7.7 per cent. Fuel is cheap, right? So we’re binging on gas guzzlers.

At the expense of small cars, in fact. Subcompact sales are down 14.4 per cent, compacts down 5.1 per cent. Thirsty big pickups? Up 11.6 per cent for 2016.

And if you are cheerleader for plug-ins cars and a climate change worry-wort, here’s a really depressing number: 20,000. In the entire history of plug-in vehicle sales in this country, Canadians have bought a total of 20,000 of them, according to GreenCarReports.com. That’s not 20,000 a year; that’s 20,000 in total.

True, the pace of plug-in sales is picking up, with GreenCarReports.com predicting we’ll hit 30,000 total plug-in sales by July 2017. But in a market where Canadians buy 2.0 million new light vehicles annually, sales of 5,000 plug-ins per year amount to less than a blip.

We're binging on gas-guzzlers. Sales of the F-Series pickup are up nearly 26 per cent this year, notes DesRosiers Automotive Consultants. The F-series is the most popular vehicle in Canada.

We’re binging on gas-guzzlers. Sales of the F-Series pickup are up nearly 26 per cent this year, notes DesRosiers Automotive Consultants. The F-series is the most popular vehicle in Canada.

In all of April, the month for which total vehicle sales are available, Canadians bought 883 plug-ins. The top four sellers: Chevrolet Volt (260); Tesla Model S (110); Nissan Leaf (152); Volvo XC90 PHEV (69). Smart sold exactly one fortwo EV, Porsche sold two Panamera SE hybrids.

So why should any of us believe that we’re on the cusp of a plug-in sales explosion? Why should any of us believe that EVs (electric vehicles) and hydrogen fuel cell vehicles are a “when” not an “if?” And that “when” is no more than a decade away?

Here’s why:

  • A flood of new plug-in models is heading to dealer showrooms.
  • The cost of batteries will drop dramatically and soon.
  • Government regulators are insisting on a shift to plug-ins.
  • The boom in connectivity and autonomous vehicles is driving technology towards electrification.
  • Bubbling under the surface – especially among younger buyers — is an incipient public desire to clean up the fleet of personal vehicles.

These and other developments will drive down prices. Within just a few years, you can expect to buy an EV for about $20,000 — before taxpayer subsidies. Let’s start with batteries. Business Insider notes that the price of lithium-ion batteries fell 35 per cent last year. That matters because batteries account for about one-third of the cost of an EV.

Ford executive chairman Bill Ford: Ford is investing $4.5 billion (US) to add 13 new EV models by 2020. Forty per cent of Ford’s lineup will be electrified by 2020.

Ford executive chairman Bill Ford: Ford is investing $4.5 billion (US) to add 13 new EV models by 2020. Forty per cent of Ford’s lineup will be electrified by 2020.

The investment firm Goldman Sachs calls lithium “the new gasoline,” adding in a December 2015 note, “thanks to technology breakthroughs, favorable policy and supportive public opinion, electric vehicles (EVs) appear poised for a sustained period of superior growth with our autos team estimating 22% EV penetration (BEV, PHEV, and HEV combined) in 2025 from under 3% today.”

And while lithium-ion batteries are for now in great favor, other battery technologies such as vanadium flow are also coming online. The point is, improved technologies and competitive pressures are causing battery costs to plunge dramatically, which means EV costs will plummet, too.

Then there is the volume part of the story. At present, some 18 plug-in models are sold in Canada, but at least 25 new ones will be introduced in the next 24 months. Every global car company and a number of interesting new start-ups (Faraday Futures) have a flood of plug-ins in the product pipeline.

Mainstream models include the coming Chevrolet Bolt due later this year and a new-generation Nissan Leaf coming sometime in the first half of next year. Both General Motors and Nissan with its Renault partner have made well-documented commitments to plug-ins.

Volvo's revival plan has at its core the electrification of the entire lineup.

Volvo’s revival plan has at its core the electrification of the entire lineup.

But there is much more to this story. Ford Motor has said it is investing $4.5 billion (US) to add 13 new EV models by 2020. Forty per cent of Ford’s lineup will be electrified by 2020.

Daimler, reports www.just-auto.com, plans to spend about $10 billion on “green” technology in the next two years alone. Among the new plug-in hybrids being rolled out by Mercedes-Benz: a GLC coupe and the E350e, both planned for certain markets this year. An S500e update is coming in 2017.

“No other manufacturer offers a comparable range of electrified vehicles and solutions in the field of electric mobility,” says Daimler R&D chief Thomas Weber.

Mercedes-Benz R&D chief Thomas Weber gets the license for an E-Class that will be tested as an autonomous vehicle in Nevada.

Mercedes-Benz R&D chief Thomas Weber gets the license for an E-Class that will be tested as an autonomous vehicle in Nevada.

Daimler plans to introduce additional electric vehicles by 2020, spanning the entire range of Mercedes cars, all of which will have a range of 500 kilometers, reports Bloomberg, adding that Merc’s EV owners will be able to recharge their cars for a 100-kilometre journey in roughly the same time it takes to fill up a gasoline car. Look for details this fall at the Paris motor show.

And on and on. Hyundai and Kia, for example, have outlined a comprehensive electrification plan. Honda and Mazda are now moving quickly on the plug-in front, too. As are luxury brands such as Jaguar Land Rover.

But it’s fair to argue that the biggest electrification push will come from the Volkswagen Group. A humbled VW has announced a massive EV push.

VW is reinventing itself with a new EV commitment in part as a response to the “diesel-gate” scandal, but also because government regulators around the world are demanding massive reductions in emissions by 2025.

Audi Q7 e-tron 3.0 TDI quattro

Audi Q7 e-tron 3.0 TDI quattro. In response to “diesel-gate,” Audi is making a commitment to electrification — including a $2 billion (US) fund that will in large part be spent building an EV charging infrastructure along the lines of Tesla’s supercharger network. 

“It’s simple — the CO2 legislation in the various regions will mean every OEM is compelled to offer e-mobility,” said Thomas Lieber, head of complete vehicle development for VW’s electrified cars, told Automotive News.

By 2020, the VW Group expects to add 20 new electric and plug-in hybrid cars, including two Tesla fighters — Porsche’s Mission E electric car and the Audi e-tron quattro, the brand’s first mass production EV, notes the industry publication.

What makes VW’s commitment far more interesting, though, is the company’s recent $15 billion (US) settlement in the U.S. to address fines and lawsuits and provide for other compensation after being caught rigging diesel emissions tests. Tucked into the agreement is a commitment to spend $2 billion (US) to create a network of EV re-charging stations and hydrogen re-fueling stations in the U.S.

VW, then, will build a charging network to rival Tesla’s vaunted supercharger network. Some $800 million (US) will be spent in California alone, while another $1.2 billion (US) will go to extend the network right across the U.S.

We can only hope that the Canadian settlement expected to be announced next month will contain similar plans to boost the EV charging network in our country – where some 81 per cent of electricity comes from “clean” sources.

For the 2016 model year, LEAF adds a number of significant enhancements – beginning with a new 30 kWh battery for LEAF SV and LEAF SL models that delivers an EPA-estimated driving range of 107 miles* on a fully charged battery. The range of a LEAF S model is 84 miles, giving buyers a choice in affordability and range.

For the 2016 model year, LEAF adds a number of significant enhancements – beginning with a new 30 kWh battery for LEAF SV and LEAF SL models that delivers a more range. An all-new Leaf is due early next year. The Leaf is the world’s best-selling EV.

A reasonable and user-friendly charging network has been seen as a major barrier to consumers adopting EVs – that along with costs. Costs are going down, as we’ve seen. Charging networks are coming in a major way. And the car companies are stepping up with fleets of new plug-in models that promise to be cost competitive with gasoline and diesel models today.

Yes, we’re binging on gas-guzzlers today. But the end of the gas guzzler is coming within the decade. Electrification is the future and that future is only a few years away.

 

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