- October 17, 2020
- Posted by: Bastion team
- Category: Markets
2021 Toyota RAV4 XSE AWD.
Kristen Lee/Business Insider
- Nearly every major automaker has some kind of electrification plan in the works, following the EV lead set by Tesla.
- But pure EVs still have limited range and nationwide charging infrastructure isn’t where it needs to be in the US just yet.
- Plug-in hybrids with good EV-only range are the solution.
- Visit Business Insider’s homepage for more stories.
Much of the talk surrounding the so-called “future” of the automotive space has to do with battery-electric cars. EVs are the hot item buyers and automakers are jumping on now, with the latter spending billions and creating all-new product lines that run on electricity alone.
That push includes both taking major risks with top-selling vehicles and reviving storied nameplates with an electric twist. Ford is hard at work on an all-electric F-150 pickup, America’s favorite four-wheeled conveyance since Ronald Reagan was president. General Motors killed off the Hummer after the financial crisis, but the brand is back as an electric truck under GMC.
Based on marketing alone, it would seem to be game over for the internal-combustion engine. But there’s a significant flaw with that argument: While EVs get the buzz, 98% of all vehicles sold in 2019 ran on some form of a petroleum product.
The EV revolution is already well underway
There’s no denying the need for cleaner cars. The Guardian reported in 2018 that personal cars were the biggest source of carbon-dioxide emissions in the US — a figure aided, no doubt, by our propensity to buying big trucks and SUVs instead of smaller, more fuel-efficient economy cars.
Thus, the push for EVs. With Tesla leading the charge, both in EV sales and in building out the vital charging infrastructure, we can now count Volkswagen, Chevrolet, Hyundai, Kia, Jaguar, Porsche, Polestar, Audi, and Nissan among the automakers with all-electric offerings.
State legislatures are getting on board, too, even if the current federal administration isn’t. Most recently, California Gov. Gavin Newsom’s executive order will ban the sale of new gasoline-powered passenger cars and trucks starting in 2035 in an aggressive push to reduce emissions.
It’s an ambitious idea, one that buys into the need for an EV revolution. But the real EV revolution — one that’s attainable and realistic for most US buyers, anyway — is already well underway in the form of highly capable plug-in hybrid cars.
We’ll be the first to admit that hybrid cars suffer from a bit of an image problem. They don’t have the futuristic, space-age design that so many EVs have. They don’t beat supercars in whisper-silent drag races.
For a long time, when people thought of a hybrid car, they thought of a Toyota Prius — an objectively fine vehicle, but one that was perceived to be driven by tree-huggers and hippies, despite having sold more than 6 million examples since its introduction in the late 1990s.
But hybrids get the job done. You don’t need to make any major life changes to own one, and you don’t need to build out a major, nation-wide fast-charging network for them, either — a costly undertaking that Tesla has committed to, but that other automakers have tried to achieve through partnerships with charging providers to lower expenses and spread around the risk.
Toyota has always been the hybrid leader
Toyota hybrids have a lock on the situation. The co-author of this story, Matt DeBord, owns a 2017 RAV4 hybrid and routinely averages 35 mpg. The majority of that figure comes from city driving, where fuel economy is always lower. He also has a 2011 Prius and even at close a decade old, the car continues to serve up better than 40 mpg.
But neither of those vehicles can travel far, or drive even remotely fast, on battery power alone. Toyota is aware that many customers want better, and that’s where hybrids with superior electric performance enter the picture. And Toyota leads the pack here, as well.
This was most obvious after the 10 or so days co-author Kristen Lee spent with the new Toyota RAV4 Prime, the plug-in hybrid version of the popular RAV4. Because plug-in hybrids generally have bigger batteries, they have longer EV-only ranges than non-plug-ins.
Toyota quotes the RAV4 Prime’s EV-only range to be 42 miles. In our own testing, we achieved 35 miles, but that was only because we took it on the highway.
An all-electric range of 42 miles is impressive no matter which way you look at it, especially in an SUV like the RAV4. In the US, the length of the average commute is 16 miles — at least, according to this ABC News story from the mid 2000s — which means you could theoretically do 1.5 commutes to and from work without using a drop of fuel.
You’ll emit far less noise and pollution while you’re sitting in traffic, then you can charge the car in your garage overnight if you have one. Repeat it all the next day and your trips to the gas station will be rare.
An AAA study from last year found that about 40 million US buyers will consider a battery-electric car, but The Drive reported that the biggest thing keeping more buyers from buying an electric car is range anxiety.
“That is, 58 percent of drivers are afraid that they will run out of power before being able to charge their vehicle,” the outlet elaborated, “while another 49 percent fear the low availability of charging stations.”
A capable plug-in hybrid with great EV-only range solves this problem. Drivers can rely on the battery for local commutes, and if they wish to go somewhere further, they aren’t constricted by the lack of chargers along the way.
Not enough hybrids to meet demand?
In the ideal scenario, Toyota makes enough RAV4 Primes for anyone who wants to buy one and we gradually shift everyone to electrified driving that way. Prior to the latest wave of EVs, both real and planned, people who study transportation for a living or who have researched the impact of auto emissions on climate change thought that widespread hybridization would be the way to go. That could lower greenhouse-gas pollution from tailpipes by 30%.
However, Car and Driver reported in July that because of “unforeseen battery supply constraints,” availability of the plug-in SUV this year won’t be as robust as it should be. Toyota is now aiming for 5,000 RAV4 Primes, which Car and Driver said looks like “limited availability.”
“The result is limited supplies, sellouts, and potentially, prices above the MSRP of $39,220,” Car and Driver wrote.
“As of right now, we have no additional production confirmed,” a Toyota spokesperson said when Business Insider asked if there were more cars planned for next year.
In some respects, the composition of the US market is ideal for big carmakers that don’t want to miss out on a large-scale shift to EVs, but that are also determined to preserve the gas-guzzling, feature-loaded cash cows that buyers are able to afford thanks to rock-bottom interest rates and long loan terms.
The legacy players can make ambitious gestures toward EVs, and they can even roll out impressive vehicles — namely, Porsche, with the stunning Taycan— but they can continue to produce big-ticket pickups and SUVs that average less than 20 mpg.
The trick is to avoid falling behind on research and development. But even if an automaker does, it can always partner up with a competitor and hedge some risk. Honda recently did this with General Motors, and Ford and Volkswagen have been exploring a sort of soft alliance on all things futuristic, from EVs to autonomous vehicles.
Government could lend a helping hand
With limited resources all around, and with the car business being a notably capital-intensive enterprise, it’s easy to see hybrids getting kicked to the curb. Why go to the trouble of engineering and marketing a new generation of plug-ins when you can prepare to sell buyers an EV instead?
From a giant automaker’s point of view, compliance with various regulations on fleet emissions around the globe would be covered with a portfolio balanced out by EVs and gas guzzlers, allowing big pickups and SUVs keep the lights on while the EV transition continues.
There are two losers in that wager: the consumer and the planet. The consumer is deprived of the perfect, versatile transportation solution in a plug-in hybrid, while the changing climate remains in a waiting game for EVs to achieve escape velocity.
The latter, by the way, is behind schedule: A decade ago, EVs were supposed to have taken over 10% to 15% of the market by now. But even with Tesla’s success and traditional automakers such as GM and VW launching dozens of EVs in the coming years, EV growth in mature regions like the US and Europe has been sluggish.
An obvious spur to higher hybrid sales comes with better government incentives. The largest US federal incentive is a $7,500 tax credit — certainly helpful, but canted toward buyers who both purchase a 100% electric vehicle. Plus, the credit phases out when an automaker sells more than 200,000 qualifying vehicles, and that’s hardly a long-term inducement.
The credit thus isn’t designed to move the needle for the mass market, where knocking $5,000 to $10,000 off the sticker price of a plug-in hybrid would convince buyers to seriously consider the option.
Broadening a hybrid incentive through tax policy
When the Green New Deal debuted in Congress last year, we suggested the idea of a $10,000 hybrid voucher to reduce taxable income. It would be like making a contribution to a retirement plan, or, if you run your own business, deducting the cost of your vehicle as an expense.
The incentive could also be extended to used hybrids, but with discounting applied based on a vehicle’s age. The entire scheme would also be voluntary, so automakers and consumers wouldn’t be coerced into doing anything.
This could clearly get expensive, but with a looming climate crisis, giving consumers an opportunity to buy a hybrid or plug-in now has to look cheaper than the alternatives. Capturing future carbon in the atmosphere and sequestering it with technologies that haven’t yet been developed at scale has to be far costlier than simply not generating the carbon emissions at all.
Luckily, there are more hybrids and plug-in hybrids today than ever before to choose from, giving buyers far more variety than when the Prius was the only real game in town. Audi has a few. The Lincoln Aviator is an absolute heavyweight in plug-in guise. And the beloved Jeep Wrangler will soon have a plug-in version as well.
So, while everyone else might, don’t be so quick to assume that purely battery electric cars are the solution. Do consider the humble hybrid.
Bastion Balance Seoul, Korea.