What if consumers decide that EVs aren’t better than combustion?
Toyota bets that many people will want only partial electrification
Electric vehicles are still too expensive to turn the eye of many mainstream Americans, but the atmosphere around gasoline propulsion has turned suddenly funereal: Activist investors and a judge this week inflicted powerful blows against the biggest players in Big Oil. And one of the last stubborn combustion holdouts — Ford — waved the white flag and said it is going electric.
The blood in the street has Wall Street’s approval: As recently as a week ago, Ford seemed to be still clinging to combustion, but on Wednesday, CEO Jim Farley finally said clearly that the company is breaking up with gasoline, inciting a bacchanalia by investors, who sent up Ford shares by 17%.
The big picture is a cold-sweat fear of the “Osborne Effect” — that consumers, seeing the oncoming headlights of EVs, will be both bedazzled by electric propulsion and fear the obsolescence of their combustion vehicles. Like a giant herd, they will then wholly abandon combustion, and buy out EVs. This dread is written all over Ford’s rushed and unseemly swerve to EVs.
But not everyone is beset by this apprehension. Specifically, Toyota — the world’s top-selling automobile company — isn’t. I spoke this week with Gill Pratt, Toyota’s chief scientist, who suggested that, at least for the coming decade, EVs aren’t going to take off the way that a lot of people believe.
There was a lot that still hasn’t been unpacked in Ford’s announcement Wednesday: that the company isn’t just vaguely expecting 240 GWh of battery demand by 2030, as seemed to be the case last week, but that it plans to build 10 gigafactories to make these batteries itself. And that many of those batteries will be lithium-iron-phosphate, known as LFP, another colossal shift by Big Auto away from expensive and geopolitically stressed cobalt- and nickel-based formulations, known as NMC and NCA.
But one question I raised with Pratt was why must future EV demand be contextualized around the imperatives of climate change? Can’t EV demand go up simply because their price will drop in the next few years to parity with combustion, and a lot of people will want…