Daily Management Review

Even in the Face of Lowering Gas Costs Automakers Chose to Go Electric


01/12/2016




Even in the Face of Lowering Gas Costs Automakers Chose to Go Electric
With the US federal fuel -economy standards looming in 2017, car companies are hustling to bring out hybrid and electric models to help them meet the new rules. This despite the fact that American consumers were taking advantage of low gas prices to buy trucks and sport utility vehicles in large numbers.
 
This has caused some of the automakers to delay investing in slower-selling electrified vehicles which make up only 2 percent of overall sales.
 
The new fuel-economy standards that the US government plans to bring  in 2017 mandates that corporate average fuel economy of 37 miles per gallon would have to achieved by auto maker by 2017. The ultimate goal of the policy is to attain corporate average fuel economy of 54.5 miles per gallon by 2025.
 
At the annual North American International Auto Show in Detroit this week, automakers are showing off a raft of electric and hybrid models despite declining gas prices.
  
A plug-in hybrid-electric version of its new minivan model, the Pacifica, was introduced by Fiat Chrysler on Monday. This is the first hybrid vehicle in the Italian-American Automaker’s lineup.
  
Other automakers like Ford Motor Company and General Motors have also introduced new electrified models.
 
Relying heavily in recent years on sales of Ram pickups and Jeep sport utility vehicles to drive its growth in the American market, Fiat Chrysler has been an industry back bencher in the push for electrified cars. Profits have surged and market share has expanded at the expense of Fiat Chrysler’s rivals.
  
The company needed more high-mileage models, and the hybrid minivan was a good starting point said Fiat Chrysler’s chief executive, Sergio Marchionne. 
 
“The 2025 numbers are very high numbers. You look around the show at all the hybrids and the electrification as being a solution to the rules in 2025,” Marchionne said.
 
After a 30 mile stretch of drive when the hybrid minivan looses its battery charge,  a gasoline engine kicks in to extend its range. This hybrid model would achieve an equivalent of 80 m.p.g. in city driving, says the company.
 
However Fiat Chrysler vehicles are among the least fuel-efficient companies in the industry with about 22 miles per gallon and experts are of the opinion that one hybrid alone will not improve Fiat Chrysler’s corporate average fuel numbers enough to meet the coming standards.
  
In order to improve fleetwide fuel-economy numbers, other automakers are also adding vehicles to their lineups.
 
General Motors was improving fuel economy across its lineup with smaller, more efficient gasoline engines, aerodynamic designs and reductions in vehicle weight, said Mark Reuss, head of global product development at the company.
 
However experts say that in order to make substantial gains in corporate-wide fuel economy, G.M. still needs new vehicles like the all-electric Chevrolet Bolt.
 
“It is a zero-emission vehicle, so there are a lot of credits for vehicles like the Bolt. Our plan is to improve fuel economy on all fronts, from taking weight out of new models to introducing game-changers like the Bolt,” Mr. Reuss said.
 
The average fuel economy of vehicles sold in the United States had been improving steadily until gas prices plunged to $2 a gallon last year.
 
(Source:www.nytimes.com) 






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