EVs Need Government Subsidies to Thrive, Says Kia

The sales growth potential of electric vehicles is in the hands of government regulators, not carmakers, because price will trump any eco-conscience that consumers may express.

That’s the opinion of Kia Motors Europe’s chief operating officer Emilio Herrera. Speaking exclusively to TU-Automotive at the Paris Motor Show 2018, Herrera said the price point will also affect the uptake of hydrogen cell technology.

I have been fortunate enough to visit Kia’s fuel-cell R&D facility in South Korea some years ago and drove a couple of the carmaker’s early prototypes. It is a nation that can quite easily go to fuel cell technology because most of the cars already run LPG which uses similar dispensing equipment to liquid hydrogen.

Yet, Herrera told me, the extra cost of producing fuel cell vehicles is the biggest hurdle to date. He said: “It will take longer for fuel cell than it has taken with other electric vehicles, hybrids or plug-in hybrids first of all because the cost of producing fuel cell vehicles at this point in time is so high. Nevertheless, we have in the plan to launch a fuel cell vehicle in 2020 as part of our electrification strategy but this will take longer to become accepted.”

Herrera was speaking after the unveiling of Kia’s first all-electric mass market car, the e-Niro compact SUV. This claims a range of more than 300 miles between charges in the long-range version boasting a high-capacity 64 kWh lithium-ion polymer battery as well as a 39.2 kWh power pack. Plugged into a 100 kW fast charger, it should take just 54 minutes to recharge to 80% capacity.

Yet, price also affects battery electric vehicles (BEVs) especially at a time when demand remains flat in most European countries despite the cacophony of media noise about the so-called benefits of the technology in terms of climate change. Herrera explained: “Currently, the behavior of the consumer is driven by the decisions the different governments are taking. You can see that in Norway, here in France, the Netherlands and Sweden, wherever electric vehicles are getting into a different pace, it is because the governments have taken some steps.

“We were very curious about this and we did a survey in Norway, where 36% of the cars are electric, and we asked them ‘why did you buy an electric car?’ What came out was: ‘because it was cheaper than buying an ICE vehicle’. It is as simple as that.”

Norway saw 52% of all new car sales in 2017 were EVs which is hardly surprising considering the cost to owners. For example, thanks to government hand-outs, a Volkswagen e-Golf EV sells for $32,300 in Norway, just a little over its pre-tax base import price of $32,088, according to the Norwegian Electric Vehicle Association. Yet, the gasoline-powered equivalent Golf, which costs just $22,215 to import, ends up selling for $36,778 after taxes are applied.

Of course, none of this, according to Herrera, has anything to do with climate concerns. He said: “I don’t think the consumers have a particularly eco-friendly view on this. There are a few who will want to contribute to the health of the environment but the majority is looking at ‘what is best for my wallet?’ If an electric vehicle makes more financial sense than an ICE vehicle then, as in Norway, people will all get an electric vehicle.”

Herrera said there are other advantages to governments who choose to support BEV sales with subsidies. He said: “What we will see is that pace of adoption will be different according to the measures the governments are taking to subsidize and support electric vehicles. As soon as a government starts its support, more EVs will be sold and, also, the energy suppliers will react to make sure there’s a charging infrastructure whereas now the energy suppliers are in the wait-and-see stage in many countries. Yet, as soon as they the potential for selling energy to car drivers, they will do it.”

Herrera said commercial entities and local authorities are likely to be the main drivers in bringing more EVs to our streets. He explained: “We also other see influences where corporations what to have a ‘green’ feel to them because they want to be seen as eco-friendly and also the pressure of public administrations. If you’re a big city, like Paris, with the Mayor saying she wants better air in the city, then suddenly we see 200 police cars now eco-friendly!

“So, the early adopters are public administrations and companies who want the green image. The consumer is simply driven by the decision of the government whether to subsidize or not electric vehicles.”

— Paul Myles is a seasoned automotive journalist based in London. Follow him on Twitter @Paulmyles_

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