Both Honda Motor Co. (NYSE: HMC) and Toyota Motor Corp. (NYSE: TM) showed off their newest electric vehicle offerings at the Los Angeles Motor Show the day before the much-hyped IPO of the newly-solvent General Motors Corp. (NYSE: GM). Honda showed the electric version of its Fit subcompact, while Toyota rolled out the RAV4 EV small sport utility vehicle. Both vehicles claim a 100-mile range, both are set for delivery in 2012, and both use lithium-ion batteries.
But the new models couldn’t dim the glow of the GM IPO, which has seen more than 83 million shares traded in the first hour as the price rose by more than +6%, to over $35/share, or more than $2/share over the IPO price of $33/share. Ford Motor Co. (NYSE: F) has also lost a bit of luster this morning, as its shares are trading down about -2%, probably just because the shares aren’t GM.
In announcing their new models, Toyota and Honda were cautious about predicting an enormous wave of sales for theirs or any other electric vehicle. A Toyota executive quoted in The Wall Street Journal said, “We see a role for the EV, but it’s far, far below 10%” of total industry sales. That jibes with a recent survey that projected electric vehicles would comprise just over 7% of new vehicle sales in 2020.
But automakers have to build EVs because they don’t want to be left behind or branded as serial polluters. Toyota, for example, plans to expand its sales of hybrid electric vehicles, or HEVs, because they believe that is where the most growth potential lies. In fact, Toyota expects its Prius nameplate to replace the Camry as its leading brand.
The Prius line will include a plug-in, or PHEV, version of the current Prius, an HEV Prius Verso wagon, and an HEV Prius subcompact on the current Yaris platform. Because the Prius HEVs use much smaller batteries than the all-electric EVs, the cars are much cheaper. HEVs, which use their electric drive train only intermittently, more easily overcome consumers’ fear of running out of juice before they can get to their destinations. Of course HEVs still use gasoline, but mileage ratings rise significantly and they never need to be plugged in.
GM’s Chevy Volt EV is making its way to showrooms now, with the expectation that about 10,000 will be sold in the US at around $33,000 each. The Ford Focus EV will be in dealer showrooms next year, along with the Nissan Leaf, and both will be priced at roughly the same price point as the Volt. The basic Prius is about $10,000 less, before government rebates.
Toyota and Honda executives are right to be cautious on the outlook for EVs over the next ten years. They’ve been selling cars long enough to know that price often rules after the honeymoon ends. Especially if the new models are compact family cars and not growling, high-octane limited-edition muscle cars.
