Gas Prices Are Falling But Hybrid Production Is Not

Prices at the pump are falling, but that hasn't slowed production plans for hybrid and electric vehicles.

Despite the fact that sales of SUV and crossover utility vehicles are up 11.9 percent this year, while gas-electric hybrid sales are down 15 percent, automakers are gearing up for greater electric, fuel-cell, and hybrid vehicle production.

BMW has just announced it plans to sell a plug-in hybrid version of every major model in its lineup. Daimler is investing 100 million euros to expand battery production for electric vehicles. Toyota will soon begin sales in Japan of the Mirai, a hydrogen fuel-cell electric vehicle.

On top of that, Tesla recently announced plans to construct a $5 billion gigafactory that will build up to 500,000 lithium-ion battery packs each year for electric vehicles manufactured by it and other automakers.

When Ford rolled the first aluminum F-Series off the line in Dearborn, Michigan, CEO Mark Fields was repeatedly asked if it was critical for the automaker to offer a dramatically more fuel-efficient pickup.

CEO after CEO in the auto industry has said they are counting on higher gas prices eventually returning. It may not happen next month or next year, but at some point, they expect the world's growing demand for gasoline to push prices at the pump higher.

Regardless of what happens with gas prices, U.S. automakers are locked into meeting a fleetwide average mileage of 54.5 miles per gallon by 2025. That's a long way from where the industry is right now, at roughly 31 miles per gallon.

Back to NAFA Connection