Subaru is developing this BEV crossover in partnership with Toyota.

With the launch of a plug-in hybrid version of its Crosstrek SUV for 2019, Subaru finally seemed ready to get serious about electrifying its line-up, but even while preparing to ramp up production of battery-based vehicles, it’s far from certain how well they will sell, warned the automaker’s CEO during a news briefing in Tokyo.

The demand simply isn’t there, at least in the U.S. market that the Japanese automaker depends upon for the majority of its sales, according to Tomomi Nakamura, adding that, “The only EVs that are selling well are from Tesla.”

At the briefing on Monday, Subaru officials outlined their plans to bring hybrids, plug-in hybrids and pure battery-electric vehicles, or BEVs to market – the company expecting they will account for 40% of its global sales by 2030. Like many other automakers, however, Subaru’s push to electrify is being driven more by regulatory mandates than by consumer demand.

(Subaru, er, screws up with obscene name for customized Forester model.)

Subaru’s experience with the Crosstrek Hybrid, which was launched in late 2018 as a 2019 model, hasn’t convinced company officials otherwise. So far, only about 300 of the PHEVs have been sold during an average month.

Part of the problem for Subaru is that it’s largely dependent on trends within the U.S. market which accounts for two-thirds of its global sales.

“We think the U.S. market is really difficult,” when it comes to selling battery-based vehicles, said Nakamura.

Subaru CEO Tomomi Nakamura has to balance consumer demand with regulatory pressures.

Demand largely flattened out in 2019 after several years of moderately aggressive growth, according to industry numbers. One reason was that Tesla, far and away the largest seller of all-electric vehicles in the American market, actually suffered a modest decline last year, in part due to the phasing out of its federal sales incentives. They disappeared entirely on January 1, 2020 and some analysts believe Tesla could face challenges until its new Model Y SUV debuts late this year.

Other manufacturers collectively account for a fraction of Tesla’s volume, even factoring in both BEVs and PHEVs. But a number of recent studies have found interest in battery technology growing at a fairly fast rate, with forecasts from Navigant Research and others suggesting demand could accelerate as more compelling new products come to market. BEV entries launching in 2020 will include not only the Model Y, but the Porsche Taycan, Ford Mustang Mach E, Audi e-tron Sportback, Volkswagen ID.4 and a yet-unnamed SUV from Cadillac.

(Subaru CEO predicts SUVs and CUVs will lead to record sales in 2020)

But Subaru officials remain skeptical, Subaru’s chief technology officer, Tetsuo Onuki, telling reporters on Monday that, “To be honest, we don’t expect the market is going to turn into all electric vehicles in 2030.”

One reason for his caution, added Onuki is that, “They’re going to be quite expensive.”

Demand for the plug-in Subaru Crosstrek Hybrid has averaged only about 300 a month.

There is no question that electrified vehicles cost significantly more than comparable gasoline-powered models right now. But prices have been falling. Volkswagen, for example, is believed to be targeting about $100 per kilowatt-hour for its lithium-ion cells as it begins its own, aggressive electrification program. That would be barely a tenth of what those batteries cost in 2010. And General Motors President Mark Reuss last year said he expects EVs to reach price parity “a lot sooner than people think,” which observers have taken to mean by somewhere near mid-decade.

That could play out well for Subaru. On Monday, it showed a prototype of an all-electric crossover – what would become its first BEV – set to come to market before 2025. The new model is being developed in cooperation with Toyota which owns 20% of the smaller company. Toyota helped pioneer the conventional hybrid with its Prius model. But, like Subaru, the Japanese giant remains openly skeptical about the near-term future for BEVs.

(Subaru reveals limited edition Series.White WRX, WRX STI)

Japanese automakers, in general, remain divided on where the market will go. Nissan, which introduced the first mass-market all-electric vehicle, the Leaf, is among the most bullish. Honda is cautious about forecasts for BEVs but, nonetheless, expects two-thirds of its sales to be made up of electrified models of some form or another by 2030.

One of the reasons for Subaru’s skepticism is quite basic: its relatively modest size. While it has grown substantially in the U.S., it remains relatively tiny on a global scale. Betting on the wrong thing, whether the design of a new product or the technology under its hood, could have a devastating impact, analysts stress.

“As a small carmaker,” said Nakamura, “we need to think about how to enhance Subaru’s uniqueness so consumers differentiate us from others.”

Don't miss out!
Get Email Alerts
Receive the latest Automotive News in your Inbox!
Invalid email address
Send me emails
Give it a try. You can unsubscribe at any time.