Why Does Honda's Electric Car Have Just 80 Miles of Range?

By John Rosevear Markets Fool.com

The upcoming battery-electric Clarity sedan from Honda (NYSE: HMC) will come with a big surprise, according to a new report: a range of just 80 miles.

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That's the word from trade publication Automotive Newsin a report that was more or less confirmed by Honda officials.

That seems woefully inadequate by 2017 standards. What is Honda thinking?

The upcoming Honda Clarity Electric is expected to look very similar to the 2017 Honda Clarity Fuel Cell sedan released late last year. Image source: Honda Motor Co., Ltd.

Why such a short range?

At an expected starting price of around $35,000, the Clarity Electric will be in direct competition (in terms of price, at least) with General Motors' (NYSE: GM) Chevrolet Bolt EV and Tesla's (NASDAQ: TSLA) upcoming Model 3 sedan. But the Bolt has an EPA-rated range of 238 miles, and the Model 3's range is expected to be in the same ballpark. Why didn't the Clarity's range at least come close to its rivals?

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Honda executives told Automotive News that the Clarity Electric's short range was a byproduct of the company's decision to base it on the platform of the midsize Clarity Fuel Cell, introduced last year. The Clarity Fuel Cell is a midsize sedan, about the size of Honda's Accord. It's considerably bigger than the Bolt.

The size and design of the Clarity platform, which will also be shared with a plug-in hybrid version, didn't leave room (physically or financially) for a larger, longer-range battery pack without a hefty cost increase, they said.

Why Honda committed to a three-Clarity strategy

Honda explained last year that the idea behind the Clarity's three-drivetrain strategy is that it will give Honda flexibility to vary the production mix as the market and infrastructure evolves. It also allows Honda's customers to choose their preferred path to an "ultra-low carbon vehicle that meets their lifestyle needs," in Honda's words.

I think the business decision flow probably looked like this:

  • After years of building tiny numbers of fuel-cell vehicles for test markets, Honda wanted to do a fuel-cell car that could be marketed to a somewhat wider audience.
  • Under pressure from investors (and maybe its dealers), Honda felt it needed to offer a midsize battery-electric car -- if only to show that it could be competitive in that realm.
  • Honda then decided to add a plug-in hybrid version that was likely to sell in much greater numbers than either of the other versions, in order to give the Clarity a better chance of turning a profit.

The problem is, when you design one car around three very different drivetrains, a lot of compromises have to be made. And the Clarity Electric's rivals are much less compromised designs.

The cost of compromising on a battery-electric car

Tesla has shown the world what can be done when a car is designed from the ground up around a battery-electric drivetrain. A vehicle designed from the start around electric motors and a big battery pack can have plenty of range, good handling, a roomy interior, and lots of cargo space.

The Chevy Bolt doesn't look like a Tesla, but like the Teslas, it was designed from the start as a battery-electric vehicle. It doesn't have the range or speed of the big Teslas, but it has something else enabled by its battery-electric packaging: A surprisingly roomy interior enclosed in a small, nimble vehicle perfect for city driving.

It's no coincidence that the Teslas and the Bolt are the current gold standard of battery-electric vehicles. And it's sad that Honda, which has spent years building up its green-car credibility, has settled for a compromised design with the Clarity Electric.

But will it sell?

Some folks say range doesn't matter all that much, and the Clarity Electric will find buyers attracted to its size and Honda's reputation for quality and durability. I'm skeptical: I think the plug-in hybrid version of the Clarity -- or an Accord Hybrid -- is likely to win over most of the green-minded Honda loyalists who might have taken a chance on a Clarity Electric with greater range.

It's likely Honda will share more details about the Clarity Electric at the New York International Auto Show in April. Your humble Fool will be there.

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John Rosevear owns shares of General Motors. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.