2018 Subaru Crosstrek, 2017 Geneva auto show
It's now clear that every automaker, no matter how large or small, will have to develop and sell battery-electric vehicles by 2020 to 2025.
Companies like GM and Volkswagen, which each make 10 million cars a year, can afford the breathtaking costs of developing expertise and engineering cars with entirely different powertrains.
For smaller companies, it's tougher.
DON'T MISS: All-electric Subaru crossover coming in 2021: Japanese report (Aug 2016)
Now Subaru is moving toward its first plug-in vehicles, with a plug-in hybrid planned for 2019 and a battery-electric model after that.
In an interview published Sunday by Bloomberg, the company's CEO Yasuyuki Yoshinaga said that it plans to make all-electric versions of existing models rather than develop new vehicle lines for the new powertrains.
By global standards, Subaru is a relatively tiny automaker, at about 1 million vehicles a year—more than half of them sold in the U.S.
2018 Subaru Outback
That means its R&D budgets must be very carefully meted out to ensure that Subaru can meet increasingly tough regulations around the world while still positioning future products where they need to be to lure new and repeat buyers.
The adaptation of existing models to battery power is essentially a practical matter for Subaru, Yoshinaga explained.
“Providing the choice of an electric vehicle," he said, "means the customer can still desire the same Subaru.”
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The CEO offered the example of a Subaru buyer in Beijing who might want the company's very popular Crosstrek (sold outside North America as the Subaru XV).
If that customer is effectively required by Chinese regulations to buy an electric car, Yoshinaga said, "if there's no electric version, then he can't buy it."
The tactic also allows Subaru to escape the high cost of establishing new models, which incur substantial promotion and marketing costs to establish in any new country
2017 Subaru Crosstrek
To pay for the research and development required to launch a fully electric car, Subaru is downplaying its efforts in autonomy, or self-driving cars, and connected vehicles.
It has budgeted more than $1.2 billion to spend on R&D by next March, which is more than double the comparable figure from just two years ago.
The key choices, the CEO said, will be suppliers for the battery and the electric motor—a decision he said will have to be made within the year.
CHECK OUT: 2018 Subaru Crosstrek preview
In part, the company can make the switch, Yoshinaga said, because the brand's signature feature has evolved from its flat "boxer" engines to a broader image of safety.
The New Global Platform that will underpin all future volume vehicles from the company—starting with the 2017 Impreza compact and 2018 Crosstrek crossover—has been designed to permit electric drive and installation of battery packs.
Reports last summer indicated that Subaru would introduce an all-electric crossover utility vehicle in the summer of 2021.
Subaru EyeSight safety system
It seems likely that it will be a version of the XV Crosstrek, because compact (or C-segment) vehicles have the highest global volume compared to other sizes.
Michael McHale, director of corporate communications for Subaru of America, told Green Car Reports that the company hasn't yet confirmed its plans for plug-in vehicles.
"We are still gauging the overall demand for plug-ins," he said, "and watching the current demand carefully."
But, he cautioned, the company also knows that " the reality of customer acceptance of any new system is always lower than the results from polls"—in the same way that a 2014 poll found that 30 percent of respondents planned to buy a hybrid vehicle.
Hybrid vehicle sales, of course, have remained at roughly 3 percent of the U.S. market for a decade.