Rick Haglund: GM’s road to the future of electric vehicles could be bumpy
General Motors headquarters, Detroit | Susan J. Demas
Brett Smith has long thrown shade on automakers’ predictions about how soon Americans will be driving cars and trucks powered by something other than fossil fuels.
“For 20 years I’ve been a realist,” said Smith, technology director at the Center for Automotive Research in Ann Arbor. “Some say I’m a pessimist. But we’ve been right for saying how hard this is.”
According to predictions by automakers and analysts, consumers should have had a wide choice of new vehicles powered by electricity or hydrogen by now.
General Motors Co., which has been at the forefront of advanced powertrain research, offers just one fully electric vehicle — the Chevy Bolt. No hydrogen-powered vehicles are on the near horizon.
Nevertheless, GM pushed the bar higher last month, surprising the auto industry by saying it plans to sell only “zero-emission” light-duty vehicles by 2035. That’s just 14 years, or little more than two new product cycles away.
The New York Times published front-page stories two days in a row about GM’s move, calling it “a seismic shift by one of the world’s largest automakers” and saying it “blindsided rivals.”
But in declaring that GM would no longer sell gasoline-powered vehicles by 2035, the Times and other media outlets went far beyond what the automaker actually said.
In a Jan. 28 news release, GM said it “aspires” to eliminate tailpipe emissions on new light-duty vehicles by 2035. As veteran auto journalist John Voelcker pointed out, that exempts GM’s popular and highly profitable heavy-duty pickups.
GM also said it plans to be “carbon neutral” in its products and operations by 2040.
“I don’t know if they’re going to get there,” Smith told me. “They were pretty clearly stated as aspirations.”
But Smith thinks GM has a decent shot of reaching its lofty goals. Battery technology is rapidly advancing and costs are falling.
President Joe Biden is pledging to spend billions of dollars to build charging stations and other infrastructure needed to transport the auto industry to a carbonless future.
“You start to see in four to eight years that these cars could become more viable,” he said. “If the government puts incentives in, you might be really close” to the 2035 goal. “You could see a real shift in the market.”
Cue comedian Will Ferrell. GM attempted to boost consumer enthusiasm for electric vehicles with a hilarious Super Bowl ad in which Ferrell says he hates Norway because the Nordic nation is beating the United States in electric vehicle sales.
Ford and Audi responded by jabbing GM with amusing videos showing they already sell electric cars in Norway. GM doesn’t.
But it’s all good for GM. The automaker’s ad and the clapback from rivals show consumers that upcoming electric cars will be regular vehicles, not science experiments or toys for rich people.
That’s important in getting consumers to widely adopt a new technology after more than a century of selling them cars and trucks fueled almost exclusively by gasoline.
“These are normal American cars, being driven in a normal American Super Bowl ad,” wrote Robinson Meyer in the Atlantic.
GM has long wrapped its electric vehicle aspirations in the rhetoric of reducing greenhouse gases to save the planet from cataclysmic climate change. But the automaker has a solid business reason announcing its 2035 green aspirations.
In essence, Wall Street is telling GM to become an electric vehicle company or die.
Tesla, an electric vehicle manufacturer that sells only about a tenth as many cars and trucks as GM sells, has a market capitalization that’s more than 10 times greater than GM’s.
“They’re envious (of Tesla and other startup electric automakers), as they should be,” Smith said. “These companies have incredible access to capital.”
GM’s electric vehicle strategy is starting to please investors. Its stock this week was trading at about $53 a share, an almost 85% increase since mid-August.
But the road to a mostly electric future will be a bumpy one for GM, its workers and suppliers.
While Biden says his clean-energy agenda will create 1 million auto-related jobs, some are skeptical. A United Auto Workers union study found that the jobs of 35,000 hourly workers making engines, transmissions and other components no longer needed in electric vehicles are at risk.
And small suppliers that have long made parts for gasoline-powered vehicles could be left out of an electric vehicle future.
“There are a lot of these small companies in Michigan and the Midwest,” Smith said. “Those folks are at risk.”
Life for highly skilled engineers is changing, as well. Detroit has long been a hotbed of mechanical engineers. But they must add electronic and software engineering skills to their portfolios.
“The transitions are going to be difficult,” Smith said.
For now, GM is doing just fine selling gas-guzzling pickups and SUVs. The automaker this week said it earned a net profit of $6.4 billion in 2020, providing its 44,000 eligible hourly workers with $9,000 profit-sharing checks.
But the business graveyard is littered with automakers and other companies that failed to adapt new technologies and implement new business models as the world changed.
GM, which cheated death twice in the past 30 years, is trying not to become one of them.
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