Yes: U.S. automakers are swept up in a global electric-vehicle rush
“General Motors believes in an all-electric future,” GM product boss Mark Reuss announced recently.
“Although that future won’t happen overnight, GM is committed to driving increased acceptance of electric vehicles through no-compromise solutions that meet our customers’ needs.”
GM already offers one extended-range electric vehicle — the Chevrolet Bolt EV — but it will add two others within 18 months, and at least 20 will be in the company’s lineup by 2023, Reuss said.
Thus did GM become the latest — but certainly not the only — car company to reveal a commitment to what is being called the “electrification” of the auto industry.
Some, like Sweden’s Volvo, have said all their models will soon be either all-electric or hybrid. Germany’s Mercedes-Benz will have electrified models of all its vehicles by 2022. Volkswagen AG will invest $20 billion to develop electrified products.
In a nutshell, almost every company has some form of plug-in vehicle on its way to U.S. dealerships. And some have many. While many of the vehicles are versions of gas-powered vehicles already in the marketplace, automakers are increasingly seeing the value of producing from-the ground-up dedicated electric vehicles.
Importantly, Reuss, in a nod to stockholders, made it clear the electrification at GM must be profitable. An all-electric future, he said, only makes sense if the company can make money.
GM also got a stock boost from its very public declaration that, looking ahead, many of its electric vehicles will also be autonomous vehicles, thus the company benefited from the “double whammy” of technology leadership perception.
What has brought about this movement to electric vehicles? As with most major changes within the auto industry, it has been a convergence of factors.
Government regulations — not just in the U.S. but in many countries around the world — are putting the squeeze on internal combustion engines.
Several countries, including Norway and India, plan to ban internal combustion engines entirely. France, Great Britain, and the Netherlands are considering similar moves.
Many believe that China — largest auto market in the world — is crucial to EV growth. With its serious pollution and traffic congestion problems, China officials are expected to see that EVs are part of their potential solution.
Another key factor has been falling costs of batteries and related technology which has made electric vehicles more competitive.
A recent study by the Boston Consulting Group showed that since 2010, the average cost of lithium-ion batteries has fallen from $670 to about $150. Further, the study says the cost will drop to $70 within five years.
Obviously, any rise in oil prices will shift purchase decisions even further from internal combustion engines to electric vehicles.
Today, even with more companies in the process of bringing electric cars to market, the future is challenging.
Less than 1 percent of total cars on U.S. roads are electric, and “range anxiety” — the fear of running out of battery power — is a feeling most electric owners have experienced as they attempt to drive their vehicles a little farther than just to the store and back.
While most EV owners charge their cars at home, far more public charging stations will be needed to support a substantial increase in electrification.
A true infrastructure of charging stations along key highways, in public parking garages, and at shopping malls will be needed to convince motorists to buy an electric car.
Still, the people who forecast auto markets point to recent increases in EV sales and technology improvements as signs the future looks bright for EVs.
Energy Innovation, the policy research firm, believes EV sales could reach 65 percent of the total market by 2050. And, with strong technology cost declines and higher oil prices, might go as high as 75 percent.
The auto business, of course, has always been difficult to predict. But with GM and other automakers firmly in the EV game, it would appear increasingly more motorists will be plugging in.
A graduate of Michigan State University, William Noack is a business consultant who has advised some of the nation's leading industrial companies. Readers may write him at Noack & Associates, LLC, 3168 Braverton Street, 4th Floor, Edgewater, MD 21037.
No: Car buyers lose when government tells them what to buy
For a century car makers built the cars and trucks their customers wanted. That’s changing. Increasingly they’re building cars and trucks the government wants their customers to have — and that means electric vehicles (EVs).
CNN reports that China, France, Great Britain, India, Norway and Germany are considering banning the future production and sale of gasoline and diesel-powered engines.
Norway wants all its cars to be zero emissions by 2025. India wants all car and truck sales to be electric vehicles by 2030. France hopes to achieve that goal by 2040, and Great Britain by 2050.
Those are ambitious goals, considering only 750,000 electric vehicles were sold worldwide in 2016.
Eight other countries — Japan, Korea, Austria, Denmark, the Netherlands, Portugal, Ireland and Spain — are only setting EV sales goals. In addition, 10 states want an EV sales target by 2025.
President Barack Obama also tried to push more electric vehicle sales. How’s that working out?
Automakers sold 1.93 million vehicles in the U.S. during October — one-third of them were cars and two-thirds trucks and SUVs.
Of that number, Chevrolet sold 2,710 of its all-electric Bolt. Nissan sold a whopping 213 of its all-electric Leaf. And Tesla sold an estimated 1,120 of its Model S, according to the website Inside EVs.
Normally, a manufacturer would eliminate such a poor-selling product. What gives?
Government mandates and taxpayer dollars, that's what.
While Washington hasn’t banned gas and diesel-powered cars and trucks — yet — it is forcing manufacturers to make EVs and subsidizing consumers who buy them.
The corporate average fuel economy standard, or CAFE, is a 1975 law that requires each automaker’s lineup of cars, light trucks and SUVs to meet a government-designated fuel economy goal.
The Obama administration raised the standard to 54.5 miles per gallon by 2025.
The problem automakers face is that consumers want SUVs and trucks — especially when gasoline prices are low — which fall short of the CAFE standards.
So they make money-losing electric cars to lower their overall average mileage, which allows them to sell less fuel-efficient but moneymaking SUVs and trucks that consumers want.
In addition, taxpayers subsidize the purchase of electric vehicles and hybrids — up to $7,500 per vehicle. For example, the Bolt’s web page sets the car’s starting price at $37,495, adding that it is “$29,995 after federal tax credit.” The Bolt featured on the web page is $42,760.
That’s a lot of money for a middle class family making the median household income of $59,000.
Then there’s Tesla, a beautiful EV that many people would love to own, but the Model S begins at about $70,000. Most middle class taxpayers can’t pay that — but their taxes will pay a portion of the $7,500 credit that subsidizes wealthy people who can afford them.
Defenders fear if the tax credit were phased out, EV sales would plummet. When Hong Kong ended its $12,500 tax credit for Teslas, sales tanked. Apparently, Hong Kong residents only wanted it if the government helped pay for it.
There is nothing wrong with automakers churning out EVs if that’s what their customers want. And the day may come when improved technology, longer driving ranges and lower costs create a real demand for electric vehicles. But for now the large majority of Americans want trucks and SUVs.
The car or truck of your dreams may not be the car or truck of the government’s dreams. Remember, these are the same folks who designed Obamacare insurance the way they wanted it, required everyone to have it, and assured us it would be the best health insurance ever.
Don’t let Washington do to our cars and trucks what they did to our health insurance!
Merrill Matthews is a resident scholar with the Institute for Policy Innovation in the greater metropolitan Dallas area. He earned a doctorate in Humanities from the University of Texas. Readers may write him at IPI, 1320 Greenway Drive, Suite 820, Irving, Texas.