The EVs are Coming

Illustration by Barry BlittCar and Driver

From the November 2020 issue of Car and Driver.

The Nissan Leaf was a shoo-in for success. The Chevrolet Bolt, a can’t miss. The Audi e-tron, an EV that would show Tesla what the big boys can do. Early on, those electric models were lauded as game changers, but the game didn’t change.

Electric vehicles have had a rough go of it in the U.S. The Leaf, one of the most popular non-Tesla EVs on sale today, had its best year in 2014, moving a middling 30,200 cars. (For reference, Nissan sold more than 400,000 Rogues here in both 2017 and 2018.) Even with Tesla doing a booming business, selling an estimated 223,200 vehicles last year, overall EV sales in the U.S. actually fell from 2018 levels. And apart from Tesla, no other automaker has delivered a true EV hit, despite a decade of attempts.

Showroom failures haven’t dimmed enthusiasm, though. If anything, automakers appear emboldened, promising an unprecedented number of entrants into this field in the next decade. Market research firm AutoPacific counts a remarkable 90 to 100 new electric nameplates coming to U.S. showrooms by 2030.

And the dollar amounts that automakers are laying down to make it happen are serious. GM announced it’s investing $20 billion to deliver 20 new EVs by 2023, including a re-imagined electric GMC Hummer. Ford is hanging its iconic Mustang badge on the electric Mach-E as part of an $11 billion commitment to EV manufacturing that was announced in 2018. And last year, the Volkswagen Group pledged a tremendous $91 billion to the EV cause.

So what’s fueling this wave of investment in an electric future in the face of troubling sales? For starters, carmakers have to meet ever stricter emissions regulations. The U.K. has gone so far as to set 2035 as the year it will ban the sale of new vehicles with internal-combustion engines, including hybrids.

Then there’s Wall Street. Besotted with EV startups and their soaring valuations—Tesla alone has a market cap greater than the Detroit Three combined—it has ratcheted up pressure on the old guard to stay on trend.

And even if the U.S. isn’t all that hot on EVs right now, it’s important to remember that many of these vehicles and technologies are being developed for global markets. In China, the auto industry’s largest market, internal-combustion sales fell 8.4 percent last year whereas sales of plug-in vehicles fell by 4.0, which translates to a slight increase in EV market share.

GM CEO Mary Barra promises the company’s planned “all-electric future” will see it moving 1 million EVs a year in the U.S. and China by mid-decade. That’s a lofty goal considering it moves only 112,000 now, but the GM-affiliated Wuling Hongguang Mini EV topped 15,000 sales in August, becoming China’s most popular EV. So things are looking up.

Back in the U.S., though, it’s hard to see this EV reckoning as a smart gamble. AutoPacific projects that the EV market share in this country will triple by 2025, to 4.9 percent and 800,000 sales. That may sound like a lot until you consider that Ford sells about 900,000 F-series trucks in a good year. George Peterson, AutoPacific’s president, cited one reason for this low predicted growth: In the company’s regular new-vehicle satisfaction surveys of 70,000 car owners, no more than 5 percent of respondents said they’d currently consider buying an EV.

Other trouble signs abound, not the least of which are a pandemic‘s ability to ravage vehicle sales, delay launches, threaten fragile startups, and keep gasoline at party-down prices. Shellshocked consumers may find even less reason to take a flier on a pricey EV.

Advances such as GM’s upcoming Ultium battery cells spark chipper reports on impending price parity between EVs and internal-combustion models, but the $37,495 base price of a 2020 Bolt suggests we’re not there yet. That’s about 15 grand more than a comparable gas-burning economy car.

Then there’s the problem of baggage. Brands like Buick and Cadillac—the Magnavox and Westinghouse of the premium-automobile world—can barely sell conventional cars to Americans. Now Cadillac is expected to hustle Lyriq SUVs and electric Escalades? That’s a big ask from the brand that brought you the ELR. The situation is dire enough that Wall Street analysts have even suggested that GM change its corporate name to Ultium or spin off its EV business. GM has done neither, but in September, it did sign on to a $2 billion deal with aspiring automaker Nikola. GM will engineer and build Nikola‘s Badger pickup in 2022 using its Ultium batteries and hydrogen fuel-cell tech. It’s easy to imagine prospective Badger buyers not knowing or caring about the GM-sourced components under the skin as long as there’s no Chevrolet or Cadillac badge on the outside.

Similarly, Ford is hoping to help its stodgy image by investing $500 million in dynamic startup Rivian, earning a stake and access to its skateboard truck platform. It’s a smart move, particularly given our country’s affinity for pickups. That said, Ford is not the only one to think of it. A coming army of electric pickups—including mammoth-battery trucks from Ford, Chevy, GMC, Rivian, Tesla, Bollinger, Nikola, and Lordstown Motors—will be a real test of our EV appetite, despite the irony of our biggest, burliest vehicles suddenly being cast as eco-warriors. R.J. Scaringe, the MIT-educated founder of Rivian, notes that this segment can better absorb electric-tech premiums without scaring off shoppers, as truck buyers are already accustomed to paying $60,000 or more for internal-combustion rigs. And don’t forget market scale. If Ford can convince just one in nine F-150 buyers to opt for an electrified version, that’s 100,000 customers a year.

If Americans reject even electric pickups, though, what then? Many analysts say OEMs will simply retrench because there’s no going back. GM and LG Chem aren’t building a $2.3 billion battery plant in Ohio just to mothball it in a few years. The upside for established automakers is that they have room to fail, whereas a startup like Rivian may have only one shot to get it right. Global giants still have shareholders to appease, but they’re free to develop concept cars, niche cars, halo cars, and even outright bombs without going hat in hand to investors for every new product. Their flexible, scalable architectures and battery modules can help brands dump losers and pivot to new models without breaking the bank. “Once you’ve got the platform, it’s not that expensive to put new top hats on it,” AutoPacific’s Peterson says.

What’s more, gasoline isn’t going away anytime soon. IHS Markit expects that in 2030, 87 percent of new cars will still feature some form of internal-combustion engine. Stephanie Brinley, a senior auto analyst at IHS Markit, said automakers are playing a long game. Consistency in the form of competitive models and coherent strategy can be as important as initial sales. “It’s a struggle in the beginning to get consumers to think about cars differently,” she says. “It’s not so important to sell 100,000 units out of the gate but to build the business.”

That building process will get easier with time and innovation. In 2017, analysts estimated that GM lost about $7000 on every new Bolt sold that year. But by partnering with LG Chem, GM says Ultium battery-cell prices will drop below $100 per kilowatt-hour and allow the company to earn a profit on electric vehicles in the future.

It’s helpful to think of this as the money-pit phase, with automakers pouring investments into an electric foundation. The job appears endless and rife with disaster. But with enough time, money, and faith, they’ll own a beautiful business with both stockholder curb appeal and the strength to withstand future economic storms.