Sorry, this is an opinion piece. I can’t help myself. I’ve already seen one too many truck and sport utility vehicle (SUV) ads.
Seeing the spectacular rise of Tesla in 2018 has been tremendous. From a hopeful to a real player. They are starting to reach profit stage and redefining the industry. It is Tesla’s production that propelled U.S. Plug-in Electric Vehicle (PEV) sales to an 81% growth rate in 2018. Let us hope their growth continues into 2019.
Personally, I don’t see much PEV competition for Tesla this year and maybe some next year. The German car companies Volkswagen, Audi, Porsche, and Mercedes have to reboot their designs yet again to be competitive and profitable. Toyota and Honda started late and are still years out. Hyundai and Kia are showing promise with their SUV and crossovers, but I hear of low volumes in 2019. The Chinese are going gangbusters at home but not stepping out of China yet. So, Tesla has the field. There’s plenty of demand for Teslas, but they may be running into sales limits at their current price point. Tesla’s solution is to continue ramping production, drive down costs and price and sell more overseas. As a result, I don’t expect 2019 to be a big U.S. PEV growth year, maybe 30-50% growth, though Tesla may grow 80-100%. Where are the other players? How many PEV ads have you seen on TV so far? How many PEVs do you see filling the lots of car dealers? Hardly any.
I am saving my biggest disappointment for General Motors (GM) and Ford. Both have announced to the world that they no longer will produce sedans and will focus on gas guzzling trucks and SUVs to make money for the transition to electric vehicles (EVs). That means we may have to watch five years of non-stop truck and SUV ads. That might work for a year or so, then the makeup starts to melt. Unfortunately, they have little choice now that they foreswear the car market years before they had viable EV designs ready. It will take 3-5 years to get those designs to market in volume.
So, one asks, if Tesla made a profit by producing in volume, why doesn’t GM start producing 200 thousand Bolts and Volts per year and clone the drivetrain to other vehicles to get profitable? The answer is complex, but basically, I don’t think they can. They shut down the Volt future when they announced the end of plug-in hybrids and the Cruse (car frame for the Volt). The drivetrain port to Cadillac didn’t sell. The Bolt is a good effort at pure EV design but still not low enough cost to make in volume for the existing price point. Also, their battery chemistry is still loaded with cobalt which is expensive. It will take years to get the cobalt out with street-worthy chemistry. With EVs remaining a money loser, GM will keep the volume low. Even worse, GM’s federal tax credit is running out. And for risk, they announced Cadillac as their new lead brand for electric vehicles, then promptly admitted the EV transition may be Cadillac’s last chance to get it right (Saturn redux anyone?). Ford’s story is similar to GM’s. They started a few months earlier but have a longer way to go. Don’t even bring up Chrysler. Maybe Apple will rescue them.
To be sure, there is some good news here. GM and Ford have committed to serious EV transitions and focusing sales and production on trucks and SUVs will be keep them profitable for a while. GM leading with the Cadillac brand might be smart with upmarket potential for early profit on performance EVs. But can Cadillac get it right? When will they ship the first EV? A recent trade article predicted three years. Ford said they will focus early on the Lincoln brand (yawn). GM and Ford also announced they will develop PEV trucks and SUVs. Hooray! I see promise there but still over three years out.
So, again, sorry, we’re in for five years of mind numbing truck ads! Enjoy.
Randy Bryan is one of the co-founders of Drive Electric NH. Bryan has been an advocate for electric cars for eight-plus years. His company, ConVerdant Vehicles, has converted vehicles to plug-in hybrids, including his own Prius in 2008, and developed and sold inverters that turn a Prius into an emergency generator.