As GM and Ford ramp up EVS for US, Europeans retreat
As General Motors and Ford Motor Co. bet the farm on electric vehicles, European manufacturers are pulling vehicles from the U.S. market for lack of demand.
BMW confirmed this week that it will not bring its electric ix3 crossover to these shores, following a decision by Mercedes in December to delay the introduction of its EQC EV here. They will be sold in international markets like Europe and China where governments are forcing electrification with penalties and consumer incentives.
The BMW and Mercedes made their decisions despite the fact that the ix3 and EQC are aimed at the heart of the American market: the compact SUV segment. The similar-size gas-powered BMW X3 and Mercedes GLC are the German automakers’ best-selling vehicles here.
The moves follow poor sales for Jaguar’s ipace SUV, which debuted to media raves last year as a Tesla-killer but which has failed to catch fire with consumers. Tesla dominates the EV market with 80% of sales and has been the only automaker to sell in volume.
The German automakers’ retreat comes as GM and Ford go all-in on electrification, hoping to duplicate Tesla’s sales success.
Ford is investing $11 billion to produce 20 new EVS by 2023, headlined by the Tesla Model Y-fighting Mustang Mache compact ute. GM last week said it will spend $20 billion on 22 vehicles in the same time frame. Ford predicts a third of its vehicles will be electric by 2030 while GM says 60% of its research and development is committed to EVS as it electrifies all its brands.
GM CEO Mary Barra told the news media at an “EV Day” last week that the product overhaul is necessary to prevent environmental catastrophe: “We are building to an EV future because we believe that climate change is real.”
GM is targeting Tesla a decade after introducing the Chevy Volt plugin hybrid in response to the Toyota Prius hybrid which industry analysts expected to lead a consumer stampede to hybrids. Volt production ended last year after disappointing sales, while Prius sales are off 60% from last decade as predictions of an oil shock never came to fruition.
This month’s drop in crude prices may create more headwinds for battery-powered vehicles.
The average price of gas nationally was $2.34 this week — down from $4-a-gallon in 2011 — with prices as low as $1.79 in Metro Detroit due to an international oil price war cause by decreased demand due to the coronavirus scare.
Despite the U.S. debut of 45 pure electric and plug-in hybrids to considerable hype last year, battery-powered sales plunged 6.8% to only 325,000 in sales according to Edmunds.
BMW and Mercedes, however, are bullish on sales of their EV SUVS overseas, especially in Europe and China where government incentives are heavily skewed toward electrics. In Europe auto fleets must meet carbon dioxide targets of 95 grams/per liter — equivalent to 57 mpg — or face massive fines.
A U.S. National Highway Transportation Safety Administration analysis of a similar U.S. target of 54.5 mpg by 2025 would have no impact on global temperatures by the year 2100.
To encourage consumers to buy EVS, countries are dangling a host of incentives — and penalties. France, for example is imposing a tax of up to $20,000 on non-electric cars. A new VW Touareg diesel SUV will see an increased tax this year of nearly $8,000. Norway and Denmark tax non-evs by over 100% of sticker price.
“The EV market is purely a government creation,” said Seeking Alpha auto analyst and investor Anton Wahlman. “Take away government mandates, subsidies and other incentives, and EVS are a steady 0.1% of the market whether we’re talking about Laos, Louisiana or Luxembourg.”
Despite nixing the ix3 and poor sales for its current i3 and i8 EV lineup currently a BMW spokesperson says more EVS are in the pipeline for the US in 2021: “The inext goes into production in the middle of 2021, followed by the BMW i4, which begins production towards the end of 2021.”
Both vehicles are based on BMW’S all-new “skateboard” architecture.
GM EVS will also be based on a new skateboard platform which the company believes is game-changing when combined with the continued drop of battery prices. GM says that, in addition to its green benefits, its
BEV3 architecture is more efficient to manufacture, provides more crash protection than gas cars, and will offer a more refined driving experience.
“No one knows the (customer) adoption curve,” GM President Mark Reuss said last week. “So we have to be tooled and ready to go.”
Other automakers express similar sentiments that EV adoption is inevitable both because of government regulation and a consumer shift. At a Volkswagen test program in Vancouver this month, executives said the millennial generation covets EVS because they are environmentally aware — and because they expect the same technology in cars as in their battery-powered smartphones.
VW plans on introducing the first of its all-electric ID line — the Tesla-like ID.4 crossover — to the U.S. later this year. Product planners say, however, EV acceptance in the U.S. may come slowly.
So to meet consumer demand, VW is introducing another variant of its hotselling gas-powered three-row Atlas SUV — the two-row Atlas Cross Sport.