Auto market increasingly pivots towards bigger, greener cars

New generation of vehicles will not lose anything in terms of scale and range

General Motors Co announced that it will be closing factories and laying off thousands of workers as it shifts its focus to light trucks, crossovers and electric vehicles.

Its current investment strategy reflects the reality of US consumer preferences; its future strategy is a bet that electric cars are here to stay.

As my colleague Justin Fox noted last week, “The US vehicle market has come to be dominated by sport utility vehicles and pick-ups to an extent never before seen.”

In an auto market that has posted flat sales for the past four years, light trucks (which include sport utility vehicles) make up more than two-thirds of total purchases.

Pick-ups are certainly popular in the US — the Ford F150 has been the best-selling vehicle for decades — but when we dig deeper into light truck sales, we can see that trucks aren’t what they used to be. American cars are now light trucks; American light trucks are now SUVs.

Five years ago, medium- and full-size pick-ups were the largest group of vehicles sold within the US light truck category. Since the start of 2016, though, a single class of SUVs — compact crossovers, such as the Ford Escape, Honda CR-V, Subaru Forester and Toyota RAV4 — has been bigger on its own than the entire pick-up market.

So how will an increasingly diverse field of electric vehicles intersect with Americans’ growing preference for big pickups and small SUVs? I was in Shanghai last week, where electric vehicles with their distinctive green licence plates are easy to spot. Most of them are Chinesemade; many are small SUVs.

That China offers generous incentives to electric vehicle buyers certainly helps propel these models to market, but they also match nicely with the (not just American) preference for taller SUVs and crossovers.

Jaguar already offers an electric SUV; Audi has announced one. Electric drivetrains won’t find much trouble fitting into the buying preferences or driving habits of global SUV seekers.

What about pick-ups? EV start-up Rivian Automotive Inc announced production dates for its “electric adventure vehicles”. Its electric pick-up boasts specifications you’d be hard-pressed to find in any internal combustion engine vehicle: a 0-to-60 time of three seconds; a “wading depth” of three feet; an 11,000-pound (4,990kg) towing capacity.

Uniquely electric features

It also has uniquely electric features, such as four motors that provide independent power to each wheel. Rivian isn’t exactly going after the entrylevel Ford F150 demographic; its pick-up starts at $69,000 (Dh253,437). Founder R.J. Scaringe said in an interview that he’s aiming for the “Patagonialike brand position”, illustrated by its 644km range.

If Rivian, and its eventual electric pick-up peers, are successful in the US, they’ll be growing in a flat auto market.

That makes Scaringe’s goal intriguing, because it would mean eating into demand, even incrementally, from another vehicle class.

The question, then, is this: Would a $69,000 electric pickup eat into the top end of the truck market or the heart of the luxury SUV market?