As GM and Ford ramp up EVs for the US, Euro­peans re­treat

The Kansas City Star - - Business - BY HENRY PAYNE Detroit News

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’ best­selling 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 plug-in 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-agal­lon 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.

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