As GM and Ford ramp up EVs for the 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’ 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.