Classic Tale Returns: Lack of Corporate Commitment to EVs

This image, created by Bosch, depicts a landscape that automakers like BMW were promoting heavily over the past decade, but which is nowhere near becoming a reality.

So the merry go round goes round and round, and the electric vehicle story continues.

General Motors is discontinuing the Chevrolet Bolt EV and EUV at the end of 2023. It will be missed, according to Plug In America and according to a lot of other Bolt owners. Like Ford and other makers, GM will be focusing on more expensive premium models, even though the Chevy Bolt was doing well in sales and brand identity.

Have you ever tried to rent an EV? Saahil Desai, a senior associate editor at The Atlantic, explored the question after a bad experience with Hertz. After booking the “Manager’s Special” to get the most economical gasoline-engine rental car, she was given the last available car, an EV. A vacation rental driving from the Brooklyn store to upstate New York became a nightmare. With no guidance or support from Hertz, she and friends had to search for “public chargers in desolate parking lots, the top floors of garages, and hotels with plugs marked for guests only.”

Hertz wants to go up to 25% of its fleet in EVs starting by end of next year. Avis and Enterprise are bringing in EVs as well, but the same questions remain for how trustworthy it will be. How available will these EVs be for those who prefer them? Will car rental staff help customers on the need-to-knows for renting an EV — and driving one for possibly the first time?

BMW had 7,107 EVs sold in the US during Q1 2023, or 2.76% of that EV market, through the i4 sedan, iX SUV, and the i7 sedan. Compare that to Tesla selling 6,545 of the Model X in the US market during that time period, and Volkswagen selling 10,053 of its ID4 electric SUVs. BMW has invested a lot into bringing EVs to the US market and promoting them. BMW’s high-performance brand image isn’t enough. BMW has put a lot into building that image along with creatively marketing its role as a leader in the future of urban mobility/electromobility.

GM, Hertz, and BMW, aren’t the only major corporations in automotive and transportation sloughing off their commitment to hitting government targets and rising up to their corporate sustainability commitments.

Why might all of this be?

  1. EVs are not profitable, but pickups, SUVS, and luxury vehicles are money makers.
    Major global automakers have stayed with the argument that manufacturing and selling trucks, SUVs, and luxury sedans and SUVs, has been a more profitable route to go. That applies mostly to pickup trucks and SUVs, with luxury models being more costly for R&D, production, and marketing. Major competitors like BMW and Mercedes-Benz build and sell their luxury lines at a lower production volume than a company like GM or Ford will do in pickups. But they can be very profitable and dealer networks love to sell and maintain their luxury vehicles; along with dealers selling and maintaining trucks and SUVs for GM, Ford, Toyota, and other makers.

Tesla has a different story to tell, being the only sizable EV-only maker out there. Stock prices and profits may fluctuate, along with the public image of CEO Elon Musk, but the company continues to do well. As for switching over to more affordable models than the previous market leaders, the Model S and Model X, Tesla says that it’s made more sense to produce and market a lot more Tesla Model Ys and Model 3s than the higher-end offerings; and to lower the price points on all of them. Customers continue buying them, and demand is growing for the Model Y and Model 3. There are, of course, lower-priced compacts and midsize EVs on the market than the Model Y and Model 3, but Tesla still dominates the space; and, as for now, that automaker is still going to leave all four models on the market and will be bringing out the Cybertruck this year.

  1. Battery packs are still expensive.
    High battery costs make EVs more costly for automakers. Demand far exceeds available lithium supply from mines that are in good operational order to supply the global market. Federal tax incentives and a few states with rebates help increase EV sales, but the core problem that’s been there from the beginning persists. Automakers around the world are getting ready to balance out the necessary supply chain relationships and manufacturing plants needed to reach aggressive goals by 2035.

Car rental companies and other fleets have to weigh and balance their investment in EVs and the needed charging infrastructure from this angle. How much will consumers pay to rent these vehicles, and what will it take to maintain them? Would it be worth it for the fleet to bring in a fairly high number of them to take advantage of the savings fleet buyers usually experience? They’re still inexperienced working with them, unless their fleet operations staff had worked with EVs elsewhere. They have to gain the valuable experience of acquiring EVs, operating and maintaining them, and seeing how they do on the used vehicle market. It will take a few years to adapt to having EVs in their fleets.

  1. Over promise, under deliver.
    By promising its investors that its next-generation EVs, built on a new architecture known as Ultium, would be profitable, GM is delving into the recurring theme that global automakers have been stuck in for years. Federal mandates and California’s zero-emission vehicle target — not to mention regulatory requirements put in place throughout Europe and Asia — have set a new playing field for global automakers over the past dozen years. GM and major global competitors have made very big commitments to meet the mandates that will spike up in the next decade.

It goes hand-in-hand with commitments to hit targets in connectivity, and eventually, autonomous vehicles. It also ties into their ability to adapt to crowded urban environments and to meet the demands of younger buyers who want mobility options — as illustrated by the previous BMW reference. But will BMW and competitors really get into small electric city cars, e-scooters, and autonomous electric shuttles?

Volkswagen has had to recover from the “Dieselgate” scandal that exploded in September 2015. It has taken VW and competitors several years to ramp up production of EVs and bring them to market – something that Tesla has been able to take advantage of over the years. BMW, Mercedes-Benz, Porsche, Jaguar, Audi, Cadillac, and Volvo, have impressed customers over the years with their distinct performance capabilities in sedans and SUVs — and they’ve paid attention to their commitments to roll out impressive offerings in the EV space.

But they’ve yet to become leaders in the EV market overall, or to even have much of a strong presence there. At the end of the day, automakers will talk about the pressures they’re under to perform. Government mandates, globalization and competition in the industry, and the higher cost of engineering and producing EVs, will usually come up.

  1. Market share is the golden key
    Some analysts are concerned that Tesla has fallen victim to this reality in the auto market — corporate value is heavily tied to marketshare. You have to do anything to be No. 1 in the world — or at least No. 1 in a few countries and market segments. Gaining market share usually means that profits grow thinner, and production must be ramped up to hit those high marks. But what if one of the segments, such as EVs, doesn’t sell enough, or its profit margin forecast wasn’t realistic? Most automakers and transportation companies would rather stay out of really taking on that risk.

And in other news…………

Rivian follows Ford and GM: Rivian drivers will be able to have access to 12,000 Supercharger connectors next year. The electric SUV and truck maker will incorporate Tesla’s North American standard charge port into its vehicles starting in 2025. They’l follow Ford and General Motors, who’ve made similar deals with Tesla.

Gas stations still a problem: Going to the gas station can be dangerous for your health. The owners still haven’t taken care of that storage tank changeover and leakage problem. Gas stations caused a $20 billion toxic mess — and it’s not going away anytime soon, according to the report. Leaks can come from the storage tanks, gas pumps, and in the pipes that connect all of them. From that hazardous chemicals can be leaked out and spread through soil, groundwater, and into lakes and rivers.

The Green Transportation Summit & Expo (GTSE) is set for Aug. 22–24, 2023.
CALSTART is offering a 20% discount rate for those using the code today: CALSTART-20! This year, GTSE will take its focus to a new level–investigating clean vehicle technology and taking advantage of funding opportunities at the local, state, and national levels. Technology providers in the electrification, hydrogen and alternative fuel industries will bring their knowledge to discuss with fleet practitioners how to move forward.   

Plug In America and the Bolt: As mentioned, Plug In America has been advocating for GM to stay with the much-loved Chevy Bolt. The organization is encouraging EV owners to send GM a letter with a format that is set up for users to create a personalized message that tells them their story; and to tell GM that their leadership in offering affordable electric models has been needed and appreciated.

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