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Will the Chevy Bolt recall change EV adoption?

Last week GM’s CFO reassured Wall Street that the company will recover the over $1 billion cost of the Chevy Bolt EV recall, with the battery maker, LG Chem, paying GM back for the expense. While as an automaker, recovering direct costs from suppliers for warranty expenses is a routine matter, this is a high profile, high visibility situation for GM. The company has made tremendous progress moving toward an all-EV product line-up, branded their battery system the “Ultium” (which is pretty cool branding actually),  and even changed the corporate logo to be more hi-tech looking. Will this recall cause any slow-down in EV adoption for GM? I say short-term yes, long-term no, for three reasons.

First, the transition to electric vehicles is happening globally much more rapidly than most previously expected, and this will not slow down for some recall events here and there. EVvolumes.com has reported that in the first half of 2021, global EV sales were up 168% over last year. Of course, the global pandemic had a dampening effect in the first half of 2020, but this is still much more growth than the mainstream auto market. It seems like we are finally “crossing the chasm” as technology adopter guru Geoffrey Moore famously put it in his seminal book of the same name. There is no looking back now.

Second, automakers have had many brushes with bad PR due to perceived safety issues and always gotten beyond them. Ralph Nader made his name by attacking a GM vehicle, the Corvair, in the 1960’s, and GM overcame this issue. Audi in the 1980’s suffered sales declines due to perceptions of “sudden acceleration” in some of its models, and now Audi is a very strong brand in the US market. Toyota even had some of the same issues with perceptions of sudden acceleration a few years ago, and this does not seem to be an issue for consumers who are still buying Toyota’s. Overall, these kinds of issues do affect the short-term sales of a model, and the brand as a whole, but longer-term they are soon forgotten. The global chip shortage will probably have more effect on GM’s EV sales near term.

Finally, consumers are changing and their expectations will need to be met by progressive companies, and offering EV’s will be a requirement. Tesla has had some bad press a few times along the way but overall they have built a very positive and favorable image for themselves among consumers. Customers like Tesla’s large touch screens, over-the-air-software updates, and “autopilot” automated driving technology. They are looking for similar features from all other EV choices, and the winners will be those that provide the best value which can be thought of as the Total Experience divided by the Total Cost. Savvy consumers will continue to drive the automakers to supply EV’s loaded with hi-tech features and that need little maintenance.

In the end, yes, this is a stumble GM could have lived without, and it is great that they will recoup some costs from their supplier. But consumers now have a taste for the future of “mobility” and EV’s are a critical part of this. More EV’s for sale by more OEM’s will be required, and GM will continue to drive much of the progress. Let’s help them change the planet!

News Source:  https://www.thestar.com/business/thestreet/2021/09/10/general-motors-stock-jumps-as-cfo-sees-battery-recall-cost-recovery-stable-chip-supplies.html?es_id=7968cdc9b4

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Photo by Mathias P.R. Reding from Pexels

Meeting the new National Target for Electric Vehicle sales in the US Market. 

Last week President Biden announced that the new environmental goal for the US should be 50% electric vehicles for sale by 2030. This was announced as a non-mandatory national target, and the signing ceremony was attended by leaders from GM, Ford, and Stellantis. Tesla was notably absent. 

Many since have wondered how can this be a realistic target, given that we are only at about 3% EV sales worldwide? And currently, the average age of a vehicle on US roads is over 12 years. So how do we replace so many cars with new EV’s so quickly? Here I offer three ways to make this acceleration happen. 

First, by pushing through an even bigger infrastructure plan around charging stations and enabling technologies for EV’s on American roads, the Biden administration can help lower the barrier many potential new EV adopters see with this new way of powering their automobile. If they do not feel they will be stranded without power, they will feel much more secure about living with an EV. Most consumers understand they can charge at home, and perhaps work, and that their range under normal circumstances is plenty. But they worry about when they have to go out of their way, and cannot find a ubiquitous charge point, unlike today where they are pretty confident they can re-fuel their internal combustion vehicle almost everywhere. And while Biden has a goal of 500,000 electric chargers across America, there is not nearly enough federal funding for this in the bill. “There’s $7.5 billion for electric buses—I wanted $15” billion, Biden said at the press conference. 

Second, the Federal Tax Credit for EV purchases is currently up to $7500 on a growing list of eligible vehicles, (see current list here (https://fueleconomy.gov/feg/taxevb.shtml) including Battery Electric Vehicles (BEV’s) and Plug-in-Hybrid Vehicles (PHEV’s). But consumers are changing the way they buy cars, and ownership models are changing as well. The Administration should recognize this, and help enable more accessible EV’s for many potential buyers. Fleet’s are an obvious way to increase the penetration of EV’s within the current units-in-operation (UIO) of the US market, and fleet tax incentives could be improved to encourage more EV adoption by fleet buyers. It was not that many years ago that the government encouraged companies to buy large SUVsSUV’s at the end of the calendar year, as they could write-off much of the cost to their businesses. Let’s help companies and fleets more rapidly adopt EV’s as their preferred vehicle of choice, by making going green more cost-effective upfront. Late-model EV’s that are then turned over by fleets will be available as used EV’s for the market, widening retail customer adoption. 

Finally, automakers and marketers need to do a better job of showcasing the dramatic performance capabilities of EV’s. Most consumers still believe EV’s are low-power, poor for hauling, and have very little “fun” factor to them. The current crop of electric vehicles on the market shows that this is not the case at all. More vehicles have been introduced with more power, and large vehicles like the Ford F-150 Lighting, and the GM Hummer are going electric, showing that space and hauling ability does not have to be compromised then buying electric. Remember, it took decades for consumers to get over the 1980’s diesel-powered cars that were noisy and smelly, and then realize that modern diesel’s are fantastic performance transportation. While everyone gets that EV’s are zero emissions and quiet, until they drive one, most people don’t understand the near-instantaneous power delivery many EV’s have as well. 

A national target of 50% of sales by 2030 is high, but business and consumers are ready if there is a strong push by the government to move to more EV adoption. If the US market growth in EV’s simply matched China’s current rate, we could easily get there. Make it easy to charge them anywhere, cost-effective to purchase and own, and then let the marketing types showcase the value and performance benefits, and EV’s will begin to fill the roads. The time is finally here. 

News Source:  https://www.cnbc.com/2021/08/05/biden-pushes-for-evs-to-make-up-40percent-or-more-of-us-auto-sales-by-2030.html