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!