Weekly Brief: Automakers Running Scared into EV Stampede

Commentary By Andrew Tolve

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22nd February 2021

It’s a scary time to be a carmaker.

I was reminded of that last week when Jaguar Land Rover hitched its future to electric vehicles. The company said that it plans to become a champion of sustainability as “an electric-first business.” Jaguar will shift away from internal combustion engines into a purely electric brand by 2030.  Meanwhile the automaker will offer six electric vehicles by 2026, with the first electric Land Rover due out in 2024.

Jaguar has been around for nearly a century. It turns 100 years old next year on the fourth of September. It has a strong tradition, millions of devoted drivers and tried-and-true performance and design aesthetic. Out of all the vehicles that it has brought to market through the years, it has only one electric vehicle to speak of. That’s the Jaguar I-Pace, which took home the hardware for the World Car of the Year in 2019 but has never gained traction with consumers. Imagine then what it feels like for JRL’s CEO Thierry Bolloré to launch his “Reimagine” campaign last week by declaring that “The purity of electric is the next natural step for our company!” It is? Says who?

JLR isn’t the only carmaker making bold EV declarations these days. Ford stated last week that it plans to go all electric in Europe by 2030. Two weeks ago I wrote about Toyota going all electric. Before that, I wrote about General Motors and Nissan and Volvo and Bentley. The list goes on. Each of these companies has as little EV success as the next, yet here they are lining up and pledging allegiance to the EV revolution, essentially rolling the dice on something with minimal proof of consumer demand. That’s scary indeed. It’s also largely beyond their control.

In making its announcement last week, JLR admitted that it had to pay nearly $50M in government fines last year for failing to meet EU emissions targets. Volkswagen admitted that it had to pay more than $100M in fines for the same reason in 2020. Those fines will only increase the closer we get to 2030. Carmakers aren’t being audacious, in other words. This isn’t the result of some powerful crisis of conscience. Their hands are being forced and they’re doing what they have to even if it feels counterintuitive, especially during the pandemic.

The auto industry has been ravaged by COVID-19. Carmakers individually and collectively lost billions of dollars last year. Even though car sales picked up in the third and fourth quarters, spurred by a resurgence of the auto industry in China, carmakers are still dealing with underperforming factories, reduced work forces, dealership closures and changing consumer preferences due to the pandemic. In the midst of all of this turmoil, their instinct should be to hunker down and stick with what has worked to date – and that’s not EVs.

Let me be clear: I am of the mindset that we have reached one of the most important hinge moments in human history. Either we figure out how to make our world more sustainable, equitable and just or there is a good chance that our future will be engulfed in disaster, both manmade and natural. More frequent catastrophic storms, wildfires, floods, famine, crop failures, pandemics and warfare that will inevitably stem from a world in crisis.

EV may prove to be an important step toward this more sustainable world but we need to build out the infrastructure rapidly, both in terms of charging and sustainable energy generation. Powering EV chargers with energy produced from power plants that gobble up fossil fuels won’t do much. We need solar and wind, produced and used locally, in our homes, businesses and cars. If we can pull that off, we will have given future generations a more sustainable platform upon which to grow and improve. That doesn’t make it any less scary if you’re a carmaker.