Weekly Brief: EV’s Hoping for a ‘Model T’ Moment

Commentary By Andrew Tolve

---

11th April 2022

A hundred years ago Ford revolutionized gasoline powered cars by mass producing the first affordable automobile, the Model T.

Now, General Motors and Honda want to do the same for electric vehicles. The carmakers announced a plan last week to co-develop a series of affordable EVs built on a modular architecture using next-generation Ultium battery technology. The modular architecture will allow GM and Honda to use one global platform to produce multiple variants, including a crossover SUV. The target date for deployment is 2027 and the target MSRP is sub $30,000. That price point is almost half the price of the average EV on the market today and could go a long way toward making EVs accessible and obtainable for the masses.

“GM and Honda will share our best technology, design and manufacturing strategies to deliver affordable and desirable EVs on a global scale, including our key markets in North America, South America and China,” said Mary Barra, GM’s CEO. “By working together, we’ll put people all over the world into EVs faster than either company could achieve on its own.”

Don’t be surprised if this is the first of many such collaborations among legacy carmakers as they seek to achieve efficiencies and defray some of the massive cost of transitioning to an electrified future. A century ago gas-powered cars were in much the same position as EVs are today: luxury items that held great potential to revolutionize transportation but were out of reach for most of the lower class and even middle class. Cars were made painstakingly by hand, typically one unit at a time. By introducing assembly line production, Ford was able to streamline the process and create far more vehicles at a much lower price. The Model T went on to sell 15 million units and was the best-selling vehicle of the 20th century until the Volkswagen Beetle knocked it off its altar in 1972, almost 50 years after the Model T went out of production.

Could GM and Honda deliver a similar blockbuster success by interconnecting their technologies, design and sourcing strategies? It certainly could give them an advantage, especially if they can figure out how to make a high performing battery that delivers superior range at a lower price point. Last week Paul Myles reported that Tesla’s battery technology is beginning to slip when compared to the competition and now ranks only seventh when it comes to delivering maximum range on a single charge. Lucid’s Air Dream R AWD takes the top spot. GM and Honda have been working jointly on their Ultium battery technology since 2019. The battery technology is more flexible than Tesla’s and thus lends itself to a modular setup that can be adapted for a number of variants with a smaller footprint at a lower cost.

At the same time, it’s hard to imagine any start-up like Lucid, or any legacy carmaker, or any alliance of legacy carmakers for that matter, capturing the popular imagination and revolutionary spirit the way Tesla already has. Granted, most Teslas land squarely in the luxury segment but Elon Musk has pledged to produce a $30,000 EV eventually. The Model 3 has gotten Tesla closer, at a starting price point of $45,000. The five years between now and when the GM-Honda partnership delivers its first EVs to market is an eternity by Tesla’s standards.