Weekly Brief: GM’s EV Pledge is a Big Easy

Commentary by Andrew Tolve

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1st February 2021

General Motors will eliminate all gas- and diesel-powered light duty vehicles by 2035, the automaker announced last week.

The pledge applies to all passenger cars, SUVs and light LCVs and is part of an ambitious goal to make the entire company carbon neutral by 2040 [It doesn’t not, however, cover GM’s heavy duty vehicles and comes with a commitment to improve future ICE technology – Ed]. “As one of the world’s largest automakers, we hope to set an example of responsible leadership in a world that is faced with climate change,” said GM’s CEO Mary Barra. GM has already pledged to spend $27Bn on electrifying its vehicles by 2025 and has promised to debut a fleet of 30 EVs by the mid twenties. In the build up to CES 2021, the carmaker unveiled a revamped logo that looks like an electric plug.

Still, last week’s announcement came as a surprise. Investing in EVs and introducing a growing number of electrified models into a fledgling market is one thing. Hitching the entire future of your business to them is another. GM sold 2.6 million vehicles in the US in 2020. Only 21,000 of those vehicles were EVs. What would encourage the carmaker to make such a risky bet on a largely unproven business model? For one thing, bold declarations don’t cost anything and garner lots of attention.

It’s no coincidence that GM made its announcement the same week that President Biden signed a “Made in America” executive order and announced that the US federal government will replace its entire fleet with electric vehicles that are made in America. The current US fleet is 645,000 vehicles, 225,000 of which are US postal service vehicles in dire need of replacement. Guess who makes a potential EV alternative? GM.

 Photo by Steve Fecht for General Motors

In rejoining the Paris Climate Accord, Biden promised “a clean energy revolution that achieves a carbon pollution-free power sector by 2035”. Biden wants clean power, clean transportation and an EV charging infrastructure to support it. No matter how much of this vision comes to fruition, there are obvious benefits for GM to become the most outspoken and audaciously committed electric carmaker in the country.

It’s worth remembering that back in 2020, GM sat on the opposite side of the political spectrum and was eager to fight for more relaxed fuel efficiency targets in alignment with former president Trump. It went so far as to sue the state of California for its climate friendly restrictions, only to drop the case the moment Joe Biden was elected president.

Making the transition from a purveyor of gas guzzlers to a ‘woke’, climate change ambassador won’t be easy for the carmaker. Changing over supply chains and converting factories from combustion to electric will take years – and billions of dollars. Plus, GM will have stiff competition along the way. Tesla is currently the best known EV manufacturer in the world and the most valuable carmaker in America. Last week it unveiled a refreshed version of its popular Model S sedan. The car will feature a 17-inch horizontal central screen on the dashboard, a second infotainment screen in the backseat and a funny-looking yoke-style steering wheel. As for a PRNDL gear shift, there is none. Instead, Elon Musk says that the new Model S shifts by “guessing” your direction, thanks to the wonders of Autopilot.

The National Highway Transportation Safety Administration has informed Musk that it would like to investigate both the yoke-style steering wheel and the PRNDL, neither of which appear to be street legal. Anyone who has witnessed Tesla’s meteoric rise over the past five years would be a fool to doubt the company. That being said, it makes a fraction of the vehicles as GM and most of those vehicles are too luxurious and forward-looking to satisfy the majority of the market. GM thus has an opportunity to brand itself as the American electric carmaker for the masses. Whether it meets its 2035 goal is beside the point.