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GM's EV Gambit Likely to Stir More Action

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General Motors’ (GM) groundbreaking decision to sell only zero-emission passenger vehicles by 2035 leaves much to prove, but indicates that electrification is now unstoppable and may not hinge on government action alone. The largest US automaker on Jan. 28 said it will aim to eliminate emissions from new light-duty vehicle sales by 2035 -- positioning GM to morph into an electric vehicle (EV) giant while foreshadowing big risks for oil demand in the world's largest consuming nation (NE Feb.4'21). Of course, GM’s goals are still aspirational at this stage and the company’s business model is currently a long way from its 2035 target. Still, the move positions GM more strongly in the EV race -- and is likely to stir similar actions by rivals. “This certainly puts GM in more of a leading role along with Volkswagen and Tesla,” says Kevin Riddell, a senior manager at consultancy LMC Automotive outside Detroit. “The more companies you seeing do this, you will see more competition.” GM is vowing to roll out 30 all-electric models globally by mid-decade and says 40% of its US models will be electric by end-2025. The automaker maintains that its Ultium battery technology will offer a 450 mile (725 kilometer) driving range on a full charge, delivering twice the energy density at less than half the cost of today's typical chemistries. GM officials have told Energy Intelligence that they see no bottom in sight to the EV cost curve and are exploring cheaper materials, more efficient battery assembly methods and ways to economically recycle used batteries (NE Jul.9'20). GM isn’t alone: Ford, Volkswagen and Honda, among others, have continued investing in EVs over the past year despite the economic downturn. Ford, for example, is pursuing carbon neutrality and promising to invest more than $22 billion in EVs through 2025, including an electric F-150 pickup truck (NE May24'18). So, why now? Experts tell Energy Intelligence that multiple factors have built up like a pressure cooker -- GM’s targets were unveiled on the heels of Biden’s inauguration and decision to rejoin the Paris Agreement, and may have been timed in advance of landmark UN climate talks in Glasgow later this year. “I think global car companies have bowed to intense government pressure,” says Dan Lippe, founder of Petral Consulting in Houston. Established auto companies also face mounting investor pressures to decarbonize, along with intensifying competition from markets like China and corporate rivals like Tesla. Also, the technology itself is now ripe for a larger wave of investments: “Battery electrics are starting to get out of that toddler phase,” says LMC’s Riddell. “It’s just a matter of time until this transition happens anyway. It’s taken a while to grab hold, but EV costs have come down so much and are expected to come down further.” Compared to start-ups like Tesla, GM’s EV vision has much to prove because its business model is “so steeped in the combustion technology,” Riddell says. Some criticize GM and its rivals for painting themselves as EV leaders while extending the time they can sell gasoline and diesel vehicles. At present, GM only offers one EV, the Chevy Bolt, and has recently spent millions advertising its gasoline-powered Chevy Silverado pickup truck. "If I have aspirations of running a marathon, I can spend time browsing online for running shoes, but at some point I need to sign up for the marathon and put in the training. That’s what we need to see -- more volumes from the automakers and something beyond aspirations," argues David Reichmuth, a senior vehicles engineer at the Union of Concerned Scientists. “It’s great to hear aspirations from automakers, but we want them to follow through. We want to see standards that guarantee this transition, and that’s a role California and the federal government can play." On the flipside, an EV transition led by automakers would help counter political risks in the US, where EV policy could be thwarted by shifting political winds, lawsuits, and consumer skepticism. Yet GM's announcement “shows you that this is not just governments pushing mandates; it’s the companies themselves,” says Robbie Diamond, founder of the Electrification Coalition, a US advocacy group (NE Aug.20'20). US EV sales represented just over 2% of new light-duty vehicle sales in December, compared with recent market shares of 5.4% in China and 9.9% in Europe. GM recognizes the difficulty of bringing US consumers on board, and even ran a humorous Superbowl ad Feb. 7 lamenting how the country has fallen far behind Norway in the EV race. But US car buyers will ultimately want to see affordability and freedom of mobility: “What happens to personal mobility if we don't have enough fast recharge stations?” Petral's Lippe says. Personal mobility "allows common folk to change jobs" and "get out of the congested big cities," he notes. Lauren Craft, Washington

Topics:
Oil Demand, Security Risk , Upstream Technology, Policy and Regulation, Electric Vehicles
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