Per Capita Davis: What a week this was
What a week that was, and I don’t mean about what was happening in Washington, though I guess that also factors in. I’m talking about the avalanche of news reports coming out about car companies and their plans for the future.
Friday, Jan. 29, the New York Times headline read, “G.M. Decision To Go Electric Rocks Industry” with the lead paragraph reading: “The days of the internal combustion engine are numbered. General Motors said Thursday that it would phase out petroleum-powered cars and trucks and sell only vehicles that have zero tailpipe emissions by 2035, a seismic shift by one of the world’s largest automakers that makes billions of dollars today from gas-guzzling pickup trucks and sport utility vehicles.”
Further on, the carmaker’s action is “evidence that even big businesses have decided that it’s time for the world to begin to transition away from fossil fuels that have powered the global economy for more than a century.”
This is big news, and not just through the lens of tackling the climate crisis. It affects a lot of people very directly. General Motors is a major part of an industry that employs more than a million workers, not including those who currently fix transmissions (electric cars don’t have one) and need oil changes (mechanics).
Also, how will the nearly 200,000 “service stations” in the U.S. adapt when “fill ‘er up” means plugging in rather than pumping gas, turning them into essentially convenience stores selling fast foods to travelers?
The transition that needs to happen will have significant and unavoidable echoes throughout the economy.
Backing up a few days on the calendar, the GM announcement followed President Biden (oh, that sounds good) indicating he would reinstate fuel-economy standards implemented by former President Obama but axed by the most recent occupant of the White House; require that the federal government purchase electric vehicles when replacing its quarter-million passenger vehicles and, where possible, its more than 400,000 trucks, install a half-million charging stations; and propose incentives and rebates for customers to purchase electric vehicles.
He is certainly getting the ball rolling.
Sidebar: Bloomberg Businessweek reports that “despite all the buzz about how electric vehicles will reshape transportation, the real transformation in the auto business has been consumers’ race away from traditional cars and to so-called light trucks (which include not only pickups, but also SUV’s and minivans). Few people these days drive what we think of as a “car.” In fact, 76 percent of all vehicles sold in 2020 were these so-called trucks.
Moving on to Jan. 30, a Page 1 N.Y. Times story indicates that General Motors is putting its money where its mouth is, committing $27 billion just between now and 2025 to come up with 30 electric vehicle models (including a EUV; Electric Utility Vehicle) by 2025, 10 years before their zero-fossil-fuel goal of 2035 and only four years from now. They plan to sell a million of these a year in the U.S. and another million a year in China.
There’s some skepticism about this plan. How in the world do they plan to pay for and implement such a massive change of direction? New models must be designed. Factories need to be built and tooled for an entirely different manufacturing process. Workers need to be trained. Supply sources need to be identified and contracts made for a different set of parts and materials, including massive numbers of batteries. Advertising budgets need to be established to encourage consumers to buy all these vehicles.
And it’s not like they are already selling a whole lot of electric vehicles: only about 21,000 Chevy Bolts in 2020. They do plan to introduce any day now a EUV (see above) version of the Bolt, and, somewhat incredibly, an electric Hummer pickup and an electric Cadillac — by 2022.
Jumping ahead a bit on the calendar to Feb. 11, another Times article reports on what might seem to be a simple, straightforward and obvious answer to the above. GM apparently reported a profit in 2020 of $6.4 billion, down just a bit from the prior year, but not bad for a year dominated by a pandemic and economic dislocation.
Mostly, GM forecasts continuing strong sales of its current line-up of gasoline-powered vehicles, in particular pickup trucks and SUVs, resulting in profits that will enable, as noted in the title of the article: “Gas Guzzlers To Bankroll G.M.’s Shift To All Electric.”
But there are other factors involved. They know that a primary consideration in whether to buy an electric vehicle is how far the car can go on a charge, how long it takes to recharge and how convenient the charging stations are. They see all these factors as improving.
They also know cost is a consideration and forecast that steadily declining costs, most notably for batteries, but also for other key inputs such as lithium and cobalt, will continue their steep decline.
This sounds to me like significant progress, the wet blanket being the more than 250 million vehicles now on the roads in the U.S. mostly burning gas or diesel. They will be with us for a while.
— John Mott-Smith is a resident of Davis. This column appears the first and third Wednesday of each month in The Davis Enterprise.
Crossposted from the Davis Enterprise
Published online on February 17, 2021 | Printed in the February 17, 2021 edition on page B3
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