Lead, Follow, or Get Out of the Way

This blog has been updated from its original posting.

The last few months have been an exceptional time for the electric vehicle (EV) movement. Major automakers have been making historic announcements signaling that they have seen the future and it is electric.

France and Britain, in keeping with the Paris Accord, made announcements in July that they would ban gas and diesel-powered cars by 2040 with the aim of combating the air pollution crisis.  Since then, we’ve seen a domino like response from several other countries including India and Norway setting firm dates (2030 and 2025, respectively); while others: Austria, Denmark, Ireland, Japan, the Netherlands, Portugal, Korea, Spain, and eight American states have set targets for electric car sales.

Real shock waves were felt in September when China (the world’s largest car market) announced that their government is developing a long-term plan to phase out vehicles powered by fossil fuels. China’s aggressive plan has forced the hand of the auto manufacturers.

Most major automakers had already begun gearing up for the electrification of the industry, however a recent signal from China hastened their commitment to transition in order to remain competitive.

According to Forbes, the top global automaker in 2017 is the VW Group.  They announced a massive investment in electric vehicles with plans to spend up to $84 billion dollars in order to bring 300 electric vehicle models to market by 2030.  Importantly, most of the investment ($60 billion) will be in battery production in order to support their electric car transition for the next decade.

The VW announcement was quickly followed by Renault-Nissan announcing that they, in collaboration with Mitsubishi, would invest $11.7 billion dollars to bring twelve new zero-emission electric vehicles to market by 2022.  The vehicles would share common electric vehicle platforms and components. Not to be outdone, American automaker GM created its own electric headlines by also announcing in October that they plan to launch at least 20 new EVs by 2023, and will unveil two new all-electric cars within the next 18 months.

This news set off a firestorm of electric vehicle announcements from other automakers as well.  BMW, Daimler-Mercedes Bens, Ford, Hyundai-Kia, Honda, Jaguar-Land Rover, Toyota, and Volvo have each publicly issued  a timetable and specifics on their electric offerings. And of course, pioneering Tesla has made electric vehicles mainstream to many Americans, building one Gigafactory to mass produce EVs and promising two more. The Model 3 is arriving at local showrooms as I type!

Improvements in battery technology and cost have been key to ensuring the feasibility of the electric vehicle transition and will continue to impact future adoption. Recent projections by Bloomberg show batteries set to fall below $100/kWh by 2025. The drop in the cost of batteries has inarguably prompted manufacturers to get more aggressive in their EV development.

However, the pivot to electrification that China is making cannot be underscored. The world’s largest market has announced their goal to phase out the internal combustion engine. Combined with the fact that China’s policymakers are immune to auto trade organization’s efforts that might seek to derail the shift, and because China is investing heavily in infrastructure, they are on target to make their vision a reality. China’s market share is largely driving the auto manufacturers and they simply cannot afford to sit this one out.

But, what about the U.S.? Some automakers have kept their eye on this and may only be offering their electric vehicles to Asian markets. The auto industry and their lobby groups here also have been engaged in scare tactics and misinformation campaigns. The history of the auto industry challenging clean vehicles goals in the U.S. is well-documented. Union of Concerned Scientists released a new report last week, Time for a U-Turn: Automakers’ History of Intransigence and an Opportunity for Change, highlighting automakers’ long history of claiming they can’t meet public safety or pollution standards, even though they have always been able to hit regulator targets and ultimately deliver better cars to America’s drivers. Will history be repeated?

Auto industry lobbyists in Washington are currently trying to undermine fuel economy and greenhouse gas standards and the House version of the Tax Cuts and Jobs Act repeals the federal $7500 EV tax credit. Although the Senate version leaves the tax credit intact, its unclear what the final result will be.

Sound domestic policy, investments in infrastructure and consumer pressure are what will keep EV adoption in the U.S. on a positive trajectory. It is imperative that we invest in electric transportation now if we have intentions of being a world leader in technology. In the words of Ford and later Chrysler CEO Lee Iacocca, we need to “lead, follow, or get out of the way.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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