GM have recently announced that they would reintroduce a plug-in petrol/electric vehicle combination. This configuration is back after 3 year’s absence has returned after promising to abandon petrol for ever and only make pure EV’s. GM is the latest automaker to signal a back-track (along with Ford). This hybrid kind of vehicle type seemed to be on its way out until late 2023, now it returns.
Why the change in direction? Well global, including US EV sales, have not reached the level the marketing and political hype had predicted. The large automakers are not selling EV’s to a somewhat sceptical end user market, therefore a plug-in hybrid is a compromise or a bob each way.
This way they are betting that it provides some emissions-free electric kilometres, coupled with a petrol tank that assures a longer road trip to avoid the poor network of EV charging stations. The large cost and volume of raw materials that go into a pure EV has been downplayed until recently and it has been widely reported that the big automakers can’t make a profit in the pure EV market.
Secondly, GM’s plan reversal underscores how difficult it is for a traditional automaker to navigate the transition to EV’s, with having to deal with the conflict between three key components. First, investors looking for profits, second, regulators looking for lower emissions and third, customers looking for an affordable vehicle and support infostructure.
All of these have to line up for this to work well. When one or more is out of balance the system falls over. It is clear the regulators throughout the western world are insisting for far too much compliance to their rules and regulations. A more gradual approach to their increasingly strict emissions rules would be more sensible. However they seem to have no thought for the manufacturers profitability or the end users costs and support.
In general, Automakers have been against the proposed rules by the EPA in the USA, saying they are unrealistic and out of step with what end users want. The rules would in effect require the automakers to produce 67% of the offering as a pure EV by 2032. GM’s altered plan is to deploy plug-in technology in strategic segments and should deliver some of the environmental benefits of EV’s as the nations continue to build their charging infrastructure.
GM did add a caveat to its plan by saying that it would be guided by customer demand. That’s interesting, what company shouldn’t be focused on customer demand and satisfaction. Isn’t that the main purpose of being in business, creating a product or service the people want or need. EV sales are barely climbing and nowhere near the rates of mid 2023. The sales drop has caused turmoil throughout the auto industry. Earlier this month, the car-rental company Hertz said it was selling off part of its fleet of electric Tesla’s, citing in part a lack of demand from customers. Last week, Tesla CEO Elon Musk warned of a slowdown in the company’s core EV business.
April 2024
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