By Ken Silverstein / forbes.com
General Motors has its electric vehicle marketing program in overdrive. This week it is unveiling its gradual plans to release several all-electric models. It is an effort to show that the legacy automaker can go head-to-head with Tesla and lead a new movement in the car market.
GM, of course, introduced drivers to EVs in 2010 with its Chevy Volt. Now it has as many as 20 different models on the drawing board to not just meet what it thinks will be future demand but to also achieve its net-zero emissions goals.
GM is joined by several automakers that are banking on reduced battery costs — now the most expensive part of buying an EV. But it remains a question as to whether the industry can deploy a charging infrastructure that corresponds with the expansion of EVs. The good news is that there is a concerted effort to do so, including from Volkswagen’s Electrify America that is investing $2 billion to install fast-charging stations — part of a legal settlement tied to VW’s 2015 emission’s cheating scandal.
“Even though we expect GM to lay out a solid strategy at its EV day, we believe the ultimate proof-point of success in GM’s EV strategy is if the volumes materialize,” says Credit Suisse’s Dan Levy, in a note, per CNBC. GM must also “be able to challenge Tesla for share in the US EV market, as Tesla has been until now the only game in town in the US EV market.”
About 5.1 million EVs are on the road globally. By 2040, EVs could make up 40% of sales; dozens of EV models could come to market in the next five years. Their fate is directly linked to the cost of batteries, which has dropped from $2,500 a kilowatt-hour to $400. It may fall to $100. In five years, the price of EVs may be on par with traditional cars that run on the internal combustion engine.
In 2020, Audi, BMW, Chevrolet, Honda, Hyundai, Jaguar, Kia, Mini Cooper, Nissan, Porsche, Tesla and VW will have EVs on the market, says CNET.
Given the trajectory, Electrify America and ChargePoint are expanding the number of charging stations and especially in the Northwest corridor, along the California coastline and throughout the Northeast. Those are heavily traveled areas that have stringent air quality standards and where there is a multitude of EV owners. Globally, it is a $50 billion pursuit, says consulting firm McKinsey & Co.
ChargePoint and NATSO, which represents travel plazas and truck stops, will invest $1 billion in capital to build 4,000 charging stations. They will go in travel plazas and fuel stops that serve highway travelers and rural communities.
“Volkswagen’s investment in this expansive public EV charging project sets the blueprint for future EV charging infrastructure in the United States,” says Hendrik Muth, senior vice president of strategy for Volkswagen of America, which along with BMW is part of ChargePoint’s effort.”These charging corridors will add greater flexibility and convenience for current e-Golf and other EV drivers, and reduces one more barrier to increased EV ownership.”
Separately, Volkswagen is allocating $2 billion through 2027. It’s part of Electrify America that has installed 2,000 fast-chargers at 500 locations in 42 states. It just announced that it is investing $2 million in solar-powered EV charging stations in rural California. Specifically, it is sourcing the chargers from Envision Solar.
Beyond the cost of batteries and the expansion of the fueling infrastructure, there may be other twists in the road for EVs. It’s a global market place. To compete, companies need access to growing economies and they need to be able to create a single platform to mass-produce vehicles. To that end, China has 400 million middle-class consumers and automakers want access — all at a time when the country is ensconced in a trade war with the United States.
Meantime, the federal income tax credit is expiring: The $7,500 federal tax credit is available to the first 200,000 cars sold from each company. Once a company hits that threshold, the credit disappears. Both Tesla and GM have exhausted their full credit, although their buyers will get smaller credits in the coming months. The automakers say that they are preparing to lobby Congress for an extension, saying that EVs are still a more expensive proposition than traditional cars. And if the goal is to reduce emissions, the investment will reap a positive return.
“There are multiple elements that go into the price of an EV, including battery cost, leveraging the China market to achieve global scale on a common architecture and gaining manufacturing efficiency with less complexity, ” Doug Parks, GM’s vice president of autonomous and electric vehicle programs, told CNBC. “We are focused on all these items to drive profitability.“
Tesla’s Elon Musk has always said that reducing CO2 emissions is paramount. He is, therefore, pleased with the onslaught of new EVs coming to market, notably from GM that is an American staple and from VW that is investing in chargers and atoning for previous mistakes. The combined effort is building economies of scale, expanding infrastructure and adding political clout — dynamics that may alter the course of the car market and help automakers clean their act.