The old time car manufacturers are mighty sick of watching their stocks continue to droop, and not just because of COVID. GM is currently around $26, down 22% since it went public in 2010. And poor Ford is down a whopping 60% since its most recent peak in 2011. Meanwhile Tesla is up 415% since just March of this year, and its market cap of $277B is almost eight times that of GM. And other EV would-be makers that haven’t sold a single thing except a rendering are seeing their stocks soar.
GM is in the process of launching a massive EV fusillade, some 20 models based on their new Ultium battery platform, starting with the unveiling of the Cadillac Lyric tonight (update: not available until late 2022). But it’s done nothing to generate the slightest of interest in investors. The solution: spin off GM’s EV ops, into a new entity? Generate investor enthusiasm? It worked for its Cruise automation investment, which GM spun off and then attracted several billions in investment from other companies, including Soft Bank, Honda and T.Rowe Price. Maybe call it Saturn?
Of course that leaves a few unanswered questions.
The idea was already floated internally once in 2018. And in response to a question on it, she indicated that it’s on the table.
From an autonews.com article:
Barra was publicly asked about it in light of Tesla Inc.’s soaring valuation and the easy access to capital that unproven EV startups such as Nikola Corp. have pulled off by merging with blank-check companies.
“Investors are telling us every day that they are willing to invest in electric vehicles,” said Emmanuel Rosner, the Deutsche Bank analyst who asked Barra about the idea of a spinoff on July 29. “But they are doing it with electric-vehicle companies, not legacy companies.”
Even Fisker, which had been written off and is still unable to secure a deal with VW for their new EV platform, has just raised hundreds of millions by merging with a special purpose public company. Same for Workhorse, the Ohio company that bought GM’s Lordstown plant and wants to build EV pickups there. And of course Nikola, with their ambitious plans for hydrogen and battery big trucks, and a rendering of a pickup, for good measure.
One way for GM to be better rewarded for its plans to roll out a wide range of EV models could be to spin off at least partial ownership of the operations and get investors to help foot the bill, Rosner said. It has earmarked $20 billion of investment for self-driving and electric vehicles by 2025.
“The biggest motivation in all of this is access to capital,” said Rosner, who rates GM shares a buy. “It’s the willingness of investors to give GM money over time.”
GM’s EV operations include an advanced battery lab that creates proprietary cell chemistry, a partnership with South Korea’s LG Chem Ltd. that just broke ground on a factory in Ohio and two assembly plants in Michigan that are dedicated to making EVs. The Chevrolet Bolt has been in production since 2016, and the automaker will unveil its battery-electric Cadillac Lyriq crossover Thursday evening. Barra has vowed to have at least 20 EVs for sale globally by 2023.
But there’s two very real risks: Unlike Tesla, which has been profitable this year, and has been cash-flow positive for a couple of years, GM’s EV operations might well be big money losers, as literally every EV program by other car makers is. It might expose a painful truth about just how hard it will be to not only sell EVs, but sell them profitably.
As an example, just yesterday Audi cut the price of its slow-selling e-tron by a cool $9,000. And unlike Teslas, the e-tron still qualifies for the federal $7,500 tax credit. That had been dubbed one of the “Tesla Killers”. And how great of a loss is Audi taking on each e-tron sold in the US? It was probably quite big even before the price decrease.
The other risk? Once GM spins off its EV ops, who will still be interested in owning shares of the legacy company?
Note: Saturn was not spun off; it was a 100% owned subsidiary. But a lot of consumers were not aware of that.
Didn’t they do this in 2009, when Vehicle Acquisition Holdings bought the assets of Motors Liquidation Company? 😉
If they spin it off, then it pretty just says that the rest of the company is stuck in the past, no matter how you feel about IC vs EV. Everything worldwide pretty much dictates that EVs will at the very least be part of a company’s portfolio in the short term and likely an ever-increasing percentage long term. Spin it off completely then you’d have to get ready to wind down the rest of it as the EV to IC relationship steadily increases. A good EV easily proves that the concept is exceptionally sound. Audi for example is too caught up in their own “we build beautiful stuff for the beautiful people” bullshit which is all great until people don’t buy it because they feel range-constrained. And I was once the Audi-booster poster child. Audi E-Trons are fairly popular around here and an almost daily sighting (perhaps the same half-dozen?) but nothing like Teslas, and yesterday I saw another of those orange Jaguar Electric SUVs that are striking design-wise but also going nowhere in a hurry in the marketplace.
All this waffling back and forth is what’s driving the investor negativity, both at GM and Ford. Get this stuff figured out and out the door without just constantly teasing it. The Bolt has been around for several years now, plenty of time to get the drivetrain dropped into a different platform that is more attractive to buyers, make an E-Quinox already. A high dollar Cadillac is not the answer unless it replaces the Cadillac name itself somehow, nobody who remembers Cadillac of yore fondly has much interest in Electrics so that’s likely DOA. Ford, who knows what’s going on there, with Mr. Hackett suddenly out quite soon before their E-Mustang (and several other company-critical vehicles) debuts for real has to make people wonder if that really is the big thing it’s touted as or if there are still serious issues that need to be worked out. What CEO wants to leave before three major ego-boosting actual launches unless they are worried?
BMW of all people took the sort of lame duck i3 and dropped that drive train into a MINI https://www.curbsideclassic.com/new-car-review/curbside-review-2020-mini-cooper-se-hardtop-2-door-all-electric-starting-at-19250/
While range limited, it’s a compelling package IF the size works for people and doesn’t look like a circus sideshow. Looks good, goes great, priced well as a premium product that nobody will look askance at. Increase the battery size and now put it into an X1e or X2e and eventually an X3e. GM has significantly more resources available than BMW, stop building yet another pickup or SUV trim level and invest in the future, i.e. electric vehicles that aren’t constrained and aren’t unattractive to the mass market. It simply cannot be that difficult. If you don’t have the talent in house, buy it in. Or just GTFO and retire already and hand the reins over to someone with the willingness to do it. We are two decades into a new century and still living in the past.
My solution to GM’s woes in the USA.
1. Kill Buick
2. Kill all Cadillac Sedans.
3. Kill Chevrolet hatchbacks, Sedans and Camaro.
4. Combine existing GMC-Hummer dealers with the remaining Cadillac SUVs. creating a single distribution channel for primarily ICE trucks and SUV’s in four different price levels (GMC<Denali<Cadillac<Hummer). Yes, in my view, Hummer is more affluent than Cadillac.
5. Chevrolet, it's hard for me to see a future here except for Trailblazer, Equinox, Traverse, Tahoe, Suburban, Corvette, Silverado, Express, and Colorado.
The brand Chevrolet is too "low-rent" and has become synonymous with "rental car fodder." There is nothing in the list above that cannot be offered for sale branded as a GMC instead or just branded as "Corvette" in the case of one model and sold at GMC dealers instead of Chevy dealers.
There-in lies the major disfunction for General Motors. On the one hand GM cannot afford to close Chevy completely and pay-off the dealers to go away. On the other hand, Chevrolet as I described it offers no "Competitive Advantage" over the combined proposed GMC, Cadillac, Hummer distribution channel. GM's argument of "volume" sales and "economies of scale" diminishes each year it loses market share but there is no way for it to "right size" and get to a single distribution channel that it desperately needs to do. It could not even do this when it had the chance to under bankruptcy protection a decade ago.
6. Morgan Stanley auto analyst Adam Jonas brought the question and answer section to a halt when he asked CEO Mary Barra, "The General Motors brand has done its job, but I’m wondering if it might be out of touch with some of the really interesting directions you’re taking the business. Why not call the company Ultium, the entire company?”
https://www.freep.com/story/money/cars/general-motors/2020/07/29/gm-new-name-ultium-barra-evs/5538087002/
I am not entirely on-board with GM re-branding as Ultium but it may be a good idea to call its electric division Ultium.
Ultium Lyriq, Ultium Symboliq, and Ultium Celestiq sound better than if offered as Cadillacs though.
I would suggest creating the Electra brand instead. The Electra Lyriq, Electra Symboliq, and Electra Celestiq sound better to me. What's left of the "boomers" will understand the connection to GM which is still important to them. The millennials have no association with "Electra" as a GM model and that is a good thing for GM.
My suggestion for GM, would be to create a stand-alone distribution channel similar to what Saturn was, called Electra to sell its electric cars. Create a brand with a bend toward the progressive liberal American culture. Hire with an eye toward people that are "true believers" of the effects of global warming, social, and environmental justice. Become the anti-GM, anti-Exxon, anti-capitalism brand. In other words, create the counter-culture car brand that GM briefly had with DeLorean's Pontiac of the 1960's.
Note to GM: It doesn't matter whether global warming is a hoax or not at this point. This is about the future of your entire company. If you follow my plan you still have two distribution channels that are primarily geared toward the ICE-customer. The least you can do is create one distribution channel for those customers that do not see the future in ICE while at the same time not bastardizing the once great Cadillac name. If you have no plans to make Cadillac 1959 Again. That's okay. Milk the image of the Escalade for the next thirty years. I'd rather see Cadillac become one of two models than the laughing stock of an "OK BOOMER" meme.
Buick is hugely popular in China. Killing Buick would effectively end GM’s presence in China. You could just kill off NA Buick, but how much would GM gain by that? The engineering work is already paid for, marketing is comparatively cheap, and it gives GMC dealers something other to sell than pickups and a handful rebadged Chevy crossovers.
If GM ever wants to build non-SUV/CUVs again maybe they should bring back the Saturn brand? It doesn’t have the “cheap” image that the rest of GM has. Maybe they could use the brand to build more affordable Tesla competitors, instead of trying to use the Hummer brand to do it.
That being said sedans probably aren’t coming back anytime soon and I have have doubts about GMs ability to execute, so Saturn should remain dormant for now.
Don,
I do not believe this tired trope that Buick would not be able to sell cars in China if it doesn’t sell cars in the USA too.
GM’s Chinese marketing arm can tell China’s citizens that it is the new home of the great 21st Century middle-class and that China deserves a re-imagined Buick that caters EXCLUSIVELY to the market of China’s strong middle-class.
The USA is becoming a population of “upper and lower income.” It’s time to admit it to the world and most importantly, ourselves. Admission is the first stage of recovery.
https://www.investopedia.com/insights/americas-slowly-disappearing-middle-class/
https://www.addictioncenter.com/treatment/12-step-programs/
Honestly, in all that is laid out above, if the only disagreement so far is the future of Buick in the USA, I consider that a win.
To me it emphasizes the fact that GM hasn’t got a clue as to what they are doing and the people that know what needs to be done are “shadow-banned” by GM, instead of hired by GM. It’s sad to watch from where I’m sitting and I wish I wasn’t as emotionally invested in GM’s future.
It’s sort of akin to living down the street from the High School Prom Queen and watching her life spiral out of control as a result of drug abuse and domestic violence. Knowing there is nothing you can do at this point to intervene. We all tried to be friends with her when she was young, but she just loved the bad boys and now has to live with the consequences.
Hear hear!!!
For pete’s sake, they sold Holdens in Australia, and Vauxhalls in England, and Opels in Germany, primarily, so why in the hell can’t they just sell China something badged Buick? They really do not sell well in North America, the demographic for them disappeared over here, and they no longer produce any vehicles here that evoke the past of Buick, so why keep the damned relic of a name when nobody here gives a crap about it? What Buick standalone dealers are left? Who only sells them, no other brand? I would posit that if there are any, they are so small that cancelling their franchise would not harm G, or they could offer them the chance to sell GMC or other brand in the place of Buicks.
At the end of the day, whatever GM does, they will probably fail. That is their modern history. Failing at every chance they are given, and never learning from past mistakes. Their investor base is mostly legacy, as I don’t recall hearing anyone clamoring to buy shares. Spinning off the EV will taint the EV company, no matter what. Barra and team will find a way to snatch defeat out of the jaws of success, as that is what they do best.
Hi James,
I agree with pretty much everything you said, but I didn’t mean keep Buick alive in America so GM could sell to China. I meant the opposite, sort of. I meant GM should import Chinese Buicks to America, or at least import the designs American factories. Some of the Chinese Buicks are better looking than the ones they sell here. For example the Buick GL8 is more appealing than any van GM has sold in the US.
I agree about the declining middle class, however with interest rates so low, people can continue to borrow money, This of course is not a good thing in the long run, but as far as the auto industry is concerned it means people can continue to finance cars they cannot afford to buy in cash.
Good point, GM has the technology and the Bolt’s sold well since 2017 with the sort of people who were already buying electric cars in 2017. And ever since then they’ve told us something else is coming…it’s gonna be great…here’s a concept car…
What’s needed is to actually DELIVER a followup, IN THE SHOWROOMS where people can buy it.
We’ve talked here in the past that there’s more to Tesla than just the cars. There’s the Silicon Valley culture, the corporate sales (as opposed to independent dealers), the charging network, and over the air updates. GM is going to have to do a lot more than spin off the EV’s and invite owners to picnics. A friend has an eTron which has been stuck at the dealer for weeks. They don’t know what’s wrong, have to escalate to corporate, etc. Not saying a Tesla couldn’t have the same technical issue, but all service would be by corporate, the tech would come to the owner, and it’s possible the problem could be diagnosed and fixed over the air at the owner’s location and not at a dealership. My friend has a high tolerance for exotic car service headaches but he’s very close to giving up after owning several high end Audi’s (and even an Italian “Audi” from Sant’Agata).
Or it could be that EVs appeal to a cult. That cult likes Tesla. Maybe they will like other Brand New EV Companies, may be they won’t. But as usual, the trend following automaker world HAS to go overboard chasing the latest fad. Everybody had to have a Mustang, everybody had to have a GTO, everybody had to have a Monte Carlo, etc etc. And when there are six options chasing the same buyers, suddenly the sales all drop..how could THAT happen? And in the early stages of the fad, auto writers write about how we will all be driving the fad car forever. EVs appeal to a certain type of person, like GTOs appealed to a certain type of person. A crazed switchover is decidedly not a good idea.
Definitely some merit in the idea. A spun-off BEV operation could attract a lot of investment. Might be possible to have the best of both worlds- a growing BEV business supported by still strong for the foreseeable future ICE CUV/SUV/truck sales.
On the surface this seems like a massive vote of no confidence in something pertaining to the way General Motors does business.
I’m 77. I’ll probably be dead or not able to drive by the time GM sells a decent EV like Tesla for a cost I can afford.
GM needs to get the EV business out of corporate and get busy. An EV Cad buy late 2023? That’s bullshit.
Buy a plane ticket to China and drive the Chevrolet Menlo.
https://electrek.co/2019/11/10/gm-menlo-crossover/
Also an old fart here, though there is longevity in the family so I may be around for a while yet. I can say confidently though that I will never own an electric car. I really have no interest in them and it’s not going to be possible to do away with fossil fuels within any time I’m likely to live to. I really see no reason for changing over to them en masse. If they were really better than the gasoline powered variety, government subsidies and mandates would not be necessary. People would naturally gravitate to them without being “nudged”. The fact that most buyers do not do this on their own tells me that electric vehicles are NOT the better choice at this time. Maybe if we could turn conditions back to around 1910. Electric cars were all the rage then.
It really is a cult, particularly with Tesla, a vampire company that would likely go out of business within weeks if the carbon credit scheme were taken away from them.
My understanding is that electric vehicles aren’t profitable right now for the big three, hence the reason they have not been hurrying to build them.
Now, I’m not an economics major but I do know the public is not rushing out to buy electric cars and COVID-19 made matters worse. In my part of the world used cars are big sellers right now as many are out of work.
Gwho? they used to be in the market place here in quite a big was selling Chevrolet Bedford Vauxhall and Holden brands wsith a few Pontiacs thrown into the mix but sold via other dealeships not GM franchises Anyway Chevrolet vanished in the last 60s then big Vauxhalls replaced by the Australian rebadging effort Holden which eventusally replaced Vauxhall as a favourite Kiwi GM brand now that has gone too I drove past their headquarters yesterday it looks deserted maybe they should go back ionto the refrigerator and auto parts business and forget about cars and with COVID over we have been having record car sales too but leftover ‘Holdens’ utes (Isuzu rebadeges) remain unsold.
Blimey, it’s pretty obvious why Tesla’s share price is nutty.
From a cold standing start a mere eight years ago, they made a totally reliable, attractive and good-handling car. They’ve only gone forward since. GM has had all that time to match this, and hasn’t come close. It’s just woeful.
But predictable.
In this country, this company with a nationally-liked local name in Holden sold stupidly-crap cars (other than the Commodore) that dealers didn’t want, refused to back warranties meaningfully, and finally took lots of taxpayers money, lied to everyone, and, even though they still had a reasonable 6% of the market, fucked off overnight. All, ALL of the bad decisions over many years came from Detroit.
GM somehow managed to take that incredible creativity, that entreprenuership, that sheer bloody “doing-ness” that so defines America, and kill it. Dear god, they went bankrupt that way – and clearly learned nothing.
I don’t like Elon Musk. But his product is the future, and it doesn’t matter a damn if you believe global warming is science or a plot (and for the record, I’m firmly the former). The new tech has won. Next topic, please.
GM, incapable of competing, may as well sell their electric division because they’re not capable of making anything from it. And even if they could, who’d trust the resulting product from this mob?
A glorious chapter in the American story, that of the once-fabulous GM, is closing fast. And though I am as big a fan of that past and products as anyone here, it is very much the past, it is justifiable nostalgia for a different world, but when the chapter ends, when their death comes, because of what they had for too long become, I will not mourn.
While their stock price is off in the world outside wall street GM is far more profitable then Tesla. I think that’s the real issue it’s not about fundamentals but instead it’s about what investors think other investors think about a company. It’s crazy speculation really. It drives me a bit nuts.
I’m not trying to be anti Tesla either I like the cars (thou Musk has become a turnoff for me) and I’m amazed at what they have accomplished. But in actual profit and fundamentals the Tesla valuation is crazy pants.
Which is what is driving Barra nuts shes running a stable profitable company that has an image problem with investors.
Oh, much and all as I can’t respect the modern GM, I can’t disagree with what you say. It must rightly drive Mary Barra mad.
But I think Syke (below) has it summed up well. Investors, those sophisticated gamblers they, are looking at attitude, the attitude to an (inevitable) future, and they have their beady eyes on a future where their bets pay off and Tesla is the GM of the ’60’s. GM now doesn’t remotely seem to be that company, and shows no useful sign of really ever being so.
And so despite the nuttiness of earnings vs profit, et al, I suspect that the Tesla lead in just getting it done (and being capital “N” named for it) means that those punters will turn out to be right.
Written as a Chevy dealers kid who grew up worshipping GM, and who’s currently comfortable retirement is due to all those Chevrolets sold. And who has spent his entire adult life watching GM screw the pooch of virtually everything they’ve tried (other than the Corvette and pickup trucks). And . . . . someone who will either be buying a used electric car (Bolt or Leaf, Tesla’s out of my budget) or leasing a new one early next year:
GM, fer chrissakes, stop with all the prototypes, teaser cars, claims and promises, and put some more electric cars in the showroom, right now! You happily badge engineered yourself to death in the 80’s and 90’s (A-bodies anyone?), so you couldn’t come up with other variants of the Bolt platform and drivetrain within a year or two? For that matter, eight years of the Volt, and the only other thing you could do with it was the insanely overpriced ELR?
GM, for all their promises, publicity releases, teasers is NOT serious about bringing out electric cars. Given their current track record, if anything their happily back-pedaling as much as possible about future electric cars, while keeping up a publicity run trying to show that they’re “really, really, serious” about transforming themselves as a car company. Meanwhile, go to your average Chevy dealership and tell a salesman you’re considering a Bolt. Wonder how long it’ll be in that session before he starts suggesting that you really want a Trax that they have on the lot (yes, it’s happened to me).
Tesla came in day one totally wedded to electric cars, and electric cars that weren’t dependent on their ICE powered models. Tesla’s so wedded to electric car that if they don’t work out, there is no “plan B” for Tesla’s survival. They have to make it work.
Meanwhile, GM is following electric cars on the fear of that’s where the market may go, and they don’t want to be left behind. Meanwhile, management would really rather sell more Silverados, dealers wish the electric cars would go away, and salesmen aren’t particularly interested in learning about what they’re going to have to sell because the returns on the knowledge aren’t there . . . today. And nobody at the dealership cares about anything past the end of the month. Oh yeah, the day electric cars finally hit 30%, 40%, definitely 50.0000001% of car sales, they’ll be totally behind them. But not one second earlier.
And even the dumbest investor can see the difference between the two attitudes.
I’m seriously wondering how many, if any, of the legacy car makers will successfully transition to an all-electric car lineup (for the sake of argument, I see it happening, not necessarily in my lifetime, derailed only by something else replacing individual automobile ownership). They’re too wedded to what they’re currently moving.
Having said the above, why am I primarily looking at a Bolt or Leaf next year? Because that’s where the electric car support is in the Richmond-Fredericksburg, VA area. If buying used, that’s just about all there is around here, unless you’re willing to have something shipped with via Caravana (ICE car, I might consider it, I’m real jumpy regarding my first electric). At at least we have two dealerships, Hendricks Chevrolet and Hart Nissan who are keeping models in stock, thus having some interest in moving a few, and having a couple of salesmen who have taken the time to learn about the vehicles. In fact, I’ll be expecting a phone call in early January from the guy who just sold Maggie her Nissan Kicks SR. Plus, if I buy a used one somewhere else, I will get service support.
A separate “electric-GM”? Theoretically, it could work. But only if the main management from “ICE-GM” is kept out of the company. If there’s anything “electric-GM” desperately needs it’s the absence of the same line of thinking that turned the worlds greatest automobile company in 1965 into an automotive joke that rivaled British Leyland by 2008, and now does an incredibly mediocre job of coming back from that low point.
Quite the rant there, but sadly, I have to agree with the lot, that last paragraph in particular.
As one slightly younger fart to an elder, I’d respectfully suggest that you needn’t be jumpy about a used electric. As a local mechanic said to me, they’re amazingly simple, and logically, compared to the manifold things that make a petrol car go, he’s got to be right. Complex cooling, oil, gearboxes, exhausts, engine mounts, spark systems, injection systems, petrol storage, noise suppression and more, versus a (modern) dead-reliable battery and one does-it-all motor not too far removed from the one still running after 60 years in your garage fridge. Nissan know how to make reliable aircon and driveshafts and power steering, and those main bits are indeed so basic, they won’t break.
So just do it! (A hideous slogan, personally speaking, but apt enough in this case).
Justy,
Watch the movie “Who killed the electric car” there is a scene where an EV-1 is parked at a Saturn dealer’s service dept. The mechanic shows all of the items required to properly maintain an ICE vehicle compared to the items required to maintain an Electric vehicle (water for battery, wiper fluid, tires and wiper blades).
The reason the dealer tried to sell Syke a Trax instead of a Bolt is not only the initial sale profit but potential after-sale profit of “recommended maintenance intervals” as well. Even if Syke doesn’t get the Trax dealer serviced, chances are his mechanic will be purchasing at least some GM/AC DELCO parts.
So according to the film EVs don’t have brake fluid, ball joints, tie rods, bushings, shock absorbers, brake pads(albeit at much extended intervals)?
Not saying there isn’t reduced maintenance to an EV but it’s not that burdensome and certainly not expensive to change oil periodically, and that’s the most upkeep ICE powertrains will need these days. There’s more that *can* go wrong of course, but will it? I don’t think Toyota service departments are spending a lot of time tearing down engines
Toyota doesn’t rebate and “Zero percent,” or “no money down either.”
Two different business models. Toyota charges a mostly flat-rate and doesn’t build its business around extended service the way GM does.
The discussion in the movie was specifically about “recommended service intervals.” and I think I forgot to mention brakes. I haven’t seen the movie in ages. But I always remembered that scene. I will try to post a link later tonight.
https://www.youtube.com/watch?v=tlwwLisGjH8
The movie “Who Killed The Electric Car?”
The full movie is available free at the link above.
The specific scene I mentioned is at 56:30-57:44.
It’s worth a look.
They generally need waterpumps, timing belts are a wear item, cars with chains sometimes need “guides” for said chains to be replaced, alternators, not sure how mufflers do these days in salty winter climate areas, lots of people (erroneously) think that turbos go bad constantly, head gaskets go out (but not a maintenance item really), automatic transmissions seem to have issues in certain vehicles, clutches in manual transmissioned cars, I’m sure there are other things too, and lots of “highly recommended” bullshit service procedures pushed on many owners at dealerships and other service facilities that leave those who aren’t as mechanically inclined or to afraid to refuse or know what to refuse frustrated with the recurring expense.
I’m getting “This video is unavailable on this device.“ but I have seen it before and believe I recall the scene. My point is beyond the dealer recommended nonsense, many modern fuel injected ICE powertrains aren’t burdensome to keep alive for well longer than most people keep new cars for.
A lemon ICE car will might be more dire than a lemon EV of course, which takes a would be notorious engine or transmission out of the equation, but a lemon is still a lemon. My Mom’s old (then new) quest had mirrors that fell off, Windows regulators that failed, door latches that froze up, pop out windows that wouldn’t clasp, electrical gremlins etc. Dealer visits were routine fixing those things, but the engine and transmission? Bulletproof, needed nothing for the 8 years of ownership, but she and my Dad swore off Nissan’s after it.
@Jim I agree, I’m mechanically inclined so it’s a different perspective, I don’t fear many mechanical maladies and I know that’s the opposite of most car buyers. But no or very low maintenance is one of those tropes that favor EVs just as range anxiety favors ICE vehicles. Both are driven by fear of what can go wrong, regardless of the likelihood that actually will.
If GM(and really, any establishment automaker) went full EV and dumped every ICE powerplant for some reason I absolutely believe it will be business as usual for service departments, there’s still plenty to wear and fail and need replacing on an entire car, and with now omnipresent software they will make it so you can only get those sorts of bugs worked out by their service departments, even if it becomes a sort of control center for over the air updates.
And that’s assuming the motors, batteries, cooling systems and hardware, are absolutely flawless from every company and brand and will never ever need repair(Alternators and EECs on ICE cars should never fail if this were certainty). In that vein, I don’t see how it’s possible to build an uncompetitive and/or troublesome DOHC 4 cylinder in this day and age either, but there are great examples, good examples and “what were they thinking” examples of that architecture even now. Just like not every automaker is equal to Toyota, not every will equal Tesla. We have seen very little of what wide spread mass production packed with the usual corporate bean counting and big car company cultures will do with EVs
@XR7 I know we don’t agree on everything but that’s likely the truth to a large extent at least, there will always be something that needs fixing or correcting or wears out. The makers whose actual customers (the dealers, right?) have the most to fear though are those that have the most problematic cars. The others (along with the above too) just try to scam many owners with unneeded stuff which won’t change. A maker such as Tesla who as a company has to pay their own people to correct issues directly (rather than reimbursing a dealer at a cut rate) has every incentive to save money by engineering and manufacturing a better product from the start. I believe Tesla could well save a ton of money on service to correct delivery issues by just spending a little more to train the assembly line better or invest in more QC at the factory (pre-ship) level, it’s just a matter of doing the math and deciding which is better and also (important) assigning a dollar value to a happy customer who’s car doesn’t need much fixing.
Someone like Porsche or Audi or BMW or GM is likely able to either engineer or at least swallow their pride and buy in the engineering of a perfectly capable EV (doesn’t need to be a Tesla, but a more popular format Leaf or Bolt), but putting my tinfoil hat on a bit has me thinking that there is so much money being made in the service departments currently that the dealers will fight it and sabotage the effort like we saw with Chevy and the Volt and Bolt and Nissan with Leafs that were not charged or had the charger blocked etc and tried to steer buyers to other cars. Almost every generation of Porsche 911 for example has had significant engine issues that often caused massive or repeated bills in the service department, not under warranty for a lot of it as many owners are well-heeled enough to keep coming back to the “experts” and for routine maintenance the hourly rate is far higher than for many other marques even for the same basic service item. Lose the problematic big ticket engines and/or transmissions, lose a lot of labor based service business – or that could be a fear anyway.
Electric vehicles have a long way to go before they are practical. They have come a long way in the past few years but people are not buying them in enormous quantities. One thing that would increase their sales is a large jump in gas prices. It is hard to sell an electric vehicle with gas at around $2.20 a gallon in the US. Hybrids are still much more practical. Also the infrastructure for recharging isn’t great in many places yet. Electric vehicles are part of the future in a changing world I agree but supply and slow development is still outstripping demand in my opinion. GM wants to keep up with the other auto makers. I do like the suggestion of the Electra name. Perhaps calling it “Electra Motors” for the spin off?
In my opinion, EV’s are not the future. Its the liberal, climate change snowflakes desire to reduce the “Global Warming” myth. Tesla for a long time was, and may still be receiving government subsidies, and you are hard pressed to find an EV around here. Again, this is only my opinion.
This is about branding.
The Tesla isn’t offering anything that can’t be replicated by another product, but what it is doing is selling successfully, a brand. Brand loyalty isn’t helping the established brands in this industry afloat. We have a new generation of buyers and they don’t have the brand loyalty of their parents or grandparents. The percentage of buyers in the market willing to try another brand is substantial and growing because quality across the brands has nullified brand appeal. As brands become global and manufacturing became global, there has been a loss of brand appeal and identity.
GM isn’t doing itself a favor by pumping billions into dead brands. Cadillac is dead. They don’t offer anything that couldn’t be found in a Hyundai except panache. Buick is dead, except in China. HUMMER is dead, except as a brand among some older buyers. Chevrolet is dead and has been replaced by the South Korean brands. Bottom line – GM is dumping too much money into resuscitating brands instead of building new ones. Pack it up!
Ford is weak, but on the right track. They are selling Mustangs and Broncos, and expanding those brands as a lifestyle brand. Both brands are active – Mustangs are sporty and will be available as an electric four door sedan, and muscle coupe. Bronco is a an outdoor brand and available in three formulas to appeal to anyone in the market for a Jeep. Lincoln is a dead brand and Ford needs to let it die. Anything that is not a Mustang or a Bronco needs a new brand name. I suggest that all Ford trucks keep the Ford brand, but all SUVs designed for urban and suburban markets should re-brand themselves as Explorers.
As to the future of the electric car – those monsters run on coal. Eventually, someone is going to figure out that electric cars are about as environmental as a tire fire. Every Prius has been shipped here from the other side of the Earth by a diesel engine, and then shipped on diesel trains across the width of North America, leaving a carbon trail behind them that it will take each vehicle appx 60,000 miles to catch up to an Explorer made in Chicago.
Will energy prices go up or down? They will go down. Would investors in 2009 have invested in electric cars if they knew about fracking? Fracking changed things. It changed the economics. It changed the supply of energy. We are now exporting oil, not importing oil. That is huge.
So Tesla is a generational brand that can survive as long as it keeps that generation and future generations happy. I just think that eventually, there will be a non-electric Tesla.
Vanilla,
You’re wrong about two things.
“Eventually, someone is going to figure out that electric cars are about as environmental as a tire fire.”
No they won’t.
The Sierra Club explains why…
Today, up to 85 percent of car purchasing decisions are made by women, and a lot of us are excited about electric cars…. As women, we fight for our collective liberation – to simply have the right to speak, to be included and have value. And we continue that fight alongside the fight for a clean transportation future for all, without leaving anyone in the dust.
As women, we are not, for the most part, selling electric cars or leading the industries that manufacture them — but many of us are driving them and advancing transportation justice to ensure that zero emission vehicles are accessible and enjoyed by all. Considering that today, EVs are cleaner and more popular than ever, women should be proud to be leading that charge.
https://www.sierraclub.org/compass/2018/03/women-are-accelerating-switch-electric-cars
See Also:
https://oilprice.com/Energy/Coal/Natural-Gas-Has-Replaced-Over-100-US-Coal-Plants-In-The-Last-Decade.html
This isn’t about logic and reason. This is a pure ideological fight. Women (in particular) feel that by purchasing an electric car they are doing a service to help the environment. Men (in some cases) purchase these electric cars to attract the opposite sex. In some ways for men Tesla is the new Corvette. In that it’s a way to broadcast your concern for “transportation justice.” Male Concern for (X) Justice is the 21st century’s new “Machismo” and in that way, Tesla is the new Corvette.
Secondly “Will energy prices go up or down? They will go down.”
Are you sure? What happens if Joe Biden wins and the Democratic Senate is able to confirm Alexandria O. Cortez or other “Green New Deal Believer” as one of the three created “Cabinet positions, including one on climate that “goes beyond EPA.”?
https://www.eenews.net/stories/1062988049
What impact do you think this will have on fracking and pipeline development in the USA?
Read and decide for yourself…
https://www.usatoday.com/story/news/factcheck/2020/06/19/fact-check-joe-biden-doesnt-want-ban-all-fracking-only-new-permits/3215253001/
I think I’d take the Ford Sierra club more seriously than that source. Guess I know why I’m still single at least, I haven’t adopted any justice causes as a ruse to attract the opposite sex in apparently great numbers
🙂
That’s the most chuckles I’ve had from a comment in some time. Thanks!
Yes, it’s about branding.
What you’re conveniently forgetting is that Tesla has earned that brand equity by forging forward in the face of nay-sayers, years of losses while they built that brand, and fighting against state governments who were determined to not allow them to sell their cars in that state, to protect the existent auto dealers and their campaign cash.
Look at it this way:
Let’s say in 2002, GM did a completely second company called Electra, stuff a bunch of batteries in a Lotus Elise and called it the Electra Roadster. Sold a few, just to say they were producing and selling cars.
A few years later, with technological improvements, they bring out the Electra Model S, an $80,000 sedan that gets noticed, sells quite a few, but is still losing money hand over fist. So they announce the Model X, a gull winged SUV on the Model S platform. And continue to lose money
Obviously, I’m paralleling Tesla, but under GM ownership. Would Electra have survived long enough to bring the Model 3 to fruition?
Hell, no. GM would have shut down the entire operation, possibly before the Model Y made it out the door, publicly announced “there is no market for electric vehicles”, and brought out the next generation Silverado.
That’s Tesla’s brand equity. They brought out a successful product and stuck with it throughout the losses until their line started making money. GM’s accountants would have shut that effort down long ago.
In 2002, GM was still licking it’s wounds from the EV-1 and had no interest in Electric or even hybrid (Prius-like) cars. In fact it’s funny you mention 2002 because GM was all about Hydrogen Fuel Cells that year.
https://en.wikipedia.org/wiki/General_Motors_Hy-wire
You’re right about branding, Elon Musk is to Tesla what Michael Jordan is to Nike. The innovator.
There have been many “Air-Jordan” imitators but there is still only one “Air-Jordan” brand even though the man himself retired in 2003.
GM and all the others “imitators” are the equivalent of Iversons, Barkleys, Shaqs, and Kobes. Air-Jordan is still the gold-standard, much like Tesla will be in electric vehicles for many years to come.
I don’t see where we disagree though, what is your solution for GM? Would you just use the legacy brands to go electric instead of creating an electric only brand?
It’s clear that GM needs to embrace electrics even though they may only ever be “Air Max Barkley’s.”
If you want a nice parallel, look at the current Triumph motorcycles.
Meriden Triumph went bankrupt in 1984, was bought out by John Bloor, who wasn’t even looking for a motorcycle company. He just wanted the Meriden plant to tear it down the develop the property.
1984-89 was spent going over the remaining Meriden designs to see if there was anything viable (there wasn’t), licensing production of the 1979 Bonneville to keep the name in the marketplace, design a new motorcycle, learn from Kawasaki how to produce modern motorcycles, build a new plant at Hinckley, and introduce the first 1991 Triumph motorcycle in England and Germany in the spring of 1990.
All out of his own pocket. Taking losses all the way. And Triumph’s first profitable year was . . . . . . . 2002.
The Elon Musk’s and John Bloor’s of the world can do things like that. The Board of Directors of GM would never consider such a poor short term return on investment.
I have to believe that at least one of the Board actually owns a Tesla somewhere in their fleet. But also believe that a large number of people nominally in positions of some power there have likely never driven an EV, even GM’s own products.
I am starting to wonder if GM did not miss a tremendous opportunity to dump the whole legacy business in 2008 and play up the fact that it was a brand new company grabbing the decent assets from the trash pile.
This was never going to happen, of course, because it was GM lifers who planned the whole thing and they still saw benefit to legacy brands and the legacy of General Motors.
They seem to have been turning out decent vehicles but not really any that capture the public’s imagination. Will spinning off the electric business change that? I’m not sure I’m seeing it, unless (as said above) it is run by new people with new ideas and new ways.
JP,
I was actually surprised that the “Car Czar” let GM keep two identical truck divisions. At the time of bankruptcy I thought that GM should scrap GMC/Pontiac/Buick all together and move Denali to Chevrolet/Hummer. I would have kept Hummer and built the rumored H4.
That would have been the “easy” way to get to one distribution network. With just Chevrolet, Cadillac, and Hummer sharing space with-in the same dealers. Okay to have separate entrances and buildings. It would have been the equivalent to FCA’s Dodge, Chrysler, and Jeep dealers.
Today, with sedans and cars out of style, I’d make the case to eliminate Chevrolet and keep GMC instead. But the economics of paying the Chevrolet dealers to go away just doesn’t make sense without another bankruptcy and bail-out.
Back in the 82-83 recession its was floated that GM would consolidate the truck divisions into one line, GM truck, Chevy killed that idea. Gm had a decent stake in the truck market at that time. Regardless of your truck need GM had you covered, only problem was the product was crap. Detroit engines in the medium and heavy lines that fell apart. The diesels in the light duty line that fell apart. Transmissions that failed left and right.
Later on when the Prius came along that was poo pooed. GM is going to build hybrid trucks, fuel savings will be more effective than some subcompact hybrid car. GM even brought out a light hybrid pickup for us to look at, start/stop, 110volt outlets in the bed area. WHAT HAPPENED? We still don’t have a hybrid pickup and Ford is going to beat you to it.
Sold off the heavy line, quit the medium duty line and quit the HD3500-4500 lines.
Some truck company.
I’m interested in the question of why the Audi E-Tron is falling flat. You’d think that combining the cachet of Audi with the cachet of an electric vehicle would make for a sales leader.
Why not?
The cynic in me is that e-owner wannabe’s are as interested in virtue signaling as in actually owning – this was I think why Toyota sold tons of Priuses (Priui?) back a few years ago, while other makers’ hybrids went begging. If you drove a Prius it was a hybrid and everyone knew it, whereas a hybrid Accord could be just a regular Accord.
I would like to think we’ve moved beyond that. So, maybe it’s because Audi’s are known to be expensive to maintain, and people may fear that an e-Audi, being a new model, might be even worse in that regard. OTOH, haven’t Teslas been known to have spotty reliability?
Thoughts?
It’s a range issue, as in not nearly enough of it for what you pay for and the battery size. The E-tron gets about 218 miles of range from a 95kWh battery which is about 100 miles less than the Tesla Model Y gets from a 75kWh battery and costs quite a bit more to boot. 218 miles of range is not considered sufficient by most people (although in actual reality it probably is). I do not believe that Teslas have been known at all to have spotty reliability if you define reliability as starting and getting you where you need to go without breaking down on the road somewhere. The Audi likely has excellent fit and finish, probably better than the average Tesla when delivered. That said, of all the Teslas I’ve seen around, none have jumped out at me as having something obviously wrong with them either.
Thanks for the response. I think you’re right.
As a Brit watching GM do a British Leyland, I must confess to a smidgen of shadenfreude, but I feel your pain, we’ve been there, done that.
All the naysayers are always queuing up when there’s a new technological paradigm shift, too many vested interests. Look what the horsey people said about steam cars…
Someone made an iteresting point above about wealth distribution. As Thomas Picketey showed, in a capitalist system wealth becomes concentrated into the hands of fewer and fewer people. The middle classes are being squeezed. So the future might well be as in the 19th century where the carriage makers cater to the rich and the plebs get public transport. You will either drive your sumptuous Tesla, or pay a monthly fee and the autonomous plastic box of an electric car will pick you up and take you to wage slavery. Still maybe we’ll get lucky and there’ll be a stock market crash or a few wars to redistibute the wealth. Failing that it’s revolution baby. On the other hand… I do love this future guessing.