The first mass-produced electric car to go on sale with a price tag of less than $40,000 and a range in excess of 200 miles per charge, the Chevrolet Bolt EV is now available to buy in its launch markets of California and Oregon.
Developed in double-quick time by General Motors working in collaboration with South-Korean electronics specialist LG (which made many of the car’s components, including its 60 kilowatt-hour lithium-ion battery pack, 150-kilowatt electric motor, countless in-car displays and power electronics system), the Chevrolet Bolt EV may appear to be GM’s biggest statement on electric vehicles since the much-missed EV1 20 years earlier.
But despite the fanfare with which GM unveiled the Chevrolet Bolt EV concept car at the 2015 Detroit Auto Show and the enthusiasm demonstrated by GM CEO Mary Barra when the production Chevrolet Bolt EV was presented at CES 2016 in Las Vegas back in January, it seems that GM’s attitude toward electric cars may not be what it seems.
In fact, GM’s attitude toward electric cars may not have shifted far from the attitude it had back in 2003 when it official shut down the EV1 program and slowly, inexorably, started to take back perfectly functioning EV1 at the end of their leases and crushing them.
At least, that’s according to JP Morgan analyst Rick Brinkman, who (reports Electrek) published a note to clients last week hintingthat GM was building the Bolt EV at a loss in order to ensure it receives the zero emission vehicle credits it needs to continue producing its internal combustion engine vehicles. Internal combustion engine vehicles which not only have a far larger profit margin than either the Bolt EV or Volt range-extended EV but are easier to sell to customers who don’t want to give up their large SUVs and pickup trucks and view global climate change as someone else’s problem.
Brinkman, who met with Stevens last week, advised investors in his note that the Bolt EV is part of an “improving array of electric vehicles from automakers which are pricing such vehicles with the aim not to turn a profit but rather to sell in sufficient volume to subsidize the rest of their more lucrative portfolios of internal combustion engine vehicles from a regulatory compliance perspective.” Avoiding specific details about the conversation he had with GM’s CFO, there’s much reading between the lines here and, to be honest, a little speculation coming from our friends at Electrek over the specifics.
Translated, Brinkman’s note suggests that the Bolt EV is little more than a compliance car. For those unfamiliar with the term, that’s a car designed and sold by automakers (under duress) so they can meet zero emission mandates in the ten states across the U.S. where automakers must sell a specific proportion of zero emission vehicles or face fines: California, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont. But while the note suggests these things, it doesn’t claim them, leaving us (and anyone reporting it) in a grey area.
Under ZEV regulations, the more cars an automaker sells, the more zero emission vehicles they must produce. Small volume automakers can often make do by buying excess ZEV credits from automakers like Tesla which, under current ZEV rules, can sell its excess credits for money. For a large automaker like GM however, it’s often more cost effective to produce limited numbers of compliance cars.
The possibility that GM is selling the Bolt EV as simply another compliance car is certainly disheartening, especially if true, but is hardly surprising given GM’s past attitude towards electric vehicle and its name beside those of other major automakers on a recent letter to the incoming Trump administration to block the EPA’s new fuel consumption standards for cars.
Taking everything into consideration, we think it is indeed possible that GM, like other automakers, is using its electric vehicle portfolio to help ease the increasing pressure it finds itself under from both ZEV states like California and wider governmental bodies like the the DoT and EPA, who are responsible for respectively setting the Corporate Average Fuel Economy and Air Pollution targets which new cars must meet. And while the EPA’s air pollution regulations are harder to game, the CAFE standards are, by their very name, only an average. Therefore, if an automaker produces large numbers of electric vehicles, it can produce equally large numbers of heavy duty pickup trucks with terrible gas mileage, since the average fuel economy across the fleet still meets guidelines.
It’s true too that gasoline vehicles do have a far higher profit margin than electric vehicles, if only because of the economies of scale in play and the high cost of lithium-ion battery technology. Over time, these economies of scale will inevitably shift but for now, internal combustion engined vehicles are still cheaper to produce and as such, have a higher profit margin.
But at the same time, this suggestion doesn’t make sense. For a start, GM seems to have gone through an inordinate amount of work to produce a long-range, ground-up electric car simply for compliance purposes, leading us to suggest that the note issued by Brinkman is missing important context.
Had GM truly wanted just a compliance car, it would have likely spent far less time and energy bringing the Bolt EV to market. Granted, it recently changed its launch plans from a simultaneous nationwide launch to one in which ZEV states were given first dibs on the new car, but based on what we know of the Bolt EV, a full roll out is still expected.
Does this mean we should ignore the report? No. As anyone who has been in the electric vehicle world for any length of time will attest, electric vehicles still have plenty of opponents, including the oil and gas industry and many ‘old guard’ within the automotive world.
But at the end of the day, there’s something we want readers to remember: in the past decade, we’ve seen a major increase in interest and sales of plug-in vehicles. And as we approach the end of 2016, there are more electric and plug-in vehicles on the world’s roads than ever before. What’s more, with competition from the likes of Tesla, automakers will make whatever they need to ensure they don’t lose market share or relevance.
And that, simply put, means it’s down to customers to demand more plug-in cars. When faced with the buying power of their customers, change will come.
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