What Does Commitment to a Future of EVs Mean?

It seems that not a week goes by without a major OEM announcing their future electrification plans, battery partnerships, EV charging infrastructure plans and partnerships, new EV manufacturing plant locations and more.

But often and upon further review and analysis of comments we find that you need to add an asterisk to those statements from an OEM. For example, we often hear that they won’t be bringing certain EV models to the US for a year after markets like China and Europe.

Or that they only have production plans of say 20,000-30,000 vehicles a year or talk about battery supply limits production volume. Or that plans for pickups and large SUVs are almost nowhere on the roadmap or get only lip service from executives.

“And then we’ll keep innovating,” Ford continued. “When it comes to building the
best trucks in the world, we never rest. Whether they’re gas, diesel,
hybrid – or
when the time comes, fully electric …”

– Bill Ford, Executive Chairman of the Ford Motor Company – ChargedEVs – October 5, 2018

Now in fairness to the legacy automakers, we are still fairly early in the adoption curve in most markets in the world and battery and EV prices remain well above those of comparable ICE vehicles. And according to a recent study by Alix Partners, “by 2023 a whopping $255 billion in R&D and capital expenditures is being spent globally on electric vehicles, and that some 207 electric models are set to hit the market by 2022, many of them destined to be unprofitable due to currently-high systems costs, low volumes and intense competition.

“A pile-up of epic proportions awaits this industry as hundreds of players are spending hundreds of billions of dollars on electric and autonomous technologies as they rush to stake a claim on the biggest change to hit this industry in a hundred years. The winners in this free-for-all will be those who have the right strategies and, equally important, execute on those strategies to their fullest potential—as billions will be lost by many.”

– John Hoffecker, global vice chairman at AlixPartners and a 30-year automotive veteran

So this raises the question: If you look beyond the press releases, what does commitment to future electrification and EVs actually mean?

For my purposes “electrification” does not include mild hybrids, regular hybrids or fuel cell vehicles. Those forms of powertrains will play a role for the next 15 years or so. But a true commitment to a future of electrification is fundamentally about plug-in hybrid electric vehicles and pure battery electric vehicles.

Commitment to a Future of EVs – Key Criteria

As such, the following is a first pass at criteria that shows that an OEM is truly committed to future of these two powertrain technologies:

Number of Planned EV Models: Has the OEM announced 1 or 2 BEVs over the next 5-7 years and several hybrids and PHEVs? Or is there a clear path to say 3-4 BEVs over that time period along with multiple PHEVs and regular hybrids. The reality is we already have several OEMs including Nissan – that only have one BEV in market and no clear number of new models on the way. That does not back up real commitment to EVs.

VW Announces 27 EV Models by 2022

Dealer/Geographic Availability: In the US many of the EVs from OEMs are only available in California or a few ZEV states. That is probably a smart move at current levels of EV adoption in the midwest and south – but OEMs that are truly committed need to expand markets and invest where there are at least a glimmer of sales demand. If an EV will only be available in 3-10 states in the US, that is not true commitment.

Honda Clarity Electric only available in California and Oregon

Production Volume: InsideEVs recently estimated that Audi would produce around 20,000 of its eTron SUVs annually. If we assume that 10,000 of those would reach the US shores, that is 50% of Tesla Model X sales – not exactly a “Tesla killer” volume or level of confidence you would hope for.

Why Is GM only planning to produce 30,000 Bolts?

Dealer Training/Certification: Does the OEM have a significant dealer training and certification program that ensures that dealers can adequately support (onsite Level 2 charging, repair equipment, etc) and sell EVs (sales training). Do they have training, tools and content to adequately educate buyers on things like how and where to charge? Do dealers have access to a database of preferred and qualified vendors to install charging stations in buyer’s homes?

Is your dealership ready to sell EVs?

Marketing/Advertising: Is the automaker supporting the EVs with an appropriate level of local/regional marketing and advertising programs?

Automakers still not advertising EVs study says

Battery Supply: Does the OEM have adequate battery production partners locked up and able to supply the needed battery pack volumes. If demand outstrips estimated supply, can they scale up to meet demand?

Hyundai IONIQ Electric Sales Constrained by Battery Shortage

Board/Management Buy-in: Are executives and board members all saying the right things and showing that they are true believers in the future of EVs? Or do we hear many of them at auto shows saying things like “consumers aren’t ready yet,” “We are still betting on fuel-cell vehicles and regular hybrids,” and other comments that show that they still have their doubts about EVs.

Lexus CEO - EVs not yet ready for primetime

Charging Partners/Infrastructure: Is the automaker investing in building out the necessary charging infrastructure either directly or through partnerships, including with other automakers?

Porsche Reveals Plans for fast charging

Price/Range Competitive EVs: Are they producing and planning to launch EVs that are actually competitive in the amount of battery range? Are they pricing them competitively with other similar EVs and even regular ICE vehicles, especially for luxury models?

UBS Says New Audi has a long way to go to compete with Tesla

What have I missed? Let me know in the comments what things you would expect to see from an automaker to show their commitment to a future of EVs?

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