Automakers’ risky bet: EVs are better than gas cars

As Ford Motor Co., General Motors Co. and Volkswagen AG recently have unveiled marquee electric cars, they have let slip a remarkable admission for companies built on oil: Electric models will in some ways be superior.

Volkswagen has described its upcoming ID.4 SUV as a combination of its best cars. GM suggests future electric vehicles will be “more responsive than its internal combustion equivalents.” Ford says its electric F-150 will transform tailgating parties, while being cheaper to own, and faster and more powerful than any truck it’s ever made.

These claims may not surprise EV owners: The vehicles are quiet, require little maintenance, are cheaper in most places to fuel and can rocket off the line from a standstill.

But until now, the major automakers have been loath to say so. Embracing EVs is a treacherous pivot in a highly competitive market where traditional automakers must compete against one another while also fending off new electric vehicle makers like Tesla Inc. and Rivian Automotive Inc. — companies that aren’t burdened with a legacy to protect.

The foundation of the global automotive market is still the internal combustion engine, and despite the billions of dollars that car companies have committed to building EVs for the future, today’s balance sheet depends on selling the gas-powered ones on the lot.

“More automakers are starting to say out loud that EVs are better in some ways,” said Chelsea Sexton, an auto analyst and advocate who famously skewered GM in the documentary “Who Killed the Electric Car?”

Charging with an Ohme smart charging cable

Charging with an Ohme smart charging cable

While all traditional global automakers are moving toward electric vehicles to some degree, it is GM and Ford, the largest U.S. automakers, and VW, one of the world’s largest brands, that are doing so most publicly in America.

In the span of the next two years, Americans will see Ford electrify the country’s longtime bestselling vehicle, the F-150 truck, and the storied Mustang brand with the Mach-E. GM aims to reinvigorate the Cadillac with an electric crossover called the Lyriq and roll out an electric version of the Hummer, which was once the stereotype of the exhaust-spewing SUV.

Meanwhile, Volkswagen is pinning its U.S. hopes on the ID.4, the first in what is expected to be a long line of EVs and a transition away from its diesel scandal five years ago (Energywire, Sept. 24).

Marketing experts said that companies like GM, Ford and VW are walking a tightrope by trying to get customers excited about the new product without diminishing enthusiasm for the old. They are at the early phase, when the electric models are promised but not yet delivered.

“How do you still sell the internal combustion engine cars when you’re trying not to disparage them as you sell EVs?” asked Reid Carr, a marketing expert and CEO of Red Door Interactive who has worked on EV programs.

Companies in other industries have navigated contradictions: the Coca-Cola Co. has unleashed Diet Coke and Coke Zero without killing off its sugar king. Burger King has introduced the Impossible Whopper without abandoning beef patties.

But there have also been cases when technology companies with complex products failed to catch the wave at the right time. Polaroid Corp., the famed maker of instant film, perished in the transition to digital photography. Sony Corp., once the king of the CD and Walkman cassette players, lost its music mantle to Apple Inc. and Google.

The electric transition puts incumbents like Ford, GM and Volkswagen at an empirical disadvantage, according to a study by business researchers at the University of Pennsylvania and the University of Southern California.

Looking at utilities transitioning to clean energy as an example, the study found that the value of a firm disrupting itself often declines as the company stretches in two directions.

“Ironically, those incumbents potentially most threatened by the change seem to be least rewarded for their efforts to renew themselves,” the authors said.

Ford’s EV makeover
Ford is the automaker that has ventured furthest to compare its future EVs to its current models with gas tanks.

Its electrification push has been underway for several years: It is spending $11.5 billion on EVs by 2022, compared to GM’s $20 billion by 2025 and VW’s $35 billion by 2023. All the while, the automakers have made only anodyne statements about EVs’ capabilities.

Some of that continues today. Ford says its Mach-E will deliver “the exhilaration expected of Mustang” without mentioning that the highest-end model of this SUV will go from zero to 60 in three seconds — faster than the Shelby GT500, the fastest internal-combustion Mustang the company has ever made.

Marketing experts said that is the playbook for an incumbent: Don’t knock the old product, but try to attract early adopters for the new market.

Read more: E&E News

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