The electric future is coming. But how quickly is less certain.
Just a decade and a half ago, the then-CEO of General Motors Co. Rick Wagoner observed to Larry Burns, at the time GM’s head of research and strategy, that not many industries stay the same for a century. But the automobile industry, Wagoner added with some anxiety, had so far been the exception. Its business model remained that pioneered by Henry Ford with the Model T a century earlier — “gas-fueled, run by an internal combustion engine, rolling on four wheels.” “What’s the car of the next hundred years going to look like?” Wagoner asked.
Recently, I asked Wagoner about that conversation. “The focus then was on making the internal combustion engine better,” he replied. “I was asking, ‘If we were starting the industry today, what would be different?’”
A pretty clear answer about how different came earlier this month from President Joe Biden when he issued an executive order setting out the goal that “50 percent of all new passenger cars and light vehicles sold in 2030” should be electric. In the order, he instructed government agencies to implement regulatory policies to achieve that goal. “There’s a vision of the future that is now beginning to happen,” said the president. This vision clearly does not involve making the internal combustion engine better.
In response to government policies, automakers are committing many tens of billions of dollars over the next 10 years to EV development. Targets may be motivating. But no matter how much money is spent, shifting such a vast industrial and consumer ecosystem that is so basic to the economy faces big challenges, with the result that the share of new car sales that are EVS by 2030 will more likely be about 25 percent. The challenges still have to be met.
It was in 2008 that an initial glimmer of what is now Biden’s vision appeared with the arrival on the road of the first commercial electric car of modern times — the Tesla Roadster. At the time, the all-electric Roadster looked like a novelty. Moreover, its appearance was somewhat accidental. Five years earlier, a young electric vehicle enthusiast, J.B. Straubel, had lunch at a fish restaurant in Los Angeles with Elon Musk, trying to convince him about the potential of an electric plane. When Musk showed no interest, Straubel switched to an electric car. It was an idea originally championed by Thomas Edison more than a century ago, but which had failed in the face of the Model T. But in 2008, Musk jumped at the idea. Some years later, Musk said that without that lunch, “Tesla wouldn’t exist, basically.”
The Roadster, starting at over $100,000, was not exactly a mass market car. But there soon were other early entrants. Nissan, where engineers had been working on an electric car for more than two decades, introduced the Nissan Leaf in 2010, the same year that General Motors came out with the Chevy Volt. GM followed up in 2016 with the Bolt, a major project accomplished in double-time under the then-head of development and now-CEO Mary Barra.
Now let us fast forward just a few years. Today, automakers around the world are racing to catch up with Tesla and bring out a full slate of electric vehicles. General Motors has set the goal of going all-electric by 2035. Mercedes just leapfrogged with a goal of being all-electric for light vehicles by 2030. “The EV shift is picking up speed. … The tipping point is getting closer,” Mercedes CEO Ola Källenius said last month. “This step marks a profound reallocation of capital.”
The No. 1 factor speeding the shift to EVs is governments putting an increasingly heavy foot on the accelerator. The European Union is proposing tough regulations on carbon dioxide emissions from cars made or sold in Europe that would effectively ban the sale of new cars with internal combustion engines after 2035. California and Massachusetts similarly have announced ambitions to ban new cars with internal combustion engines by 2035. Biden has now upped the ante by pressing automakers for that 50 percent electric goal by 2030. Governments around the world are also fueling consumers’ purchases of EVs with generous tax incentives and subsidies, and emission standards are becoming ever more stringent. Just this month, the Biden administration proposed tougher fuel efficiency standards in the U.S. This will drive up the cost of conventional cars with the aim of pushing more new car buyers to switch to electric instead. In Shanghai, China, the city offers free license plates for what Beijing calls “new energy vehicles,” while consumers must go through an auction to get a license plate for a car with a traditional engine.
Read more: POLITICO