From Hummer’s to Bolt’s: GM’s Transition into a Low Carbon World
General Motors, largely known for their fuel guzzling SUV’s, has begun a major transformation with both products and partnerships to become a world leader in low carbon transportation.
The transportation industry as a whole produces 26% of the world’s carbon emissions, second only to the electricity sector with 30% [1]. Of that 26%, personal transportation in the form of personal cars, SUV’s and pickup trucks accounts for roughly half of emissions. Apart from resource extraction industries, automotive companies have taken a large portion of public criticism regarding excessive emissions production. With inarguable links between CO2 production and climate change, automotive manufactures play a key role in reducing the production of carbon from our transportation sector.
General Motors (comprised of Chevrolet, Buick, GMC, Cadillac, Hummer, Opel, and other foreign brands) has been pressured, through government regulations and public demand, to begin to offer more fuel-efficient vehicles. The EPA has mandated that fleet wide average consumption must reach 54.5 miles per gallon by 2025, resulting in an estimated savings of 6 billion metric tons of GHG. On the vehicles purchasing side, while consumer demand is still closely tied to current fuel prices [2], there has been increasing pressure for car manufacturers to design and manufacture fuel efficient. GM has responded to these changing market conditions with innovative vehicle offerings and unexpected partnerships.
With respect to vehicles, GM has made large investments to enter the electric vehicle market. Beginning in the early 1990’s GM began exploring electric propulsion with the EV1, a small fully electric car that offered ~100 miles of range [3]. After less than stellar market response the program was scrapped and GM waited until 2006 to release their first gas-electric hybrid vehicle, the Saturn Vue. Following the Vue, several of GM’s vehicles were offered with gas-electric hybrid powertrains. GM’s next vehicle, the Chevrolet Volt, was a large step forward for the company in terms of full vehicle electrification. The Volt was like a conventional hybrid in that it had both an electric motor and a gas engine, however in this instance the gas engine was solely designed to act as a generator for the electric motor. This revised system, referred to as a plug-in hybrid, allowed drivers to charge the vehicle at home and then to drive solely on electric power for the first 50 miles after which the gas generator would start up to charge the batteries. High selling prices and low performance led the car to produce dismal sales, however GM continues to manufacture and iterate on its initial design [4]. GM’s latest offering, the 2016 Chevrolet Bolt has become the first commercial car to hit the fabled ‘threshold’ of commercial viability: 200-mile range at a ~$35k price tag. While all eyes were on Tesla to deliver their famed Model 3 to the mass markets, GM basically snuck in the back door and created the first fully electric car affordable to mass market consumers. The auto industry was stunned and surprised to see the traditional Detroit-based car manufacturer, which had been bailed out by government funds only 8 years earlier, beat the sexy Silicon Valley start-up Tesla to the affordable market finish line. GM cannot claim complete victory yet as Elon Musk’s Model 3 has over 400,000 pre-orders and Chevrolet still must prove there is a demand for their Bolt [5].
In other areas, increased demand for ride sharing services, a necessary step to reduce the overall number of vehicles on the road, has led GM to join the movement by investing heavily in Lyft, Uber’s only competitor for ride sharing in the US. GM’s investment of $500 million is intended to increase GM’s knowledge of the consumer preference switch towards ride sharing services versus private car ownership [6]. Lyft will soon be trialing autonomous operation of the Chevrolet Bolt’s to significantly reduce the ride sharers operating costs, release dates are TBD.
While GM has done an excellent job positioning themselves for success in a future where climate change and its implications are more widespread, there are some actions that they could take which would further solidify their success. Firstly, they should mimic Tesla in establishing a Supercharger network across the country, however they should not make it brand specific and should instead create a network that allows for all types of electric cars to rapidly charge. In doing this, they would then own the network (and the data) for future charging stations and obtain a first mover advantage in this space. Lastly, they should work tirelessly to reduce the overall cost of the Bolt as price sensitivity is very high for most consumers.
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- EPA, “Sources of Greenhouse Gas Emissions,” [Online]. Available: https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions#transportation.
- International Business Times, “Gas Prices Fall So Does Fuel Economy,” [Online]. Available: http://www.ibtimes.com/gas-prices-fall-so-does-fuel-economy-consumers-flock-trucks-when-they-see-low-prices-1775096. [Accessed 2 November 2016]
- Smithsonian, “The Death of the EV1,” [Online]. Available: http://www.smithsonianmag.com/science-nature/the-death-of-the-ev-1-118595941/?no-ist. [Accessed 2 November 2016]
- The New York Times, “GM’s Electric Lemon,” [Online]. Available: http://www.nytimes.com/2010/07/30/opinion/30neidermeyer.html?_r=1&scp=1&sq=electric%20car%20lemon&st=cse. [Accessed 2 November 2016]
- Auto Cheatsheet, “Tesla Model 3 vs. Chevy Bolt,” [Online]. Available: http://www.cheatsheet.com/automobiles/tesla-model-3-vs-chevy-bolt-ev-5-key-differences.html/?a=viewall. [Accessed 3 November 2016]
- Time, “Why General Motors Is Investing $500 Million in Lyft,” [Online]. Available: http://time.com/4166130/general-motors-lyft/. [Accessed 2 November 2016]
Michael, thanks for the interesting post! It’s surprising to see that GM actually beat Tesla to the market with its fully electric car for the mass market. Although there is a lot of anticipation that tech companies like Tesla and Apple will disrupt the auto industry because they have better technology, are more nimble or innovative, I think this shows that deep experience and scale are still important, especially in a manufacturing industry.
I agree that if GM can be successful in building and owning a Supercharger network across the country, they will really drive adoption of electric cars and have a competitive advantage for its own business. My concerns would be the large upfront costs and the costs of duplicating efforts with Tesla and other manufacturers who have the same goal. In addition, I wonder whether other auto manufacturers would be willing to have GM own the network and their data. It’s possible that GM can negotiate a partnership with other auto brands to build the Supercharger network together, sharing in the costs and benefits.
Thanks for the insight into the electric vehicle world! One thing I kept thinking about while reading this article was the actual production facilities that GM owns to produce their cars and how much waste and pollution they produce. I would be curious if they are really putting their money where their mouth is and implementing environmentally conscious processes or are they just producing electric cars because that is where the market is going.