General Motors as a tech stock, Ford as the new Apple? Odder things have happened on stockmarkets in the past. But the inexorable move to electric vehicles (EVs) in America and the rapid adaption to that reality by the country’s two major locally controlled car makers is changing the thinking about what were two moribund legacy manufacturers being on their way out.
General Motors and Ford still face more problems with their conventionally-powered vehicles. Their long-held reputations are as being conservative, climate denying manufacturers, slow to move on issues like fuel consumption, pollution and harmful emissions.
But that is changing rapidly, driven by the realities of greenhouse, carbon neutral manufacturing and products and stockmarket rewards – just look at the way Tesla has moved from being worth less than the two giants to being a $US600 billion plus giant, thanks to its pioneering of EVs, batteries and the high profile of CEO and founder Elon Musk.
Tesla though is a pure EV maker – the others combine hybrids and EVs. as well as their ICE (Internal Combustion Engine) powered vehicles which are to be milked for their revenue and profits to pay for the move to EVs and batteries (like the way the giant oil companies such as BP and Shell plan to use their oil and gas sales to finance their green future).
GM and Ford will spend more than $US10 billion on a series of battery plants by 2025 and will probably have to expand and renew those heading towards 2030 such will be the pace of change in technology.
Tesla has shown the way. Others are following.
Foreign car companies like Toyota, Nissan, Honda, Volkswagen and Stellantis (which owns Chrysler and Dodge) are heading down the same route – quickly, led by Toyota which has ambitious plans for 80% of all vehicle sales to be electric or hybrid.
Now EV purchases by US car buyers are starting to look like more than just a fad, with the latest monthly and quarterly car sales figures confirming the trend is becoming a rush.
But at the same time US buyers are buying more and more Sports Utility Vehicle types – more and more of which are hybrids, with more to come as Ford plans to start selling an electric version of its flagship F-150 truck next year.
In Australia, the Bureau of Statistics said the number of pure electric vehicles sold here last year was 23,000 – more than double a year earlier. There are tens of thousands of other electric hybrid vehicles in the Australian road fleet as well, such as the Toyota Prius.
That’s still a small share of the 20 million vehicles in the country, but they are the fastest growing segment. ABS import data since the start of the year confirm the trend is continuing with thousands more hybrids and straight EVs (such as Teslas) imported.
In the US analysts say the surge in new and used car prices this year because of shortages (due to a shortage of computer chips for car management systems) has helped boost sales of Evs.
The higher vehicle prices (for conventional powered vehicles) have boosted profitability for big car companies like GM, Ford, Honda, Toyota and Nissan and who have also lifted their investments in EV production and batteries by billions of dollars so far this year.
General Motors Co said its Chevrolet Bolt EV posted record second-quarter deliveries, with total Chevrolet sales up 31%, while sales of its Buick premium SUVs soaring 86%.
GM last month increased its EV budget to $US35 billion through 2025. That’s up from a $US20 billion commitment in late 2020 and was the third increase in planned spending in a year.
GM has already forecast record second quarter earnings of more than $US8 billion when it reports late this month.
Toyota, which has ambitious global plans for its EVs between now and 2030, said alternative powered vehicles represented nearly one quarter of its sales volume through June this year, up from 13% a year earlier.
Toyota’s overall US sales rose about 73% to 688,813 vehicles in the second quarter, meaning the number of alternate vehicle sales was over 150,000. That takes the total for the first half of the year to around 300,000.
Toyota reported US sales of 688,813 vehicles in the three months to June, just ahead of GM’s 688,236 sales in the second quarter.
US auto data group, JD Edmonds said it was the first time the Japanese giant had outsold its US rival in a quarter since 1998.
US-based car makers will release several new EVs in coming month including Chevrolet’s Bolt EUV, Hyundai’s Ioniq 5 and Kia’s EV6 models.
Analysts say these will lift the overall share of EVs in the United States from just 2% of all registered vehicles currently.
Ford revealed that its sales fell 26.9% in June, including a roughly 30% drop in its F-Series pickups. For the second quarter Ford sold 475,327 vehicles up 9.6% from a year earlier when the coronavirus pandemic caused Americans slow car purchases.
Ford’s sales in May and June were hit by the shortage of computer chips. The company has already said this will cost it half its second quarter production.
The company though reported a 117% rise in sales of EVs and hybrids (and that it now has a backlog of more than 100,000 orders for the EV version of its big selling F-150 truck to be launched next year). Ford said sold 12,975 units of its Mustang Mach-E SUV in the first six months of this year.
JD Edmunds said June’s annual sales rate was about 15.5 million vehicles, down from 17.1 million vehicles in May and 18.6 million vehicles in April. The computer chip shortage is certainly biting and growing sales of EVs are being restricted as well as conventional vehicles.
Tesla said it delivered 201,250 electric vehicles in the June quarter, falling short of Wall Street estimates of 207,000 vehicles, but it better than first-quarter sales of 185,000 and put the company on a path to double last year’s annual deliveries of just under 500,000.
But Tesla is facing growing pressure in China on its self-driving /navigation systems and the data it generates and stores. China wants that censored and kept in the country – the data currently is sent to the US and stored there, according to media reports.
The 10% plus lift in Tesla’s sales came despite the shortage of computer chips that clearly crimped sales by Ford, GM and other makers in the June quarter.
But for Ford, GM (and Chrysler), the die is cast and they are off on the road to a new, green future, and like as a future tech, with batteries, EVs and all sorts of other shiny objects that make money.