Will the Electric Car Kill General Motors?

A recent movie and several books asked the question “Who killed the electric car?” then answered GM. Indeed, the major auto makers successfully defeated California’s attempt to mandate that 10% of car sales be electric vehicles (EV). GM retrieved the EV1 at the end of their lease periods and crushed almost all. Yet, GM and other auto makers have continued to pour billions into electric motors, advanced batteries, hybrid-electric propulsion, and electric vehicles where hydrogen fuel cells supply electricity to electric motors.

The more relevant question is this, “Will electric vehicles kill General Motors?” Most people on the planet cannot afford gasoline powered cars. Increasingly they can save $200 for an electric scooter. Over 30 million people drive electric vehicles. Jonathan Weinert reports on the exploding popularity of e-bikes in China.

As incomes increase, early adopters in China, India and other emerging nations will upgrade to new generations of light electric vehicles (LEV). Most of these vehicles will have 3 or 4 wheels and carry increasing numbers of passengers and loads.

Established market leaders commonly ignore or sarcastically dismiss low-cost and under-powered alternatives to their market leading products. Initially downloaded music in MP3 players had poor sound quality and was illegal. Now the music industry is transformed as people listen to high-quality music downloaded to their iPods and smartphones.

IBM was so dominant with mainframe computers that it suffered years of anti-trust litigation. Digital Computers sold far less powerful, but cheaper, mini-computers to labs. IBM ignored the threat of the mini-computer until the information technology industry had shifted to networked minis. Continual innovation and dropping prices of chips and networking brought another revolution with PCs replacing mini-computers. Digital did not learn from its own disruptive success and dismissed PCs as useless. Digital was later bought by Compaq, the very company that disrupted the minicomputer success. PCs are now under attack by the Internet. Microsoft is watching Google very carefully.

Just as a body’s immune system will try to reject a newly transplanted heart, successful organizations reject disruptive change. The phenomenon is so common that business schools now require the reading of Clayton Christensen’s The Innovator’s Dilemma and Geoffrey Moore’s Crossing the Chasm. Let us hope that the executives of GM are reading these classics. Reading my book Revenue Rocket is also recommended.

The interiors of vehicles are becoming electronic in everything from displays to entertainment systems to GPS guidance. Under the hood, it is the same story. Mechanical parts are being replaced by electronic components. In hybrid vehicles, electric motors are doing more; the companion gasoline engines are getting smaller. In the future vehicles will be primarily electronic. Internal combustion engines will be retired. Small vehicles not requiring long-range will get their power from the electric grid. Vehicles requiring more range or carrying heavier loads will be electric vehicles with hydrogen fuel cells.
Some at GM get this. GM is currently putting 100 hydrogen fuel cell Equinoxes on the road. A couple of weeks ago, I drove this exciting vehicle on surface streets and on the freeway. It is a powerful car that many would want to own. The R&D people at GM have an exciting vision that includes advanced batteries; regenerative braking; a thin “skateboard” platform common to multiple vehicles; drive-by-wire replacement of mechanical links to pedals and steering wheel; and electric motors. GM plans to start selling its next generation fuel cell vehicle by 2011. GM’s CEO Rick Wagoner has stated plans to lead in plug-in hybrids, when battery technology meets its quality standards. The vehicle will use a big 3.6L engine.

Will the heart transplant take? Or will the patient’s antibodies reject the needed organ? In 2005, GM reported a loss of over $10 billion. Its global market share has shrunk to 13%. Thanks to its pension obligations, labor contracts and overhead, it cannot make a small car at a profit. It focuses on large SUVs and large trucks with gas guzzling engines in hopes of making money. The bulk of the corporate momentum is not in future electric vehicles but in big vehicles with engines.

Toyota, riding on the success of hybrids and more fuel-efficient vehicles, is overtaking GM’s position as #1 market share leader globally. It threatens to beat GM to market with a plug-in hybrid. Within three years, Nissan Motor Co. plans to develop and market subcompact electric cars powered by self-developed lithium-ion batteries.

Honda wowed visitors at the LA Auto Show with its 350-mile range hydrogen fuel-cell Concept FCX, which it will start leasing to consumers and business in 2008. When Honda started selling motor scooters in the U.S. in 1959, GM could not have anticipated Honda’s future success in cars. Now as the global market shifts towards electric vehicles, Honda is also one of the leader’s in selling e-bikes in Asia. Is it déjà vu all over again?

In the sea of change that is beginning, tsunamis are racing to crash on America’s shores. One is Asian production of vehicles with electric drive systems. Another is the disappearance of cheap oil. Another is global demand for affordable vehicles. We will see how skillfully GM navigates in a perfect storm.
John Addison is the author of business strategy book Revenue Rocket and the upcoming book Save Gas, Save the Planet. He publishes the Clean Fleet Report and is a popular speaker.

22 replies
  1. Hugh
    Hugh says:

    GM won't give a date for selling a battery electric vehicle (EV,) since it just got into the (weak) hybrid business.Meanwhile, in the real world, Nissan just announced that it will join Mitsubishi and Subaru in selling EVs soon after 2010. Tesla and Universal Electric Vehicles will join Commuter Cars in selling highway-capable EVs to Americans next year. Oh, by the way: hydrogen fuel cell vehicles use four times the electrical energy to make fuel to drive a mile than EVs use simply charging their batteries to go that mile.

  2. Anonymous
    Anonymous says:

    Tesla Motors is a fraud. In fact, any company that tries to sell an all-electric car without using Altair's quick charge, long lived batteries will meet the same sorry fate as every automaker who has attempted to build one in the past 10 years – Honda, Toyota, Nissan, GM and Ford. Without a practical battery, a viable electric car is a really foolish, nonsensical fantasy. The Tesla is selling a few hundred wealthy Hollywood friends of Eberhard's a $90,000 car that can't even get them across the state line and back. It's nothing more than a pathetic symbol of their environmental masculinity.

  3. John Addison
    John Addison says:

    Thank you for the comments.Yes, EV's show at least 3X the energy efficiency of hydrogen. Where the range and type of vehicle fits, EVs show greatest promise. 99% of global electric vehicle users are e-bikes to NEVs, where a range of under 50 miles is fine.99% of global hydrogen users are larger sedans, SUVs, delivery vehicles and buses where ranges of 100 to 300 miles are demanded for heavier loads.Early adopters of both EVs and hydrogen often do not use coal generated grid electricity. They are also early adopters of solar, wind, and renewable energy credits.

  4. Anonymous
    Anonymous says:

    IN THE NEXT few years, we will probably begin to see more electric vehicles and hybrid-electric cars on roads most everywhere. Because of unstable and unpredictable gas prices, people are looking for better alternatives to match their day to day driving needs. According to Electric Power Research, BEVs (battery-electric vehicles) are 97 percent cleaner than gasoline-powered cars. Gasoline-powered cars give off pollutants whenever the engine is running. Just starting your car or sitting in traffic increases air pollution, and filling your gas tank releases harmful fuel vapors. As a gasoline-powered car ages, pollutants increase. A BEV car has low pollutants and remains that way during the course of its life.More About Phoenix MotorCars and NanoSafe Lithium-Ion Batteries ->

  5. Anonymous
    Anonymous says:

    GM is introducing an EV at the Detroit Show in January and already announced a plug-in Saturn Vue for sometime before 2010. As for Honda's revelation of a 350 mile hydrogen car, GM did that two years ago and already has people driving the concept. What's amazing is that a blog that's supposed to be in the know on technology is so stupid it can't get the basic story right. Remember, at least GM did a production EV…Toyota and Honda did not.

  6. Anonymous
    Anonymous says:

    General Motors will be back stronger than ever. It and Ford are the TRUE American automobile brands and Americans won't let forigners take over. Even if it ends up in World War III. It is the "American Way.

  7. Anonymous
    Anonymous says:

    Mandatory Renewable Energy – The Energy EvolutionOur country the United States in order to insure our energy and economic independence, without being blackmailed by foreign countries and better economic growth. Our dependence on fossil fuels could lead to catastrophic consequences.The Federal, State and local government should implement a mandatory Renewable Energy installation for residential and commercial property on new construction and remodeling, with the use of Energy Efficient material, mechanical systems, appliances, lighting etc.The Source of Energy must be Renewable Energy, such as Solar-Photovoltaic, Geothermal, Wind, Biofuels etc.The implementation could be done on a gradual scale over the next 10 years. At the end of the 10 year period all construction and energy use in the structures throughout the United States must be 100% powered by renewable energy.In addition the governments must impose laws, rules and regulations, whereby the utility companies must comply with a fair “NET METERING” (the buying of excess generation from the consumer)Promote the research and production of Renewable Energy Technology with various long term incentives and grants. Utilize various foundations to contribute to this cause.Utilize Water from Lakes, Rivers and Oceans to circulate in cooling towers to produce Air Conditioning. Utilize proper landscaping to reduce energy consumption.We should also include a mandatory time table for the automobile industry to gradually produce an automobile powered by renewable energy. The American automobile industry is surely capable of accomplishing this task.This is a way to expedite our energy independence and economic growth.It will take a maximum effort of the private, commercial, industrial and government sectors commitments to renewal energy, in order to achieve our energy independence.Jay DraimanNorthridge, CA. 91325 12-24-2006Energy — generation (wind, solar, hydro, biofuels, geothermal), energy storage (fuel cells, advanced batteries), energy infrastructure (management, transmission) and energy efficiency (lighting, sensors, automation, conservation)

  8. Brian
    Brian says:

    Poor Americans are we! The US Auto Makers will probably benefit doing what Ford has recently tried to do- having meetings with Toyota (12-28-2006) in Tokyo concerning joint ventures. I don't expect the Japanese to become real serious about partnerships- unless it costs Ford (and others) a pretty penny (billions). Good Article Thanks for Writing it, I have articles called "The Future Trends" on esnips(dot)com / Brian.

  9. Brian
    Brian says:

    Also- I think that the "momentum" for fuel-cell technologies in cars will speed their development and they will not be a twenty or thirty year ordeal. I seriously hope that either one of the major automakers steps up to to the plate and develops a fuel-cell vehicle within the next 5 years- or a young entrepreneurial firm does so- and ends up making the large firm's embarassed at all the potential windfalls they will loose. Using hybrid technology as a bridge is probably only happening because major auto plants cannot re-tool and re-design their plants for fuel cell vehicles within 5 years. Again- I hope an entrepreneurial firm comes out with a fuel-cell technology within the next 5 years- and it does so well that the other automakers will have to re-design and re-tool their plants within 5-7 years. I really believe that it will take an "entrepreneurial dynamic" to implement enough change make fuel-cell technology use-able within 5-7 years. We need a fast, smart, efficient firm that doesn't look to their peers and other competitors- fuel cells are necessary and I do hope they debut nationally within 5-7 years. The hybrid is just a time waster and pain in the way of the real technology we need today- fuel cells. IMHO- Brian

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