While General Motors is just ramping up its EV program, CEO Mary Barra is boldly forecasting the Detroit automaker will outsell segment leader Tesla in the U.S. by mid-decade.
She’s not the only one who sees that happening, at least one leading analyst, Bank of America’s John Murphy predicting GM could hold twice the market share of its upstart rival come 2025. But a lot of things are going to have to come together to get there, including the launch of the Chevrolet Blazer EV unveiled Monday night.
It’s one of at least 30 all-electric models GM plans to have in showrooms in the U.S. and abroad by mid-decade and Blazer targets a much more mid-market segment than the GMC Hummer EV and Cadillac Lyriq. Those were the first two EVs using GM’s new Ultium batteries and chassis. Blazer will start at $44,995 for the base 1LT model, and push as high as $65,995 for the high-performance SS package. But the next model to roll-out, an all-electric version of the Chevy Equinox will go even more mainstream, with Barra saying early this year that it will start around $30,000.
Going for the heart of the market
“To really get to 30, 40, 50% EVs being sold, you have to appeal to people that are in that $30,000 to $35,000 price range,” Barra said in a new interview with the Associated Press.
Like Don Quixote tilting at windmills, there are plenty of skeptics who question what the $35 billion GM is investing in electrification will achieve. Right now, its all-electric products aren’t even in the top five from a sales standpoint. On the other hand, Tesla has two models on that list, and all four of is vehicles are in the top 10. But while the now-Texas-based automaker currently holds a 75% of the U.S. EV market, Tesla may be making some critical mistakes.
Currently, its cheapest model is the rear-wheel-drive version of the Model 3 sedan which starts around $48,000. The similarly sized Model Y crossover jumps to $65,000. But CEO Elon Musk acknowledged Tesla has put on indefinite hold plans to develop more affordable products.
“We’re not currently working on the $25,000 car,” he said in January. “At some point we will, but we have enough on our plate right now, too much on our plate, frankly,” Musk added.
Rising prices could short-circuit the EV market
EV prices, in general, are rising faster than comparable models using internal combustion engines, analyst Murphy noted during a presentation in Detroit last month, and that threatens to slow down what has been fast-rising demand for battery vehicles. But Tesla has been among the most aggressive in raising prices, some models going up by $6,000 this summer.
EV sales have jumped from a mere 1% of the new vehicle market in 2019 to 5% in 2021. Industry analysts now think that could reach 20% by mid-decade — though Murphy cautions that may be overly optimistic, especially if automakers can’t target the mainstream.
He’s also among the most bearish when it comes to Tesla. In the annual “Car Wars” study released by Bank of America last month, Murphy predicted the EV manufacturer’s share could tumble to anywhere between 7% and 11% by 2025. On the other hand, he was extremely bullish about GM, which he sees growing to a 15% share of the EV segment, roughly in line with what it holds in the overall automotive market today.
That said, Murphy left open the possibility that GM might not gain EV leadership, also projecting a 15% share for Ford. Until now, a relatively modest player in the battery-car market, it has scored hits with its Mustang Mach-E and F-150 Lightning models and is now laying out plans for a broad EV portfolio of its own.
Spoilers and “black swans”
And there are still other players that could come in as spoilers, notably the Hyundai Motor Group which recently laid out plans for an EV blitz for its three brands: Hyundai, Kia and Genesis.
There are plenty of “black swan” factors that also could impact the EV market, indeed, the automotive market in general. On one hand, the surge in gas prices this year has encouraged millions of Americans to consider going electric. But then there’s the surge in interest rates, as well as the talk of recession.
Add the ongoing semiconductor shortage that has frustrated industry efforts to rebuild inventories after the shutdowns early in the COVID pandemic. Automakers hoped to have supplies of those critical chips back to normal by now. But a recent study by AlixPartners warned that the situation could stretch well into 2023. And EVs are particularly vulnerable to chip shortages.
“It’s pretty volatile right now,” Barra said in her interview with the AP. “We’re looking at many different scenarios as any prudent business leader would to make sure we’re ready for whatever, however the situation evolves.”
Barra has Europe in her sights again
It’s coming up on nine years since Barra became the first female head of a major automotive manufacturer. She has shown herself more than willing to break from GM tradition. Among other things, Barra pulled the automaker out of money-losing markets such as Russia, India and Australia — and even Europe.
But shortly after selling off the Opel-Vauxhall subsidiary to what was then the PSA Group, Barra told TheDetroitBureau.com GM might yet return with a focus shifted to battery-electric vehicles. She appears to be ready to move that plan off the back burner.
“All I can tell you is I think it’s a huge growth opportunity for the company,” Barra said of Europe in the AP interview, “and we’re excited to be back.”
Returning to that market will be a challenge, Murphy and other analysts have cautioned. GM could face buyers skeptical about its long-term commitment after abandoning the Opel-Vauxhall brands. But with Europe one of the world’s fastest-growing markets for EVs, that could provide the best possible opportunity to stage a return.