First Electric Car Gymkhana By Ken Block Includes A Unique Audi Ev

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First Electric Car Gymkhana By Ken Block Includes A Unique Audi Ev

General Motors has been in business for more than a century, but in its 112 years, the company has never faced such challenges as it does in today’s rapidly electrifying and automating industry.

The assembly line jobs from Detroit’s heyday have been replaced by legions of automated industrial arms, almost as quickly as the era of internal combustion engines has been supplanted by EVs. Since 2014, it’s been Mary Barra’s job as CEO of GM to help guide America’s largest automaker into the 21st century.

 

In Charging Ahead: GM, Mary Barra, and the Reinvention of an American Icon, Author and Bloomberg automotive journalist David Welch describes Barra’s heroic efforts to modernize a business that has existed since the days when horses pulled buggies, reimagine the brand’s most recognizable models, and make EVs accessible to the general public — all while being a woman in the top echelons of a male-dominated sector. Welch looks at some of GM’s early electric projects in the excerpt below, including the Bolt and the popular but short-lived EV1, without which many Ultium-based vehicle options probably wouldn’t exist today.

 

  

Taken from Charging Ahead by David Welch. Copyright © 2022 by David Welch. Used by permission of HarperCollins Leadership, a division of HarperCollins Focus, LLC.

 

Rich, tech-savvy drivers had become fascinated by battery-powered vehicles. Tesla was the first to do so, capitalizing on the opportunity by building a popular brand. Its vehicles started luring buyers away from brands like Mercedes-Benz and BMW.

 

But EV sales were still barely about 1% of all auto sales in 2017, the year Barra was considering her own plug-in play. Even at hefty pricing, they lost money since they were still too pricey for the majority of consumers. Only Tesla models could travel more than 300 miles on a single charge, while EVs supplied by GM, Nissan, and Tesla might take hours to charge.

 

GM had been developing electric battery-powered automobiles and researching electric batteries. Barra was not at all caught off guard. But spending such a large sum of money on vehicles with an unreliable market was viewed as speculative and dangerous.

 

Internally at significant auto manufacturers, there were still those who believed that EVs were an expensive science experiment. They believed Tesla would eventually run out of money and the auto industry could continue as usual.

 

Internally, GM was weighing uncertain demand for EV sales against the risk that Tesla and Germany’s Volkswagen group and even Ford would capture the buyers who made the switch. That threatened to completely reset customer loyalties and shake up the industry.

 

Tesla already sold most of the electric vehicles on the market. Elon Musk threatened to upend the auto industry the way Apple’s iPhone did to ’90s mobile phone kingpins Nokia, Motorola, Ericsson, and Siemens. GM’s future hinged not only on Barra’s courage to make a move, but also on her being wise enough to get the timing right.

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Caution was understandable. At the time, Tesla was by far the top seller of electric vehicles with 100,000 sold globally and losses of about $2 billion on sales of its Model S sedans and Model X SUVs. Those Teslas typically sold for more than $100,000 apiece, which is triple the price of the average gasburning family SUV.

 

With Tesla’s $100,000 cars losing money the challenge for companies to make a buck selling EVs was daunting.

GM knew it all too well. In the 1990s, the company had sold the famous EV1, an aerodynamic two-seater priced at $34,000 that was leased to EV enthusiasts from 1996 to 1999. That was an expensive car back then. GM spent $1 billion developing it and would lose more money selling the vehicles, said [then-GM CEO G. Richard] Wagoner in an interview.

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I remember seeing a presentation for the car at the Detroit Auto Show in 1997. GM’s then vice chairman, Harry Pearce, talked about electric cars like the EV1 and also about hybrids that ran on gasoline engines and electric motors. For GM, it was a display of what the company’s engineers could do and a glimpse of the future, he told me. But it would be decades before it would be a real business.

 

 

The EV1 would bring GM serious credibility with environmentalists, but after leasing 1,100 of them, the company lost a lot of money. A few Hollywood actors like Ed Begley Jr. leased one and promoted it as often as he could. Francis Ford Coppola had one, and when GM ended the program and demanded that lessees return the cars, he refused to give it up and kept it. The company crushed all the cars that it had leased after retrieving them, which then made GM a pariah with the same environmentalists who loved the car.

 

 

The economics of electric cars weren’t very good twenty years later. Chevrolet started selling the Bolt in 2016 and lost a whopping $9,000 on every one of the $38,000 plug-in cars it sold. Before that, GM sold the Volt plug-in hybrid, which uses a gasoline engine and an electric motor in tandem to get forty-two miles per gallon. The Volt lost even more. Those nasty numbers would drive serious resistance to electric cars inside GM and at other major carmakers, too.

 

One big reason GM sold the Bolt was to meet government regulations. In California and a dozen coastal states that followed its lead, automakers had to sell electric vehicles or other super-efficient cars like hybrids to be able to sell their profitable gas guzzlers. Selling green vehicles earned ZEV credits. GM could also buy ZEV credits from Tesla, which many automakers did. But that just meant that they were helping fund Musk’s effort to eat their lunch.

 

In the EV race, Tesla already had the advantage of a tremendous amount of investor patience for Musk’s losses. Even though Tesla lost $2 billion that year, his company’s market capitalization ended 2017 with a total value of $52 billion. That was just $4 billion less than GM’s even though Barra brought in near record profits that year. In other words, the market would continue to fund Musk’s money-losing operation, but Barra had to fund her own vehicle development with profits from the very gas guzzlers she was seeking to replace.

 

That put GM and the mainstream car companies under pressure from three sides. Shareholders wanted profits from pickup trucks and sport utility vehicles. But in the car market, Tesla was stealing buyers, gaining a technological advantage in battery development, and building an Apple-like brand for making the cars of tomorrow. Meanwhile, governments were putting the squeeze on with new clean-air rules.

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