“Did you know Norway sells way more electric vehicles per capita than the US? Well, I won’t stand for it!” Will Ferrell then punches a globe on his desk and a wild adventure ensues. Thus begins a hilarious car commercial that will officially debut during Sunday’s Super Bowl between Tom Brady’s Tampa Bay Buccaneers and the defending champ Kansas City. General Motors hired the Anchorman star, along with SNL’s Kenan Thompson and the comedian / actress / rapper Awkwafina, to help announce that GM will only sell zero emission vehicles no later than 2035. The numbers back up Mr Ferrell’s frustration: over 60% of new cars sold in Norway are electric, over 30 times the proportion sold in the US, which is less than 2%.
GM’s announcement last week sent shock waves through the auto industry. The company has been hinting at big moves in low carbon vehicles for years, elevating Mary Barra, a strong proponent of EVs, to be the first female CEO of the company in 2014. She helped launch the Chevy Bolt as a rival to Tesla. GM signed a JV with hydrogen fuel cell truck maker Nikola and they have been reporting progress on their massive 200 kWh Ultium battery as well.
The knock-on effects of this move will be far reaching. EVs do not have pistons, spark plugs, catalytic converters, mufflers, or gas tanks. They do not fill up at normal gas stations. They have far fewer moving parts, requiring far fewer people to build and maintain them. This will turn the automobile manufacturing, service and fueling networks on their heads. In their place will be massive battery gigafactories, EV charging networks, intelligent software and very likely a massive increase in autonomous vehicles.
GM announced that it will have 30 new global electric vehicle models by 2025. Other auto manufacturers have also made big strides in moving to EVs. Both Daimler (Mercedes Benz) and Volkswagen have promised to have EV versions of each of their cars in the next ten years. Ford recently committed $29 billion to rolling out an EV fleet, including its flagship Mustang and its cash cow, the F-150 truck. But no large auto manufacturer had committed to phasing out internal combustion engines completely until GM did last week. The move is both bold and shrewd for Ms. Barra. GM sells just under 8 million vehicles every year and has a market capitalization of $77 billion, or around $10,000 per car sold. Tesla has a market cap of $810 billion on 365,000 cars sold. That equates to a market cap of $2,200,000 per car sold, 220x higher than GM!
Clearly, Ms. Barra has an eye toward the valuation premium EV car companies enjoy, but it remains to be seen whether American car manufacturers like GM and Ford, which have massive pension liabilities, unionized work forces, archaic dealer networks and R&D programs that have been focused on the internal combustion engine for 80 years, will be able overcome these legacy issues to compete with the likes of Tesla. Nevertheless, it will be fun to watch how the auto industry reacts as GM embarks upon this zero emission journey. Maybe even as fun as watching Will Ferrell catch an arrow with his teeth in GM’s new Super Bowl ad on Sunday!
