The Fuse

Ford Battles GM for Leadership in Electric Vehicle Market

by R. Kress | January 04, 2016

Quarterly Electric Vehicle Sales by Automaker (Source: Atlas Public Policy)sales by automaker over time

Not all electric cars are created equal—partially because not all of the automakers behind these vehicles are equally motivated to build them. American automakers have played a large role in advancing the technology, not only through the efforts of Tesla Motors, but also through GM, whose Chevrolet Volt routinely ranks in the top three for electric vehicles sold in the U.S. over the past three years.

While GM and Tesla took an early lead in the space, Ford has also emerged as an important player in both electric vehicle market share and innovation. The company has just announced a $4.5 billion dollar investment in electric vehicle development and plans to roll out 13 new EV models over the next four years. By 2020, the company says that more than 40 percent of its global fleet will be electrified.

First up will be an upgraded electrified Ford Focus set for production in late 2016 with an upgraded 100-miles per charge range—up from the current Focus’ range of around 75 miles per charge. The company also boasts that the new Focus Electric will feature a fast-charge capability, able to reach 80 percent capacity in 30 minutes.

But is this effort going to be able to compete with chief rival GM’s Chevy Bolt, set to be revealed later this week at the Consumer Electronics Show in Las Vegas?

“The Chevy Bolt will be a significant step forward,” says Tony Posawatz, EV industry veteran who spearheaded the development of the Chevy Volt at GM before taking the helm at Fisker Automotive as CEO. “This will be the first mainstream priced car to achieve the important threshold of 200-miles of range.”

Product offerings notwithstanding, former GM vice chairman and the author of Car Guys vs. Bean Counters: The Battle for the Soul of American Business and Icons and Idiots, Bob Lutz, tells The Fuse that there’s no question that Ford is outgunned by GM in EV development. Lutz spent 12 years at Ford, including several years serving on the company’s Board of Directors, and argues that in order to comprehend the future performance of both companies’ forays into electrification, one need only look at the past.

“GM has a substantial lead over Ford, partly for historical reasons. In the nineties, GM expended a lot of resources for [the] EV-1, which was unsuccessful in the market, but gave the company deep knowledge of EVs and their unique challenges,” Lutz explains, noting that the experience GM gained on the EV-1 helped the company become the first to commit to lithium ion batteries. “Ford has none of this history. They have a number of Prius-type hybrids—which I don’t count as EVs… but they eschewed ‘real’ EV development other than contracting out electrification of a handful of Focus [cars] to [Canadian automotive manufacturer] Magna. The car had a high price and only 80 miles of range with no ‘extender engine’ and was not successful.”

Electric Vehicle Market Share by Automaker (Source: Atlas Public Policy)EV sales by automaker

Posawatz sees Ford and GM as having different approaches to EV development. For one, he points out that the advent of EVs began not too long after the financial crisis rocked Detroit.

“Rather than spread resources too thin—a challenge for all the major manufacturers is that they were not too far removed from a very significant economic crisis. They were making sure the company was surviving, and they were restructuring. EVs alone were not going to be the financial savior, so they needed to be somewhat measured,” Posawatz says.

In that economic climate, Posawatz says that GM chose an aggressive approach that ultimately landed on the Volt as the lead option to be pursued.

“Ford took an initially slower approach,” Posawatz explains. He describes Ford’s strategy as choosing a class of car, pursuing options for EVs within that class and then moving on to another class. “Whenever they entered a particular market, they entered with a singular system and tried to make it something that was excellent in its class.”

Ford and GM’s historical rivalries aside, many might argue that Tesla is the company to beat in the electric vehicle space. But as Posawatz sees it, both Ford and GM have at least one significant advantage over Tesla.

“The traditional auto manufacturers have an existing scope of products and volume that they can bring to bear relatively quickly if they feel the market needs to justify investment in a particular segment like electric drive,” Posawatz says. “Tesla has just one product, they’ve just added a second and have forecasted a third. When you have a portfolio of products like the traditional auto manufacturers do, you can integrate that electric drive system—you don’t have to do ground-up products in every case.”

Because the large automakers have the ability to integrate electric drive into a range of existing products, they may be better suited to answering another vital need in spurring widespread adoption of electric vehicles—providing a wide variety of choices.

“To make EV adoption more prominent, a key factor is offering products in multiple sectors for people,” Posawatz says. “Historically, the products have been in compact segments—but there’s not a lot of choice in other vehicle segments and markets that exist.”

Posawatz notes that options for consumer-ready, electric drive SUVs are still currently quite limited and pose an area for opportunity as the automakers add to their EV portfolios. However, with the large, American automakers best suited to creating vehicles in bulk, Lutz raises some concern that widespread demand for electric vehicles has yet to emerge.

“Both [Ford and GM] will have to produce EVs in meaningful quantities to satisfy federal fuel economy regulations—whether there is demand for them or not. Right now, with plentiful oil and very low gas prices, there is almost zero demand,” Lutz cautions. But he points out that if range anxiety can be overcome, it will go a long way toward giving consumers the confidence to buy EVs. “That may change in the future with improved battery technology: Range of 400-miles per charge is absolutely necessary for owners to feel ‘comfortable’ on trips. Right now, not even a $130,000 Tesla can make it from Detroit to Chicago!”

Posawatz also points out that low gas prices or a change in the country’s broader economic situation could shake Ford’s plans for 2020.

“As an advocate of electric vehicles and electric drive, I’m very encouraged by Ford’s announcement… I just hope that things don’t change—be it [because of] an economic situation or a price of fuel situation. If those plans are executed, I think it will be a very encouraging few years in terms of the choices customers have and how good those products will be.”

But Ford’s ambitions aside, Lutz is still betting on GM to win the American EV race.

“GM is the clear leader. Ford ‘can and will’ when necessary. EVs will only have a modest presence in the market for many, many more years. Improved range and lower prices are necessary to bring about widespread adoption [without] massive state and federal subsidies,” Lutz says.

But ultimately, even Lutz acknowledges that Ford may yet prove itself capable of paving a new path to a bright electrified future: “There is no doubt in my mind that Ford is entirely capable of producing excellent EVs with modern batteries.”

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