Bob's Gutsy Leadership Blog

Auto Companies: Balancing Pressures from Politicians, Media, Technology, and Customers

Recently the President of the US issued an executive order/goal calling on electric, fuel-cell, and hybrid vehicles to account for 50% of car and truck sales by 2030.  That is only 8.5 years away!

While such a statement coming out of Washington DC has no binding authority, it puts auto companies in a real box.  What are the forces that they face as they consider how to react to such a statement?  Here are the major ones:

  1. 1.) The Media – Given that the media needs to create as much sensationalism about such a directive as possible, in order to drive viewership and thus profits, they will showcase anyone who will say something outrageous about the car makers, electric vehicles, climate change, scarcity of the key minerals used to make batteries, or any other aspect of the topic.  The auto companies are in the crossfire of all of this and have no option but to respond publicly.
  1. 2.) The Technology – Today the high cost of the battery in an electric vehicle makes the car cost more than the gas-driven equivalent.  That cost needs to come down.  Also, today’s batteries have had numerous incidents of catching fire.  For example, GM is recalling all Chevrolet Bolt cars ever made due to battery fire problems.  The capacity of the batteries, their large weight and physical size, and their long charging times all need attention. 
  1. 3.) The Consumer – Besides the higher cost of an electric vehicle, the range on a full charge is too limiting.  For example, supposed you want to drive to grandma’s house 500 mile away for Thanksgiving.   If you are going to be driving 65-70 miles per hour on the interstate highway, Motor Trend tests indicate that speed will cut the range by 15-20%.   If you are in the Midwest or Eastern part of the US, it wouldn’t be unusual for the temperature outside to be about 32 degrees.  Industry tests show that cuts your battery capacity by 25-30%.   The EPA rated range of an electric vehicle is at the ideal conditions of 50-55 MPH and 70 degrees temperature and while cars vary, most have an EPA rated full-charge range of roughly 300 miles.  
  • Net, you are likely to be hunting for recharging stations at least twice on your way to visit grandma, and the recharging time varies wildly.  No wonder today only 3% of cars sold are EV’s.  Given all of this, it is not surprising that today EV’s are primarily used for trips within a modest distance from your home, then you plug it in overnight in your garage to a 220-volt outlet. 

So…how does a car company respond when the government publishes a directive that sales of EV’s and hybrids need to account for 50% of sales in 2030?  GM’s CEO responded by stating: “Achieving such a goal depends on government purchase incentives and funding support for a lot of technical innovation required to get consumers excited about electric vehicles.”  Net, she is hedging the bet and reminding the government of the need for help in making EV’s popular.  Leaders need to be totally objective, and not get pinned down by government or media pressure when facing a situation like this, where so much needs to happen before such vehicles can become mainstream.  

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