Navigant Research Blog

Chevrolet Bolt Shows GM Is Serious About Making the EV Mainstream

— January 30, 2017

Electric Vehicle 2A decade ago, the documentary Who Killed the Electric Car? chronicled General Motors’ (GM’s) decision to repossess all of the existing EV1s from the small but loyal group of customers that had been leasing the pioneering battery electric vehicle (BEV). Ever since, skeptics have doubted the company’s true commitment to making BEVs—the Volt had an internal combustion engine, and the Spark EV was viewed by most as a compliance car. Wonder no more, because the 2018 Chevrolet Bolt demonstrates that GM is committed to making the BEV mainstream.

While Tesla has made big promises with the upcoming Model 3, GM has pulled ahead by now delivering Bolts to customers. Sales of plug-in EVs (PEVs) have fallen far short of the projections made when automakers revealed the first wave of modern BEVs at the beginning of the decade. Nonetheless, cumulative sales for Tesla, GM, and Nissan are beginning to approach the 200,000 level that will trigger a phaseout of federal tax credits. When that happens, the effective price for consumers will jump by $7,500, and PEVs will truly have to stand on their own merits in order to attract buyers.

Lessons Learned

As the first dedicated BEV developed by GM since the EV1 in the early 1990s, GM has applied lessons learned from its prior efforts and observations of what has happened with competitors. “The Bolt program was launched more than 4 years ago with a decree from then-CEO Dan Akerson to deliver an appealing car with a 200-mile electric range and $30,000 price point,” said Stuart Norris, managing director of the GM Korea Design Studio. Norris’ design team, along with the engineering teams in South Korea and Michigan, had a clean sheet of paper to work with.

Seeing the global market trends of increasing urbanization, the growth of ride-hailing services, and the rising consumer preference for higher-riding crossover vehicles all helped to define the general form factor of the Bolt. Advances in battery and electronics performance and cost enabled the team to meet their targets.

A comparatively small footprint in line with B-segment models like the Honda Fit means the Bolt occupies less space on the road. At the same time, its tall stance means there is ample room for at least four adults in its 95 cubic foot passenger volume. Smart packaging means it actually exceeds the 94 cubic feet of cabin volume in the much larger Tesla Model S, and it’s easy to get in and out for passengers of ride-hailing services like Lyft, in which GM is an investor.

Practical and Appealing

Performance is a big Tesla selling point, especially the oft-heralded “Ludicrous” acceleration. However, the much larger external dimensions and mass of the Model S mean that it’s not so nimble on twisty mountain roads or as maneuverable in tight urban areas like San Francisco. At half the price of the least expensive Model S, the Bolt doesn’t offer quite the same thrust, but with 200 horsepower and 266 lb.-ft. of instantly available torque, the Chevy still gets to 60 mph in under 6.5 seconds. More importantly, it handles both mountain passes and urban centers deftly, and based on a first drive, use of the low mode with its extra regenerative braking can boost the vehicle’s charge range well beyond the EPA-estimated 238 miles.

The launch of the Bolt and Model 3 has inspired other automakers to rethink their EV plans and boost the planned range to over 200 miles. If everyone can make their EVs as practical and appealing to drive as the Bolt, we may finally see a surge in sales that makes the emissions-free vehicle a mainstream reality.

 

Perception vs. Reality: CES and the North American International Auto Show

— January 19, 2017

Connected VehiclesIf there is any one lesson that we should all take away from 2016, it’s the confirmation that perception does not necessarily equal reality. What people perceive to be the truth is often the most important part of their decision-making, a concept now shown in the auto industry’s seemingly increasing participation in the International CES and apparently declining interest in Detroit’s North American International Auto Show (NAIAS).

There has been a lot of consternation in Michigan recently about the impact that CES has had on the Detroit show over the past decade. The two events tend to run back-to-back over the first 2 weeks of January. I was on hand in 2008 when then-General Motors CEO Rick Wagoner was the first major auto executive to keynote at CES after demonstrating the autonomous Chevrolet Tahoe, which won the DARPA urban challenge the prior year. While more automakers and suppliers than ever took part in CES this year, GM actually took a pass for the first time since Wagoner’s speech.

While the Detroit Auto Dealers Association, which organizes the NAIAS, is concerned that manufacturers are increasingly favoring CES, the issues of the auto show are largely unrelated to what’s happening in Vegas. Auto shows are consumer events designed to showcase all of the latest products available for sale, and media previews show what is arriving in the coming months.

With rare exceptions (like 2016, when Chevrolet unveiled the production version of the Bolt EV), new production vehicles are almost never shown at CES. The electronics show is a business-to-business event that isn’t open to the public; instead, the industry flocks to Las Vegas to talk up technology.

NAIAS Is About Reality; CES Is About Perception

For many years, the financial market’s perception of the auto industry has been that of old-school manufacturers of commodity widgets. The view of Silicon Valley and technology companies is that of innovators on the bleeding edge that are poised for explosive growth. Thus, you have investors pouring billions of dollars into startups every year; most of those companies getting all of that investment fail without ever producing anything noteworthy while burning through cash.

Meanwhile, the modern car is one of the most complicated and technologically sophisticated devices ever created and is produced by the latest cutting-edge processes. The industry that produces them employs tens of millions of people globally directly and indirectly, generating trillions of dollars in revenue and tens of billions in profit. Yet the industry gets little respect and low market values.

The presence of the auto industry at CES is designed to reach a group of media that cover companies like Apple, Google, Microsoft, Amazon, and Facebook alongside countless startups, the same media that investors follow. The goal is to change the perception of the auto business from one that looks like it came from the dawn of the industrial revolution to one that innovates on a daily basis.

That’s not a message you can get across by showing off the refreshed Ford F-150, even though it may be packed with far more technology than anything from Silicon Valley. That’s a message you communicate by demonstrating automated cars in Las Vegas traffic jams; partnership announcements with chip designers like Nvidia won’t reach its intended audience in auto shows in Detroit, Frankfurt, or Geneva. These shows have issues to address, but the fault doesn’t lie in Las Vegas. It’s all about perception.

 

Ford Shifts Production Plans to Support Electrification Push

— January 3, 2017

In December 2015, Ford announced plans to invest $4.5 billion to introduce 13 new electrified vehicle models by 2020. The company provided no additional details at the time, but a big piece of that plan just became clear as CEO Mark Fields made a major investment announcement at the Flat Rock Assembly Plant near Detroit on January 3.

Ford has been criticized in the media for a seemingly lackadaisical approach to introducing plug-in electric vehicles (PEVs) over the past several years; however, this criticism is only partially valid. Unlike its more PEV-aggressive competitors Nissan and GM, Ford has avoided building dedicated PEV platforms to date—but that will soon change. The Focus Electric BEV has been called out for being merely a compliance car to meet California zero emissions vehicle mandates. Ford has been focused on pushing the plug-in hybrid variants of the Fusion and C-Max, which have been among the best-selling PEVs over the past 2 years.

Changes to an American Classic

According to Fields, Ford’s powertrain lineup will look very different by 2020. The best-selling vehicle in America for nearly four decades, the F-150 pickup, will be available with a new hybrid system that is expected to retain the towing and payload capabilities that customers in this segment expect. A rear-wheel drive hybrid system will be available for the truck and will also be applied to Ford’s most iconic car, the Mustang, when it gets its next update in 2020.

With the overall market shift away from cars toward utility vehicles, it has been a struggle for automakers to sell PEVs in volume. With that in mind, several of the new electrified vehicles will be SUVs, including the next-generation Explorer, which is built in Chicago. The police interceptor variant of the Explorer outsells the Taurus sedan by more than two to one, and the new generation will be Ford’s first hybrid with a turbocharged EcoBoost engine.

Big Plans for Flat Rock, Michigan

In addition to the Explorer hybrid, Ford will build a new, smaller SUV with a fully electric powertrain that offers a range of at least 300 miles. The electric SUV will be built at the Flat Rock, Michigan plant alongside the Lincoln Continental, Mustang, and a previously announced fully automated vehicle for ride-hailing that will debut in 2021. In order to support these new vehicles, Ford is investing $700 million to expand the plant, as well as adding 700 more jobs.

At the same time, Ford is canceling plans for a $1.6 billion small car plant in Mexico. During the 2016 presidential campaign, then candidate Donald Trump made a major issue of the plan to shift Focus production to Mexico from Michigan. The next Focus will instead be built at the existing Hermosillo, Mexico plant alongside the Fusion sedan. The small car market isn’t growing right now, limiting the need for companies such as Ford to expand the manufacturing of these vehicles. With sales of the Fusion slowing as well, there is plenty of capacity at Hermosillo to support both cars, plus the Lincoln MKZ.

Navigant Research’s recent Market Data: Electric Vehicle Market Forecast report projects that more than 6.8 million PEVs will be sold annually across the globe by 2025. Ford’s new electrification plan shows that the company is focused on applying the technology to vehicles where it believes it can do so profitably.

 

Autonomous Ride-Hailing May Hail the New Era of the Minivan

— December 22, 2016

CarsharingIt’s been more than 3 decades since Hal Sperlich and Lee Iacocca redefined the family hauler with the introduction of the minivan. Over the subsequent 20 years, the minivan segment grew to become one of the largest in the US market before being overtaken by SUVs and beginning a long and steady decline. However, as we move into the era of autonomous mobility services, we may also see a resurgence of what had been derided as the “soccer mom-mobile.”

While the minivan market isn’t as big as it once was in total sales volume, as these vehicles have gained useful amenities, they have become quite profitable. Starting in 2016, the companies that have stuck by this body style have begun introducing redesigned vans, including the 2017 Chrysler Pacifica and the 2018 Honda Odyssey that will debut at January’s North American International Auto Show in Detroit.

Vans On Demand

When Google decided it was time to expand its development fleet of self-driving cars, it struck a deal with Fiat Chrysler Automobiles (FCA) to purchase 100 Pacifica plug-in hybrid EVs (PHEVs) and equip them with its autonomous sensing and control systems. With the self-driving car project now spun out of the X research lab as a separate company called Waymo, it has also announced an agreement with Honda to discuss collaboration on development and possibly commercialization of autonomous technologies. In Navigant Research’s 2015 Autonomous Vehicle OEM Leaderboard Report, Honda was ranked eighth among 18 companies evaluated, so working with Waymo could provide a boost relative to the market leaders.

Since auto industry veteran John Krafcik came on board as CEO of what is now Waymo in October 2015, the program has apparently shifted its focus from developing complete cars to working with existing carmakers to supply its systems as well as potentially building mobility service platforms. As the shape of future mobility services continues to evolve, these platforms are likely to include a broad range of vehicle types to support different needs. One- or two-person pods may be adequate to provide first/last mile transportation in dense urban areas, while something more akin to a minivan can support families or larger groups traveling on a variety of routes that don’t have sufficient density to make mass transit viable.

Ford-owned San Francisco-based startup Chariot is already providing hybrid on-demand services in San Francisco and Austin, Texas with human-driven vans. As autonomous vans become available, they could be deployed in the same way. For these types of transportation services, the easier ingress/egress of a van would be much more practical than climbing up into an SUV.

Growing Trend

Volkswagen will also be joining in on the autonomous van trend at January’s Detroit show. The embattled German automaker will be unveiling a new battery electric micro-bus concept based on the same new modular electric platform that underpins the I.D. concept shown at this year’s Frankfurt Motor Show. FCA will be participating in the 2017 International CES in Las Vegas for the first time and will reportedly show a battery electric version of the Pacifica.

FCA’s program with Waymo only extended as far integrating autonomous hardware into the minivan and does not include system development. However, as one of the companies in the back half of the pack in the Leaderboard rankings, FCA would also be a good candidate to adopt a production autonomous package from Waymo or one of the larger Tier One suppliers such as Delphi or Continental. We’ll probably be seeing a lot more self-driving minivans in the coming decade.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies

By Author


{"userID":"","pageName":"Sam Abuelsamid","path":"\/author\/samabuelsamid?page=2","date":"3\/25\/2017"}