“Going green” has officially permeated the automobile industry – and there’s no sign of the environmentally-conscious trend slowing down anytime soon. Within this industry dominated by the internal combustion engine, Tesla has been heralded as the leader of electric cars. However, General Motor’s (“GM”) recent announcement—stating they will cease production and sales of all gas-powered cars by 2035—has begged the question: is the auto industry permanently shifting to an electric-first approach? Tesla’s reign at the top of the electric vehicle industry will not go unchallenged and GM’s announcement may be one of many vehicle manufacturers to follow suit.
Worldwide electric vehicle sales have continuously trended upward over the last decade – an intriguing statistic automobile makers have watched closely. Perennial vehicle manufacturers like Volkswagen Group—which includes subsidiaries Porsche, Bugatti, and Lamborghini—have tremendously revamped their business models to incorporate the demand for electric vehicles. Volkswagen alone has pledged to spend $34 billion over the next five years to make an electric or hybrid version of every single vehicle they produce, and by 2030 they are aiming to have electric vehicles comprise 40% of their global sales. In an even more drastic measure, Volvo announced that they plan to convert their entire lineup to electric vehicles by 2030 and will no longer sell any vehicles with internal combustion engines. Moves like these are attempts to capture the shifting automobile market in which energy vehicles have grown from a 2.5% market share in 2019 to a 3.2% market share in 2020.
The recent news of these drastic shifts has been symbiotic with a swim-or-sink mentality that has gained widespread traction in the automobile industry – especially in the last few months. In February alone, Ford announced that their entire European passenger vehicle lineup would have a completely all-electric offering by 2020. Further, Tata Motors entity Jaguar Land Rover announced that the Jaguar brand would be all-electric from 2025 onwards. The push for electric vehicles did not stop there. GM took advantage of their newly revamped business model and captured Super Bowl LV watchers’ attention by utilizing Will Ferrell in a commercial premised on challenging Norway’s current feat of selling more electric vehicles per capita than the United States. This is a trend we are likely to see continue as experts predict that by the year 2040 more than half of all passenger vehicles sold on the market will be electric.
Even with the electric vehicle transition’s environmental benefits, this swift change will not occur without some negative consequences, specifically in the United States automobile industry. Automobile unions are concerned that the simpler electric vehicle powertrains may render their services obsolete. Those concerns are exemplified by the fact that the Chevrolet Bolt’s e-motor has only three moving parts compared to internal combustion engines that can have more than 110. Additionally, lithium-ion batteries required to power electric vehicles could be produced mainly in factories outside the country. According to a statement made by the United States Secretary of Energy, Jennifer Granholm, in her confirmation hearing, 107 of the 142 lithium-ion battery mega-factories under construction are located in China, while only nine are in the United States.
Despite these downfalls, the automobile industry appears to be zeroed in on the electric vehicle business model. Vehicle manufacturers continue to announce their shift away from the internal combustion engine making it more likely that the longstanding commercial production of those engines that began in 1886 may finally be coming to an end. But regardless of whether one is excited or concerned about this transition, combustion engine trucks and cars will likely continue to remain on the road for at least a few more decades.