The Future of Cars, Vehicles and Automobiles

Why 2030 is an Important Benchmark for EV Adoption

Tesla's stock is up 400% in 2020 and a slew of EV makers are transforming the automobile industry into the future of cars. It's been a coming out party for Chinese EV Markers like Nio, Xpeng and Li Auto.

However don't count GM, Toyota and Volkswagen out just yet. GM will become obsolete if they don't challenge Tesla in North America. So what's their response? GM will spend $27 billion on all-electric and autonomous vehicles through 2025, an increase of $7 billion, from initial plans announced in March.

Twenty-eight companies in the electric vehicle industry, including big names like Tesla, Lucid, and Rivian, have joined forces to create a new organization called ZETA, with the goal to push for 100% electric vehicle sales by 2030.

More countries are setting deadlines on fossil fuel based vehicles and when they should end, but I think there's now a global consensus they should become obsolete during the 2030 to 2035 period. Self-driving vehicles will likely also be gaining a lot of steam during that period as well.

We think of Tesla as a success story, but it's only a matter of time when the industry catches up to their first-mover advantage which is considerable. The future of electric vehicles will be driven in part by Chinese consumer led demand.

Legacy automobile makers have the capital and execution supply chains to pivot to EV and give the EV maker startups a run for their money. Tesla really has an execution problem when it comes to quality control. Speed does not win long-term here, quality does.

Legacy automakers may finally be shifting toward electric now that climate change has become the top driver of auto industry fundamentals. Biden's Presidency will change how America approaches green-tech and EV adoption. GM said it has moved up the release of 12 EVs, including pickups for its Chevrolet and GMC brands. It wants to sell 1 million EVs by 2025.

Investors have spent the better part of 2020 pouring into electric-vehicle stocks, widening the market gap between EV manufacturers and legacy automakers. Indeed, the world's largest car manufacturers have been underperforming global markets dating back to the 2008 financial crisis.

Japan-based carmakers, once viewed as electric vehicle (EV) visionaries who popularized mass-market hybrid green vehicles, failed to capitalize on the initial momentum. Can GM be any different? Or will Tesla, Rivian, Nikola and others dominate the field?

 GM is increasing and accelerating its rollout of all-electric vehicles as the automaker attempts to compete against industry leader Tesla as well as an influx of new competitors in the emerging market. But they may already be too far behind. Xpeng is well funded by the likes of Alibaba.

Nio has a brand reputation in China that's been an experiment in marketing. Li Auto, Fisker and others will serve important niche markets. Fisker is planning a return to relevancy with a trio of all-new electric vehicles, starting with an SUV the company is calling the Ocean.

The combined annual sales of battery electric vehicles and plug-in hybrid electric vehicles tipped over the two-million-vehicle mark for the first time in 2019. We are still in the early innings of the advent of EVs and hydrogen based hybrid vehicles.

The 2022 Ocean will start at $37,499 when it eventually goes on sale. Fisker will also offer a lease-like subscription plan that costs $379 per month and allows an impressive 30,000 miles per year that includes maintenance and service. New business models will accompany the self-driving vehicle era. Vehicles ownership as we know it today, might go out of style.

20 OEMs in the global auto sector will see profits decline by approximately $100 billion in 2020, a roughly six-percentage-point decrease from just two years ago. It might take years to recover from this plunge in profitability, according to Deloitte. There will be room for many winners in the EV market, but many legacy automakers won't make the shift and will be disrupted.

GM can spend big but can it execute and be early enough? They will spend $27 billion on all-electric and autonomous vehicles through 2025, an increase of $7 billion, or 35%, from initial plans announced in March. How mature will Xpeng and Nio be by then? At the operational level, the pandemic has accelerated developments in the automotive industry that began several years ago. 

The pivot to electric vehicles is in part the result of the revelation that global leader Volkswagen rigged emissions testing on some of its diesel models. Countries like Britain and France have even announced they will halt all sales of gasoline and diesel cars by 2040. But in reality, I think 2030 will be the big shift.

It will come sooner than many expect. The best EV makers will win, and it will be very profitable for a short period. That is, until fully autonomous fleets and hydrogen based vehicles see a next wave.

In the language of Deloitte, the significant growth of EVs leading up to 2030 will present major opportunities and challenges for traditional original equipment manufacturers (OEMs), new-entrant OEMs, captive finance companies and dealerships.

In particular, traditional OEMs will find insights in this report that can help them re-prioritize their customers and strategies in a volatile competitive landscape. But the shift in global sentiment towards green technology in the 2020s will fuel consumer opt-in.

GM finally in 2021 understands what's at stake. The next 9 years will be critical to the survival of the company. The increased investment will support GM’s plans to release 30 new EVs globally by 2025, including more than 20 just for North America.

GM said it has moved up the release of 12 electric vehicles, including pickups for its Chevrolet and GMC brands. It is targeting 1 million in global EV sales by 2025. What will Tesla be like in 2030? Time will tell but the EVs are here to stay. 

The year 2030 marks an important transition from fossil-fuel based vehicles to electric vehicles. And whether Tesla is still dominant in 2030 or if GM can become relevant in EVs, the world will never be the same.