The cost of going green

Issue #91, June 20th, 2021

It costs the car makers money to go green, with electric cars. It is a balance of how much to spend on what features vs going green to avoid causing harm to the environment. General Motors answered analyst questions and said its EV business will be kept inhouse and not spun off as a separate unit. Elon Musk promised Tesla's Plaid as the first car in mass production to carry sub-two-second zero-to-60 speeds, making it the world’s quickest car available to buy. Postponement of final assembly of products is not a competitive strategy any more. It is a necessity to manage with available parts. Investments in hydrogen as a technology for fueling vehicles is picking up. Here are some recent updates in the auto industry.

Balancing green EVs and their cost

Auto makers need to ensure their EVs are actually green. They also desperately need to bring down their cost. Pursuing both goals at once is hard. The all-electric technology popularized by Tesla involves a kind of front-loading of environmental risk. EVs emit less carbon than a conventional car, even when recharged with electricity made by burning coal, but their powerful batteries require a lot of resources to make. This is one reason car makers are getting more involved in the EV supply chain. Investments such as the new battery factories announced by General Motors this week are mainly about securing greater control over the supply, technology and costs of the most important EV component. But a fourth factor fast rising up the priority list is control over their environmental footprint. - WSJ

EV operations - inhouse or outsource?

Speculation and pressure from Wall Street about a potential spinoff of GM’s electric vehicle operations has been rampant for some time. CEO Mary Barra pushed back on the company spinning off its emerging electric-vehicle battery business. Keeping the unit within GM will create more value for the company than spinning it off, Barra said. “For an electric vehicle, it’s all about the battery,” she told CNBC’s “Squawk on the Street.” “I think keeping that technology close and leveraging the deep battery expertise we have at General Motors is the way we’re going to accelerate that value creation.” - CNBC

The quickest car in mass production

Elon Musk took the stage recently to introduce what he claims is the world’s quickest and safest car, which he said will be produced by the hundreds within weeks. It remains to be seen whether those claims hold up, or if they follow a familiar pattern of overpromising for the electric car company. The Tesla CEO announced a revolutionary debut for Tesla, dubbed Plaid. The car promises to be the first in mass production to carry sub-two-second zero-to-60 speeds, making it the world’s quickest car available to buy. - Washington Post

Postponement out of necessity

Postponement has been popular for product differentiation. But the COVID-19 pandemic has made it a necessity. Sports vehicle maker Polaris struggled to cope with part shortages and has changed its manufacturing and sales strategies on the fly, to make products which have necessary parts. - WSJ

IKI series on supply chain management

Infosys Knowledge Institute has started a series of posts on supply chain transformation. Nissan, which is part of a three-way alliance with Renault Group and Mitsubishi Corp, is looking to do far more to share parts among its partners to cut costs, as it places more emphasis on developing EVs. To make sure you do not miss future posts, please do follow IKI on LinkedIn.

Hydrogen - the hottest thing in green energy

Solar panels and wind turbines can’t clean up everything. That’s why plans for blunting climate change now envision a big role for hydrogen in curbing industrial emissions and for powering cars, trucks and ships. So-called green hydrogen is essentially emissions free. But meeting the ambitious plans being made for it means building a giant industry almost from scratch. 

The U.S. had 6,500 fuel cell electric cars on the road in 2019 — the world’s largest fleet. President Joe Biden’s administration has set a goal of reducing the cost of renewable hydrogen by 80% by 2030. The EU has set the most ambitious goal: building electrolyzers that are capable of converting 40 gigawatts of renewable electricity into hydrogen by 2030. It’s made hydrogen a central component of its Green Deal plan. China plans to have 1 million vehicles powered by hydrogen fuel cells on its roads by the end of 2030. - Bloomberg