The world’s major automakers are unleashing a $90-billion “investment tsunami” in batteries and electric cars, Reuters reports, in a dispatch from this week’s North American International Auto Show in Detroit.
Those dollars, alongside other investments in self-driving vehicle technology, will shortly upend the business model for many manufacturers, Fiat Chrysler CEO Sergio Marchionne told Bloomberg.
“Carmakers have less than a decade to reinvent themselves or risk being commoditized amid a seismic shift in how vehicles are powered, driven, and purchased,” Bloomberg notes, in a summary of the veteran CEO’s views. “The industry will divide into segments, with premium brands managing to hold onto their cachet while mere people-transporters struggle to cope with the onslaught from disruptors like Tesla Inc. and Google’s Waymo. By 2025, [Marchionne] predicts that fewer than half of the cars sold will be fully combustion-powered.”
Marchionne echoed other industry analysts when he speculated that manufacturers may join outfits like Lyft and Uber in offering transportation in autonomous cars as a service. “There is nothing that would prevent Fiat Chrysler from providing ride-sharing services to a wider community and using our dealer network for this,” he noted.
General Motors may get there ahead of Chrysler, though. According to a report in Wired, the Detroit-based manufacturer revealed just ahead of the auto show that it plans to pilot a self-driving car service—whose GM-made vehicles will lack steering wheels and pedals—by the end of next year.
General Motors CEO Mary Barra promised her investors the company’s dive into electric cars will start turning a profit no later than 2021. Reuters reports that Barra is relying on her company’s ability to slash the costs of EV battery cells “by more than 30%, from $145 per kilowatt-hour to less than $100 by 2021,” mainly by replacing expensive cobalt in the units with relatively inexpensive nickel. The company claims the new formulation increases batteries’ power storage and energy release.
Meanwhile, Ford Motor Co. told reporters it had more than doubled its projected spending on electrified vehicles, to US$11 billion. The venerable automaker plans to bring as many as 40 hybrid and pure battery-electric models to market by 2022, Reuters reports, starting with what it described as a “performance battery-electric SUV”—dubbed the Mach 1—in 2020.
And far from Detroit, Japan’s largest fossil fuel refiner and gasoline retailer has elected to join the car industry’s embrace of electric vehicles rather than fight it.
JXTG Nippon Oil & Energy Corporation plans to start its own EV car-sharing service, run from its chain of gas stations, “to help offset the expected decline in oil revenues,” Bloomberg writes.
“Installing battery chargers at gas stations won’t be enough to generate profits in place of gasoline sales,” said JXTG Nippon President Tsutomu Sugimori. “It’s inevitable that EV use will spread, so renting out battery-powered cars as well as other related services will become necessary for gasoline retailers to remain profitable.”
Between big bets by automakers, and a growing embrace by related sectors, the rush to electrify boosts the likelihood that demand for gasoline and diesel as terrestrial transportation fuels will stall early in the next decade, as analysts have been suggesting over the last couple of years.