Is GM committed to manufacturing the Bolt in the Trump Era

[jeff3948]

Is GM committed to continuing to manufacture the Bolt in the Trump era? I hope so, because I want a Bolt.

 

[SeanNelson]

Is GM committed to continuing to manufacture the Bolt in the Trump era? I hope so, because I want a Bolt.

Trump is not forever, and the rest of the world is not going to stand still. GM is a global company that plans to be in business for a long time, so I doubt that they're going to drop the ball now.

 

[Anonymous]

I asked myself the same question after the election when GM announced that only California and Oregon would receive Bolt EV deliveries in 2016.

I question whether the Bolt EV will be assigned to the category of a "compliance" car during the Trump Era.

What state are you in?

 

[boltage]

My guess is that market demand and supplier capacity will determine whether it sells at compliance levels or significantly greater.

 

[roundpeg]

I believe EVs are here to stay, but getting them above the 1% of installed base mark is likely to become more difficult over the coming years.

The first policy likely to be targeted is the federal tax credit. It is due to sunset over the next couple of years anyway, but I would not be the least bit surprised if it is eliminated sooner. The second target it likely to be the CAFE standards. If the fleet average is lowered, the automakers will have less incentive to build EVs, or any fuel-efficient cars for that matter. The third target is likely to be the California cap and trade program, which drives the rebates for EV ownership in this state (it is was under legal attack before the election).

The fourth target may very well be the waiver granted to California decades ago allowing the state (and others that follow CA's lead) to set higher standards for air quality than the nation. The waiver is not popular with automakers but has held through Republican and Democratic presidents but it may not survive this one. The fifth target is pushing domestic fossil fuel development. If oil prices remain depressed the market for all energy-efficient vehicles can be held back.

The sixth target is trade with Mexico. Automakers assemble many of their most fuel-efficient and least-profitable vehicles south of the border. If Trump succeeds in starting a trade war with Mexico, carmakers could very well find manufacturing these cars to be even less profitable than they do now. If the CAFE standards are lowered, then the automakers won't complain so much about a trade war until we get into the inevitable retaliation phase, at which point the damage will already be done.

Bottom line, compliance cars are only made when they are complying with something. If the compliance goals are eliminated or reduced, the automakers are going to recalibrate their market approach.

 

[WetEV]

Is GM committed to continuing to manufacture the Bolt in the Trump era? I hope so, because I want a Bolt.

I'd suspect that the answer is that GM is likely to continue to develop and manufacture electric cars. I can't know, of course.

Electric cars are nicer than gasoline cars for commuting. Start every day with a full tank, no annoying visits to the gas station, more responsive to drive, smoother and quieter... As the cost of batteries and associated components falls, electric cars will become cheaper to run than gasoline cars everywhere, as they already are in many places, even without subsidies. Less air pollution, which matters a lot in big cities. Less maintenance and likely to be more reliable. The future looks electric.

Electric cars are over 1.5% of sales in China, the largest car market. The world's best selling electric car is Chinese, the Geely Emgrand EV. As electric cars are improving faster than ICEs, the fraction of cars that are electric seems likely to continue to increase. If we don't develop, we will be importing from those that do develop.

GM needs to be there. Trump or no Trump. GM with the EV1 had a big head start. They chose to waste that advantage. One hopes they learned from that mistake.

 

[roundpeg]

Electric cars are over 1.5% of sales in China, the largest car market. The world's best selling electric car is Chinese, the Geely Emgrand EV. As electric cars are improving faster than ICEs, the fraction of cars that are electric seems likely to continue to increase. If we don't develop, we will be importing from those that do develop.

That's the likely scenario. Renewable energy in all of its forms and applications will be pursued aggressively by most of the world as a matter of environmental and economic policy. The U.S. will go in the other direction and be left behind.

 

[dandrewk]

We will know a lot more in the coming year. If Bolt sales continue to be awesome, and with the Tesla M3 hitting the market, the era of affordable, long range EVs will be upon us.

Success breeds imitation and ingenuity. Other car manufacturers will follow. Heck, even Toyota has caved in to the inevitability of EVs. All of this trumps Trump's desire to set up back decades.

 

[LeftieBiker]

If the federal tax credit is ended, then I'd expect GM to try to suppress Bolt leasing, as they'd lose $5k more per leased car even if they dropped the $2500 CCR. Then the question becomes "How many people will buy a Bolt at these MSRPs with no incentive? It would likely become the "Tesla for the Upper Middle Class."

 

[roundpeg]

You're not going to make much sense of this using leasing math. I paid cash for my Bolt. GM got $43k from me. I get $10k of that back from the federal and state governments but GM still gets the same number of dollars. Effectively this is a profit pass-through to GM. Take away those incentives and now GM has to either sell the car for a net higher price to consumers, or accept less profit. It is unclear if they would find many takers at a net higher price or if they'd find this car worth manufacturing if they had to sell it for the current net price.

 

[WetEV]

You're not going to make much sense of this using leasing math. I paid cash for my Bolt. GM got $43k from me. I get $10k of that back from the federal and state governments but GM still gets the same number of dollars. Effectively this is a profit pass-through to GM. Take away those incentives and now GM has to either sell the car for a net higher price to consumers, or accept less profit. It is unclear if they would find many takers at a net higher price or if they'd find this car worth manufacturing if they had to sell it for the current net price.

Nissan is rumored to be dropping the Leaf MSRP to under $25,000 for the entry (S) model for model year 2017. Larger battery as well. Actual selling prices for 2016 Leafs are there already.

GM can put the price high now, because they are ahead with 60 kWh battery pack. I suspect the price will drop a lot over the next year even if the Federal rebate is still available.

 

[ScooterCT]

Not just GM, but every single manufacturer on the planet has a public or secret EV program. Disrupt or be disrupted. The changeover is inevitable. It's just a question of which decade sees the great leap forward.

Is GM committed to manufacturing the Bolt (platform)? You bet, because it's an investment in future survival of the corporation. Are they committed to immediately manufacturing in huge quantities. Only if it makes a profit in one form or another. And remember, there are profits not necessarily measured in dollars (like public goodwill and corporate image).

 

[LeftieBiker]

You're not going to make much sense of this using leasing math. I paid cash for my Bolt. GM got $43k from me. I get $10k of that back from the federal and state governments but GM still gets the same number of dollars. Effectively this is a profit pass-through to GM. Take away those incentives and now GM has to either sell the car for a net higher price to consumers, or accept less profit. It is unclear if they would find many takers at a net higher price or if they'd find this car worth manufacturing if they had to sell it for the current net price.

That's pretty much what I wrote, except that you seem to discount the significance of leasing. In the case of EV's it's actually pretty important, both because of the higher vehicle prices and because of the rapidly changing technology. So if GM makes leasing unappealing (and they've just about done that already), then the "sales" of the Bolt (the "sales" figures usually include leases) will drop substantially, Add to that the addition drop from the loss of the rebate, and...well I already wrote that, didn't I? ;-)

 

[Nagorak]

I think if Trump and the Republicans go hard after CA and the CARB, we may have bigger problems because we'll potentially be on the road to the dissolution of the country. I know no one believes it now, and I think the odds are small, but part of the reason this country works is because of the semi-autonomy of the states. If the Federal government tries to do away with that and force everyone to toe the line--a line very unpopular in CA and some other areas of the country-- then we could be headed for serious problems.

The future is clearly EVs. They are more efficient, quicker, more mechanically simple. Being able to recharge at your own home is also very convenient. They pollute less. Literally their only negative is refueling time. I honestly think at this point it's going to be hard to stop EVs because they're the better product. With five more years of improvement on battery technology, costs and recharging time, I think it's going to be hard for anyone to make an argument for ICEs. The problem is the ICE had been refined over a century and it simply hasn't got much room for improvement, whereas batteries still have a lot of room for advancement. It's early 20th century technology vs 21st century technology. It's the same story with renewable energy.

I think the outcome is pretty much inevitable. Policy changes could definitely setback the pace of change though. Frankly I find it unfortunate that Republicans are so wedded to big oil. It doesn't have to be this way. EVs aren't just good for the environment, they're also good for energy independence, and potential a valuable technology we could export to the rest of the globe.

Demand is going to exist in Europe and China no matter what we do. Europe believes in Climate Change and China literally can't afford to run millions of polluting automobiles, their cities are already choking on smog on a level we can scarcely imagine. I've seen what 200+ PM 2.5 levels looks like and it's terrifying.

 

[Nagorak]

You're not going to make much sense of this using leasing math. I paid cash for my Bolt. GM got $43k from me. I get $10k of that back from the federal and state governments but GM still gets the same number of dollars. Effectively this is a profit pass-through to GM. Take away those incentives and now GM has to either sell the car for a net higher price to consumers, or accept less profit. It is unclear if they would find many takers at a net higher price or if they'd find this car worth manufacturing if they had to sell it for the current net price.

h

That's pretty much what I wrote, except that you seem to discount the significance of leasing. In the case of EV's it's actually pretty important, both because of the higher vehicle prices and because of the rapidly changing technology. So if GM makes leasing unappealing (and they've just about done that already), then the "sales" of the Bolt (the "sales" figures usually include leases) will drop substantially, Add to that the addition drop from the loss of the rebate, and...well I already wrote that, didn't I? ;-)

They're selling all that they're making so far. I think it makes sense to a certain extent. As demand starts to drop off, we should see costs come down.

Getting rid of the EV rebate would be bad. However I think there will be some push back against it, because it does hurt American industry and jeopardizes factory jobs.

 

[roundpeg]

That's pretty much what I wrote, except that you seem to discount the significance of leasing. In the case of EV's it's actually pretty important, both because of the higher vehicle prices and because of the rapidly changing technology. So if GM makes leasing unappealing (and they've just about done that already), then the "sales" of the Bolt (the "sales" figures usually include leases) will drop substantially, Add to that the addition drop from the loss of the rebate, and...well I already wrote that, didn't I? ;-)

Sort of, except that you as many others seem to believe that lease math is some sort of special magic that has little or no relationship to the net price of the car, when in fact it is exactly related. If leasing is "unappealing" then it's because the car is expensive. If leasing is appealing, it's because the car is inexpensive.

 

[roundpeg]

Demand is going to exist in Europe and China no matter what we do. Europe believes in Climate Change and China literally can't afford to run millions of polluting automobiles, their cities are already choking on smog on a level we can scarcely imagine. I've seen what 200+ PM 2.5 levels looks like and it's terrifying.

The crux of the matter. The civilized world (with now the exception of the U.S.) is taking climate change seriously, and they are taking renewables seriously. They are making them prominent features of their public policies. They clearly won't be part of ours for at least the next four years, and those will be critical years for determining which countries take the lead in the renewables industries. If I was a betting man, I'd put my markers on China right now. They will be aggressive and not let up. Then in ten years we can piss and moan about how another key industry is dominated by China.

 

[roundpeg]

They're selling all that they're making so far. I think it makes sense to a certain extent. As demand starts to drop off, we should see costs come down.

Getting rid of the EV rebate would be bad. However I think there will be some push back against it, because it does hurt American industry and jeopardizes factory jobs.

They will continue to sell all they are making. That's how the industry works. Demand will increase, but that won't mean the prices go up, because so will the supply. The marginal cost of production should also decrease, as should the cost of the battery packs.

The auto industry (with the exception of Tesla) isn't as philosophically committed to EVs as you might imagine. What they'd really like is a return to the days before CAFE standards, or at least to the days when they weren't required to build so many marginally profitable small cars. The auto industry can be easily convinced to not care about EVs if they are given a free hand to build as many profitable SUVs and trucks as they can sell and the cheap gas to go in them. We've seen it all before, at least three times.

 

[boltage]

The future is clearly EVs. They are more efficient, quicker, more mechanically simple. Being able to recharge at your own home is also very convenient. They pollute less. Literally their only negative is refueling time. I honestly think at this point it's going to be hard to stop EVs because they're the better product. With five more years of improvement on battery technology, costs and recharging time, I think it's going to be hard for anyone to make an argument for ICEs.

Perhaps a significant issue with EV adoption is that people living in rental housing may not have as much accessibility to home charging.

I can see higher end rental housing installing 40A sockets in lockers in assigned parking spaces (with billing to the tenant for such sockets) so that they can advertise being EV-ready, but lots of rental housing is not higher end, so landlords may not offer such features, making EVs less practical for those living in such rental housing.

 

[boltage]

The auto industry (with the exception of Tesla) isn't as philosophically committed to EVs as you might imagine. What they'd really like is a return to the days before CAFE standards, or at least to the days when they weren't required to build so many marginally profitable small cars. The auto industry can be easily convinced to not care about EVs if they are given a free hand to build as many profitable SUVs and trucks as they can sell and the cheap gas to go in them. We've seen it all before, at least three times.

Product planning by the auto industry is a difficult task, because it takes 5 or so years for a new product or the next generation of a current product to reach the market. 5 or so years is an eternity in terms of oil price fluctuations. Reconfiguring factories and changing orders from suppliers in response to changing market demand can also require non-trivial effort and cost.

When gasoline hit $4 per gallon in 2008, most of the auto industry was caught with a product mix designed for cheaper gasoline (and Toyota sold Priuses quickly). So new development went into improving fuel economy improvements and EVs. These new more fuel efficient models were hitting the market around 2014, when the fracking boom drove crude oil and hence gasoline prices down, reducing market demand for fuel efficiency.

If gasoline prices stay low for the time being, auto companies may still want to keep EVs and PHEVs around as a hedge in case gasoline prices go up, even if sales are not particularly high.

Note that an article in Barron's claims that oil prices are likely to rise this year. Whether or not this will come true will not be known until later this year.
http://www.barrons.com/articles/oil-prices-headed-higher-in-2017-1486186051