Detroit automakers solidify commitment to mobility

Nora Naughton and Ian Thibodeau
The Detroit News

Detroit auto executives want the New York investment community to know that the Motor City is a major player in electrification and autonomous technology.

General Motors Co. CEO Mary Barra and Ford Motor Co.’s president of mobility Marcy Klevorn presented their respective company’s commitments to technology at the Barclays 2017 Global Automotive Conference in New York on Wednesday.

Barra made the biggest splash, setting yet another electrification benchmark for GM in 2026, when the automaker is projecting to sell 1 million electric cars globally.

She said the long-range Chevrolet Bolt EV has “cracked the code for affordability and for putting EVs into the mainstream.” “We’re heading into the sweet spot of where the retail market is and where it is heading,” she said.

Barclays analyst Brian Johnson shared Barra’s confidence, saying in a note after her presentation that GM is “shedding the image that it is a dying dinosaur facing extinction.”

“While we expect the coming investor day to be light on numbers, we expect (management) to really showcase the autonomous technology, and make investors into greater believers in GM’s tech abilities,” Johnson said.

GM’s stock closed at $42.86 Wednesday, down 0.3 percent on a day when the markets were down about a half-percent.

Klevorn did not offer new information on CEO Jim Hackett’s plan for the future of the company. But the sheer size of her team — Klevorn said she’s responsible for between 14,000 and 15,000 of Ford’s 200,000 employees globally — is a sign of the automaker’s commitment to mobility.

Klevorn said 90 percent of Ford vehicles on the road will be connected by 2020. Automakers define connected vehicles as those equipped with wireless internet access through a network. That will allow Ford to provide new services, and determine which features people want and use in Ford vehicles.

“We’ve got this,” Klevorn said Wednesday. “We integrate. We operate at scale. We navigate complexity quite easily. It’s just what we do.”

But Ford’s view is still too long-term to excite Wall Street.

“While we appreciate Jim Hackett’s bold plan to address the near-, mid- and long-term dimensions/issues facing automotive manufacturers, we believe it will take time for results to show through and for investor perceptions to change,” Barclays analyst Brian Johnson wrote in a Wednesday note following Klevorn’s presentation.

Ford’s stock closed at $12.00 Wednesday, down 0.17 percent.

GM will achieve its million-unit target in part by rolling out a more flexible EV platform in 2021 that supports multiple brands and segments, Barra said.

The modular EV platform will give the company “tremendous flexibility to meet customer demands and lower cost,” Barra said, projecting a roughly 30 percent decrease in the cost per unit on second-generation electric vehicles.

The Detroit automaker will also introduce two electric crossovers by 2020.

In China, GM is working with manufacturing partner SAIC on piloting a battery assembly plant that will open there later this year. Barra says that plant is a key element of launching new electric vehicles in China, the world’s largest auto market.

This million-unit projection by GM “makes sense” so long as the automaker is focused on China, said Rebecca Lindland, automotive industry analyst for Kelley Blue Book. “Potential for growth in China is extraordinary, whereas you would never see that (growth) in the U.S.,” she said.

For any kind of impressive growth in the U.S. electric vehicle market, Lindland said it will be important for demand to be driven by consumers, and not regulations.

“If we continue to shove technology down consumers’ throats, they are just going to keep their existing vehicle longer,” she said. “Automakers need to start understanding what will change consumer behavior.”

Cost is one of the biggest obstacles to consumer interest, which GM expects to tackle in part. The automaker is projecting the cost of battery cells on its next generation of EVs to dip to $100 per kilowatt-hour from the current cell cost of $145 per kilowatt-hour.

This million-unit global commitment builds on the GM’s recent promise to introduce at least 20 new all-electric, zero-emission vehicles by 2023 — including two new vehicles in the next 18 months.