By on October 8, 2017

renaissance center Detroit

Promoting a future for wide electrification appears to be the Achilles’ heel for bearish investors. Despite some bad publicity last week, Tesla Motors’ already sky-high share price resumed its relentless upward trend after a brief September slump. However, Tesla isn’t the only domestic company benefiting from electrification. Both General Motors and Ford have also seen marked improvements on Wall Street following tech-forward corporate announcements.

For General Motors, that meant the promise of widespread electrification. CEO Mary Barra pressed the issue by reaffirming GM’s three-tiered policy of, “Zero Crashes. Zero Emissions. Zero Congestion.” On a LinkedIn posting, Barra elaborated on the company’s vision where technology minimizes accidents via driver’s aids and autonomous hardware, nullifies emissions through alternative powertrains, and reduces congestion using inter-vehicle connectivity.

In addition to GM’s proposal to launch 20 new electric or fuel cell vehicles by 2023, the company has seen its share price jump twice in the same week. But Ford saw similar, although more modest, improvements in value following it’s own announcement of a tech-driven future. 

Ford CEO Jim Hackett, loosely defined the company’s drastic cost-cutting measures and proposed a flexibility that would allow it to remain competitive within an uncertain market. Part of that meant keeping its options open in regard to electrification and not abandoning the autonomous technologies it has spent a bundle procuring.

Market analysts have been carefully optimistic. More bullish experts have marked up both companies’ prospective valuations but admit to there being a cap on what Wall Street can expect, according to a report from Automotive News.

“At this point in the cycle [both in the U.S. and globally], it is extremely difficult to sustainably push earnings expectations to new highs,” Morgan Stanley analyst Adam Jonas said in a note to investors. “We are not surprised to see auto firms spend greater portions of their presentations focused on a thoughtful pivot to Auto 2.0.”

That isn’t reserved to domestic manufacturers, either. Toyota also pressed carefully onward with its own vision of the future by showcasing its new fun-loving attitude and adherence to a zero-emissions tomorrow — neither of which appear to have hurt the feelings of investors. It’s valuation improved along a similar scale to GM’s, although its already higher starting point made the increase slightly less noteworthy. Ford also didn’t see astronomical gains but, having spent so much of the last five years on a downward trajectory, the sudden improvement could be indicative of something.

That something may be investor lust for tech talk and planning.

“General Motors believes the future is all-electric. A world free of automotive emissions,” product chief Mark Reuss said last week. “These aren’t just words in a war of press releases. We are far along in our plan to lead the way to that future world.”

Reuss’ words coincide with GM’s first stock leap from last week perfectly and was followed by a second jump when Barra discussed the company’s vision roughly a day later.

Ford’s discussion wasn’t nearly as specific, however it did say that it wanted to deliver an EV crossover with a 300-mile range by 2020 and follow it with other electric models. Perhaps more helpful was Hackett’s claim of widespread connectivity, a technology he said could hold hidden financial potential. “I don’t feel that where we are competitively is where we should be,” Hackett said, adding he felt that could be resolved rather quickly.

Some of that is in regard to its current production strategy. While not exclusively tech-driven, Ford wants to streamline production and make some financial room for EV development and employment — but plenty will also be going in to light trucks. It’s a more present-day strategy with hints that the company is keeping one eye on tomorrow. It was exactly what shareholders wanted to hear and, as a result, Ford’s stock price climbed slightly.

Some investors wanted more concrete promises from Ford — which might have been useful in bolstering share prices, but unwise before it has a clear course of action. While Ford definitely intends to put self-driving cars on the road and increase electrification, General Motors appears to have more overt confidence as to how to do it.

“GM has the right hardware — a century’s worth of experience designing and assembling more than 500 million vehicles, more than any other automaker in the world, integrating software and hardware and delivering to customers the vehicles and experiences they want,” said Barra. “And, as America’s largest automaker, GM has the right scale. In contrast to companies that have built a small number of self-driving cars, our 150 manufacturing facilities can produce some 9 million vehicles a year, giving GM the capability to test and manufacture the next generation of electric and autonomous vehicles at scale.”

That shouldn’t make one dismissive of Ford, though. Taking a more pragmatic and less staunch approach to the same technologies doesn’t mean it won’t have them. And, while GM is fixated on futuristic automobiles with unproven sales records, Ford will be trying to improve its profit margins and focus a little more on the vehicles customers want today.

 

 

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27 Comments on “Auto Investors Believe in Detroit’s Electrified Future...”


  • avatar
    jalop1991

    The 125 year old infrastructure in my wealthy neighborhood can’t deliver on all of this.

    Good luck, everyone, with your iCars. Me, I’m still waiting for the flying cars they promised us. I expect all this electrification stuff will end up going the same way.

    • 0 avatar
      mcs

      @The 125 year old infrastructure in my wealthy neighborhood can’t deliver on all of this.

      An EV uses about as much power as an electric clothes dryer when it’s charging. In my neighborhood, when all of the mega houses started going up, we had regular power failures on hot days. They fixed it and the problems went away. I have several appliances that draw far more power than my EV. Two convection ovens with “pizza mode” that are plugged into NEMA 14-50 outlets, electric cooktop, Hot water heater, dryer, and the HVAC system.

      • 0 avatar
        28-Cars-Later

        I’m not sure if that was his point. If the local 125 year old bridge which was supposed to be replaced in 1967 finally gives out, sarcastically only the flying car will be able to traverse the damage.

      • 0 avatar
        Scoutdude

        Years ago when I was upgrading the electrical systems in some of my rental properties the person I talked with to have them pull the meter asked if I was adding any additional loads as part of the project. The reason was to see if it would push the distribution system in the area to close to its limit. The problem of course is they won’t know when everyone is adding charging equipment.

      • 0 avatar
        raffi14

        Neighborhood transformers are sized for the expected average load over the course of a day. The expectation is the transformer heats up during peak time, and gets to cool off at night when the loads drop off. EV chargers add a NEW constant ~10 kilowatt load for hours on end, unlike clothes dryers or ovens that alternate on and off to keep a set temperature. So yes, it will shift the average load up and cause premature aging of transformers by running them out of spec and we will all pay to replace them with upsized models.

    • 0 avatar
      stingray65

      Jalop – stop being so negative. Don’t you know that ALL EV owners will ONLY recharge their vehicles at night when the grid is at low capacity? Many will likely opt to pay a little extra to make sure their night-time juice is solar generated so they can sleep better knowing they are saving the planet.

  • avatar
    VW4motion

    Investors should be positive on Detroit for electric vehicles. Tesla is building garage quality cars right now. I have yet to meet a Tesla owner that has not complained about squeaks and cheaply made interior bits.

    • 0 avatar
      sgtjmack

      I have. I’ve also had about twenty traded in because of differing reasons. The main ones are lack of distance able to be traveled, especially in hot climates like Arizona, as well as having their plugs removed at charging stations and other cars using them, so no charge to battery after a day at work or overnight in a community parking lot, like an apartment complex.

      But on the subject of fit and finish, there are a few issues I have seen in person, both interior and exterior. But I’ve only had two trade in because of those issues. Many gave complained about the rattles, and more importantly the lack of dealership that can address the issues.

  • avatar
    tallguy130

    There really is no reason GM shouldn’t be able to come from behind and put out a ton of products that put Tesla to shame. All that PR flack is mostly true. They do have the facilities and experience in really building mass market automobiles.

    But…then I think about every GM product I’ve ever owned or my family has owned and I realize these guys couldn’t hit water if they were in a boat. They completely missed sat out while Toyota made the Prius and developed profitable hybrids and still haven’t been able to catch up. I guess the Volt/Bolt twins are competent but it’s still the gang that can’t shoot straight.

    Sorry two decades of their products have beat the optimism out of me.

    • 0 avatar
      mcs

      I have no doubt that the established automakers can come up with some fantastic products to challenge Tesla. The problem is that they lack a sold well maintained charging network. Which is more important, panel gaps/whatever or a solid well maintained 1000+ location charging network?

      I went to my first VW Electrify America charging station a week ago and it couldn’t connect to it’s network to authorize it’s charge. I’m probably going to get a Mission E (it’s a beautiful car), but even though I probably won’t need it, the lack of a solid charging network is potentially an issue. Tesla’s competitors don’t seem to have a good grasp of how to build a good solid charging network. Maybe that will change with Shell and BP jumping into the charging game? Until then, Tesla has something the other guys don’t seem to know how to replicate.

  • avatar

    Okay, let’s assume that Tesla makes garage quality cars. So why then the whole industry is in panic? What they are scared of so much? May be Tesla?
    cbsnews.com/pictures/what-are-they-so-scared-of/

    • 0 avatar
      anomaly149

      What is any company scared of? Mostly their major shareholders.

      Tesla is a niche money-losing company. EVs remain a money-losing proposition, and normal companies have to make money to keep the board happy. (~10% margin is the expectation) However, they also have to be progressive and show they’re investing in the hot new markets. Hence, there’s a Bolt they won’t advertise. (all the hardcore BEV enthusiasts already know about it anyways) Build just enough to make the board happy on the progressive front but keep the focus on the SUVs/trucks to keep the board happy on the money front.

      Now, when batteries drop in price more and the OEMs see a financial reason to jump in with both feet, expect to see purpose designed BEV platforms. Till then? Can I interest you in a Focus Electric?

  • avatar
    28-Cars-Later

    I realize battery technology is quite current, but the basic premise of the electric vehicle is 19th Century. If half of the amount of capital going into this direction went into basic US infrastructure -which is needed by EV and ICE alike- the entire nation would benefit while the market for these continues to naturally grow. They are ramming these down everyone’s throat despite the fact demand is low and every ‘murican who can (or can’t) afford one is cruising a crew cab pickup. There is an agenda here and it is NOT for your benefit, just as blowing up Iraq, Syria, Lebanon, Ukraine, Libya, and coming soon Iran and NK, was NOT for your benefit.

    • 0 avatar
      Lorenzo

      You’ve heard of tulip mania? I give you EV mania. Bottlenecks in the components of batteries will raise, not lower prices. Electrical infrastructure can barely handle normal increases in consumption, much less millions of chargers.

      In fact, the same people pushing EVs are pushing solar and wind power as ALTERNATIVES to conventional generation, instead of augmenting it. California just turned down an upgrade of an emergency natural gas generation plant because it wasn’t the “cleanest” form of generation, as if hospitals and old folks’ homes care when the grid is at capacity and blackouts/brownouts costs lives.

      The people pushing EVs and alternate energy don’t even know what peak load reserve is, and expect “stored” solar will keep the power grid going. Anyone in California with an EV had better have a backup gasoline powered vehicle. At least it can employ an inverter to keep the refrigerator going.

      • 0 avatar
        stingray65

        You talk to the average person about cars or electrical grids, and 90% will glaze over within 2 minutes. Unless you are an enthusiast or an engineer, most people don’t care and have zero knowledge. Wall Street types have zero knowledge about cars or electricity, but they make money from hyping the “new” to other idiots that don’t know anything either. Some may get rich if they get out at the right time, but many will be hoping to sell to the greater fool and realize the person they see in the mirror is the fool.

  • avatar
    sgtjmack

    So who is going to pay for all of the upgrades to the current electrical infrastructure?

    Who is going to pay for the electricity to charge these cars?

    Who then will pay for the roads to not only be built, but maintained?

    You guessed it, you and I in not only our electricity bills that will sky rocket, but I’m sure they will add on some sort of taxes to your tires, property purchase and yearly taxes, and initial purchase of the vehicle, and subsequent registration of these vehicles, and any and all vehicles registered.

    Since we are paying taxes on a gallon of fuel today, and the tax revenue has been dropping with the introduction of higher mpg, hybrid and electric vehicles, the money is going to come from somewhere.

    I can see any and all government incentives on new electric and hybrid vehicles going away, and actually being reversed.

    • 0 avatar
      jalop1991

      According to mcs, “once they fix it” the electrical infrastructure will be MORE than able to support his always-on 50 amp pizza ovens plus his three electric cars plus everything else every good McMansion owner fills his life with.

  • avatar
    ajla

    So far in 2017 43% of GM’s US sales volume are from body-on-frame utility vehicles. 39% of their volume are vehicles that are V8 only or V8 heavy (so I dropped the Canyorado numbers but added in the Corvette and SS. I didn’t include Camaro because I don’t know the sales mix).

    Despite high sales volumes in China, GM’s operating profit in Q1 and Q2 this year was still heavily dependent (like over 80%) on its North America operations.

    Unless they have a skunkworks working on an “affordable” Suburban EV, for Barra’s post to come true (and not bankrupt GM) it requires a seismic shift in the customer market GM sells to and the products they offer.

    What does the CEO of GM think the future of something like a Silverado 3500 is in the plan she is laying out?

    • 0 avatar
      stingray65

      You bring up some great points, but some expert is going to respond by saying the future is EV so you better jump in now before it is too late. Forget about profits and customer needs, those are 20th century concepts and the world has moved on to 19th century EVs.

  • avatar

    Too bad the name Detroit Electric has already been taken. The company moved to England. Payback by starting operation Austin e-Powers?

  • avatar
    el scotto

    1st of all, you really need to be homeowner to have an electric car. Yeah, you could have a charger at work, in your apt complex, dedicated condo/townhome charging stations. They’ll be few and far between and added in your rent/hoa fees. 2ndly, no one makes a CUV that you can plug-in overnight. I.E. pic-up kids, go to soccer game, park E-CUV in garage, plug in; next morning mommy-mobile is at 100% charge again. That’ll be the 1st money making E-CUV.

    • 0 avatar
      VoGhost

      ” no one makes a CUV that you can plug-in overnight. I.E. pic-up kids, go to soccer game, park E-CUV in garage, plug in; next morning mommy-mobile is at 100% charge again. That’ll be the 1st money making E-CUV.”

      How does the Tesla Model X not meet your criteria?

  • avatar
    VoGhost

    Switching to electric cars won’t necessitate much improvement to the energy infrastructure. Next time you need a new roof, you simply replace the asphalt shingles with beautiful Tesla solar glass tiles. Pricier than asphalt, but cheaper in the long run because of all the electricity generated. Combine that with a Tesla battery for the house, and you are essentially self sufficient.

    No more worrying about when the local utility will restore power after a storm. No more concern that you might be contributing to climate change. No more dependence on volatile energy prices.

    True, made-in-America freedom.

    • 0 avatar
      Lorenzo

      That’s like the proposal to repave all the roads with solar collectors. It’s all pie-in-the-sky by visionaries who can’t do the math or see the engineering pitfalls, or both.

      That’s not even taking into account the needs of people who drive the wide open spaces of a nation of 3,500,000 square miles, not just around town and an occasional 30 mile trip.

      An EV needs to match the ICE’s ability to travel 350-400 miles at freeway speeds and refuel in five minutes or less at a source as convenient as the next off-ramp. The vehicle and infrastructure doesn’t exist and would cost too much to build for minimal benefit, if any.

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