DETROIT — The world's major automakers have made something abundantly clear: They believe electric vehicles will dominate their industry in the years ahead.
Yet for that to happen, they'll need to sell the idea to people like Steve Bock.
When Bock recently replaced his family's 2013 Honda Pilot SUV, he considered — and then dismissed — the idea of buying an electric vehicle. An EV with enough room to carry his two dogs would cost too much, he decided. And he'd worry about driving long distances with too few charging stations.
"I would consider it if the prices would come down," Bock said, though leaving open the possibility of buying an electric vehicle next time.
Instead, Bock, of suburban Raleigh, North Carolina, settled on a Subaru Outback. Like nearly every other vehicle sold in the United States, it runs on gasoline.
Opinion polls show that a substantial majority of Americans are aligned with Bock. An EV might be on their shopping list if it cost less, if more charging stations existed and if a wider variety of models were available. In other words, the time isn't right.
It adds up to a significant risk for the largest automakers. With governments across the globe intensifying efforts to reverse climate change, the automakers are staking their futures on the notion that consumers will soon be ready to buy vehicles that run not on the internal combustion engines that have powered cars and trucks for more than a century but on electricity stored in a battery pack.
General Motors, Ford and Volkswagen plan to spend a combined $77 billion developing global electric vehicles over the next five years, with models from pickup trucks to small SUVs. GM has gone so far as to announce a goal of ending gasoline- and diesel-fueled passenger vehicles entirely by 2035 – and to become carbon-neutral by 2040.
For the automakers, the risk is as hazardous as it is simple: What if American consumers reject electric vehicles for many years to come?
Companies would have no choice but to discount them and hope, in the meantime, that their profits from gas vehicles would still cover their costs — at least until large proportions of buyers gravitated toward EVs.
If they don't, the financial blow could be heavy. For now, EVs make up less than 2% of U.S. new-vehicle sales and about 3% worldwide.
"It's still a sector that doesn't have a mass appeal to the entire population," said Jeff Schuster, president of global vehicle forecasting for LMC Automotive, a consulting firm. "It could be a financial drain if consumers do not buy at the same level."
Yet in contrast to the United States, sales of EVs have taken off in Europe and China, largely because of much more far-reaching pollution regulations and government incentives. Those tighter environmental regulations are forcing the industry to sell more electric vehicles.
In Europe, carmakers unveiled a slew of new electric models ahead of lower EU limits on average emissions of carbon dioxide, the primary greenhouse gas blamed for climate change, that took full effect at the start of this year. Government-backed incentives can cut the cost to near that of an internal combustion vehicle.
The result: Nearly 730,000 battery vehicles were sold in Europe in 2020 — more than 300,000 of them in the final three months of the year. The market share of electric vehicles — battery-only and plug-in hybrids — jumped from 3% to 10.5%. By December, their share had reached nearly one in four.
2020 a breakout year for electric vehicles
Electric vehicle experts say that excitement and energy around the industry hit a new peak in 2020. Here's a look back.
Tesla became the world's most valuable automaker this summer and is now worth more than Toyota, VW, Daimler, Ford, GM and Honda combined. Tesla's stock has surged more than 600% this year even as it sold about 1% of the vehicles those automakers sold in 2019.
Tesla has said it hopes to produce 500,000 vehicles this year, which would be a 27% increase from its 2019 sales. No matter how the end of its year plays out, Tesla will easily surpass its 2019 production. There's plenty of room for growth as electric vehicles made up less than 3% of global vehicle sales in 2019, according to the International Energy Agency. Other electric vehicle companies credit Tesla's success with helping to demonstrate that electric vehicles are for real.
"We're all standing on the shoulders of Tesla," Steve Burns, CEO of the electric truck manufacturer Lordstown Motors, told CNN Business.
Lordstown Motors, which was founded in 2019, enjoyed a turn in the spotlight this year as Vice President Mike Pence praised the company at its truck unveiling this June. GM has also invested in Lordstown Motors, which will make its trucks in an old GM factory in Ohio. Lordstown Motors has received approximately $3 billion in pre-orders this year, according to Burns, and went public in November through a SPAC, raising $675 million.
Government interest in electric vehicles also helped the industry surge this year. California Gov. Gavin Newsom said in September that all new cars and trucks sold in the state would be zero-emission by 2035. The British government announced in November that it would ban sales of gas and diesel cars in 2030.
Proterra, a California-based manufacturer of electric buses, told CNN Business that it saw a 65% increase in requests for proposals from North American transit agencies, seeking electric buses, when compared with 2019.
Jumping on the bandwagon
Private transportation companies have joined the electric push too. Ridehailing businesses Uber and Lyft said this year that they plan to transition to all-electric vehicles by 2030.
Michael Farkas, who founded electric vehicle charging company Blink Charging in 1998, said for years he was viewed as a crackpot. That's starting to change, he said.
"Every single car company on the face of planet has committed to EVs in a very big way," Farkas said. "The news is overwhelming."
Ford and VW announced in June they'd work together on electric vehicles. Then last month VW said it planned to invest $86 billion in electric vehicles and other new technologies.
GM pledged in November to spend $27 billion on electric vehicles in the next five years, unveiled a dedicated factory, and resurrected the Hummer brand as an electric-only line.
This year GM also announced plans to invest $2 billion in the electric and fuel cell truck company Nikola, including developing a pickup truck together. But GM backed out of most of the investment last month amid the fallout of a short-seller report that alleged fraud at Nikola, and led to the resignation of founder Trevor Milton.
Electric vehicle mania
For some observers, the run-up in electric vehicle stocks seems like irrational exuberance and proof of a mania. Nikola, which hasn't sold a production vehicle yet, was briefly valued at more than Ford this June.
Karl Brauer, an executive analyst at the car search engine iSeeCars, said that GM's involvement with Nikola highlights what's unfolding.
Good intentions may be driving the excitement. Mark Frohnmayer, founder of the Oregon-based electric vehicle company Arcimoto, believes the pandemic was a wake-up call for many, that society needs to change and embrace better transportation.
He said electric vehicle companies like his have benefited from new retail investors, who he says turned to the popular investment app Robinhood early in the pandemic. Arcimoto's stock has grown ten times this year to hit record highs, something Frohnmayer didn't expect when the pandemic hit.
"People were laid off from work, no sports were on," Frohnmayer said. "They're betting with their ethics for the future of the world."
"For a company as conservative and historic and foundational to the auto industry as General Motors to have been on the verge of highly integrating with Nikola, I don't think you can question there's some electric car mania," Brauer said.