Talking Gearheads: The Auto Market in 2015

DeBord: I’m glad I’m not alone on Better Place! But to your points, that $1.9 billion figure actually makes me even more skeptical about the pace of electrification. In the grand scheme of things, it’s a small number. I like to remember that, by comparison, the global market for car seats is $52 billion. (The battery market is also relatively tiny.) I also think that the vast majority of new car buyers aren't going to be able to afford EVs, although China in particular may decide to commit to widespread electrification as a strategic move. But back to the more conventional automakers. If GM has to become much smaller and more focused on, say, plug-in hybrids like the Volt and its international business, while Toyota, Honda, Nissan, et al., duke it out to absorb GM’s lost share, where does that leave Ford? Has it cracked the code by having a good U.S. truck business, a forward-looking plan for hybrids, and a sort of R&D lab in Europe for cars that can thrive in a world with $10-$12 per gallon gas?

Motavalli: While you were writing that, I was on the phone with T. Boone Pickens, who says we have only one option to get off foreign oil: natural gas, first in large trucks and then in passenger cars. The 13 million barrels of oil we import daily from the Middle East are “a huge security problem for America,” he said, and who can argue with him. But, of course, we need a network of stations for natural gas cars. There appears to be bipartisan support for major natural gas vehicle tax breaks, so that may help get them off the ground. But from what I see right now, we’re going to wire America instead for battery cars and create a nationwide plug-in network. Yes, $1.9 billion is a small number. I think the EV charging market could be bigger by then. I wish the big carmakers were moving faster: Their slow pace is why they might lose out to the faster-moving startups. And I’m betting that Ford is better positioned than GM or Chrysler: It has a smart new vehicle in the Taurus, good small cars in the Focus and Fiesta, and plans for a credible small battery car and a plug-in hybrid. If you don’t think tomorrow’s automakers will plug in, go talk to Bill Ford. He’s a believer. He told me so.

DeBord: By 2015, I expect to see widespread hybridization of all the remaining automakers’ fleets, as well as a growing plug-in hybrid market. That’s a game that everyone is going to have play to survive. I like the new version of the Pickens plan, with its focus on freight transport, far more than the old plan, which aimed to use natural gas to run the whole transportation grid. Still, I’m not in favor of “freeing us from a dependence on foreign oil”—I think we should continue to be engaged in the global oil economy, not least because oil is still by far the best energy source to fuel mobility. If the U.S. opts out, other economies will quickly obtain the competitive advantage that oil provides. So where does this leave us? Well, Ford’s fortunes look good, although it does have a lot of debt to manage. Toyota will come back strong, although Honda and Nissan could struggle. Chrysler-Fiat will be very interesting and potentially agile enough to do some damage in a variety of segments (small cars, trucks, luxury sedans, and yes, minivans!). But the real breakout story for 2015 will be Tata Motors. They’ll be the Volkswagen of the developing world. And once again, Jim, thanks for engaging in a spirited discussion.

Motavalli: And wide-ranging, too! In conclusion, I see the market of 2015 as being much more diverse than it is today, with the biggest change the addition of Chinese players, including BYD and Chery. Keep in mind that BYD has the advantage of being vertically integrated—a battery maker first and a carmaker second. It’s ideally placed for the heavily electrified auto future—access to battery supply will rule. Chrysler will be a branch of a foreign automaker—like Volvo today. Ford will be smaller but still independent and proud. GM, stripped to maybe just Chevrolet, Cadillac, and GMC Trucks, will be a shadow of its onetime self. I hold in my hands a 1947 GM Annual Report to Employees, The company had $3.8 billion in revenue that year and $288 million in profit. Four out of 10 cars sold in the U.S. in 1947 were made by GM. “You and I can be proud of the fact that we work for a company that can earn a profit,” the report said, atop a graphic of smiling workers waving their fat paychecks. It’s enough to make you weep. The company’s adjusted net loss in 2008 was $16.8 billion. Giants once walked the earth. In 2015, we’ll look at their remains—shuttered factories with names like Detroit Engine Plant No. 9—as if they were dinosaur bones.

Jim Motavalli writes on environmental topics for the New York Times, Bnet.com (CBS), Mother Nature Network, and TheDailyGreen.com (Hearst). He is author or editor of six books, including Forward Drive: The Race To Build Clean Cars for the Future; Feeling the Heat: Dispatches From the Frontlines of Climate Change; and Naked in the Woods: Joseph Knowles and the Legacy of Frontier Fakery. He is also a senior writer for E/The Environmental Magazine and a contributor to the Environmental Defense Fund publications. Motavalli is a two-time winner of the Global Media Award from the Population Institute and hosts a radio program on WPKN-FM in Connecticut with frequent live music. He lectures widely on climate, transportation, and population issues.