General Motors aired a Super Bowl ad on Feb. 7 that it hopes will start closing the chapter on one of America’s great industrial eras powered by petroleum, and jump-start another powered by electrons.
In the spot, comedian Will Farrell sets out for Norway, furious that the Scandinavian nation is thrashing the US in the electric vehicle race. The Nordics are buying more EVs, 54% of all new sales, than anyone else in the world. Farrell rounds up a posse (fellow comedians Awkwafina and Kenan Thompson), and jumps into one of GM’s upcoming electric vehicles to scare the Scandinavian country straight about who will win this EV race.
Two things are notable in the ad. The first is that GM avoids naming its only EV on the market, the Chevy Bolt hatchback, of which it sold about 20,000 last year. Instead, it promoted its battery system, the “Ultium” drivetrain that will serve as the foundation for the 30 EVs it plans to launch around the world by 2025. The second is that Will Farrell is driving an electric cream-colored crossover SUV, one of vehicle categories now outpacing cars like the Bolt.
Both reveal the biggest trends in the US auto market.
GM’s Big Bet
The Super Bowl ad is one of Detroit’s first serious attempts to throw its marketing muscle behind accelerating this transition (German automaker Audi ran its own EV Super Bowl ad in 2019). Since committing billions for EV factories and vehicle development, Detroit’s automakers have nowhere to go but forward. They are desperate to jumpstart demand for EVs not built by Tesla, which now controls an estimated 80% of the EV market in the US.
GM now has everything to lose, and win, on EVs. Last year, GM was supporting litigation led by the Trump administration opposing California’s stricter fuel economy standards. By November, Detroit’s largest had automaker abandoned the lawsuit and switched sides. It says it will now exclusively offer electric light-duty cars and trucks by 2035, five years ahead of its previous goal.
To reach its goal, GM is furiously hiring 3,000 engineers and software developers to build its onboard, electric drivetrain, and self-driving systems, an effort now consuming more than half of GM’s capital spending and product development. This new aspiration puts it well ahead of market forecasts. Today, only 2% of new car sales in the US are electric, and less than half are expected to be electric by 2035.
GM isn’t starting from scratch. In 1996, it launched America’s first mass-produced electric vehicle, the EV1, which quickly won a following. Its plug-in hybrid Chevy Volt (now discontinued) and all-electric Bolt have legions of passionate owners. GM accomplished this on a meager marketing budget. As recently as 2018, GM was spending an estimated $29 million to advertise its Silverado pickup in markets across California and the Northeast, while, while spending nothing to promote the Bolt, its electric hatchback, according to NESCAUM, a non-profit coalition of air quality agencies. (GM said it has paid for “very targeted” advertising since Bolt buyers “are not typical Chevy customers…[they] don’t really watch television.”)
Today, GM isn’t focusing on selling more Bolts. It wants to sell bigger premium SUVs and trucks, the profit engine in Detroit, that just happen to be electric. Or in GM’s marketing pitch, it wants to make EVs “fun, desirable and accessible for people from every walk of life.” (Bolt enthusiasts, on the other hand, often loved their vehicles so much because they were electric).
Last weekend’s Super Bowl ad was GM’s first downpayment backing this EV strategy. GM’s entire electric lineup now looks to be almost entirely SUVs and trucks led by the Cadillac Lyriq SUV (featured in this past weekend’s Super Bowl ad) and the GMC Hummer EV, both due out next year.
That tracks American’s growing preference for trucks, SUVs, and crossovers. So far, battery-powered cars have outnumbered their larger counterparts for years. But in 2021, the ratio will switch. EV buyers in the US will now be able to choose among 19 SUVs and trucks, and only 11 cars, according to automotive market intelligence firm Edmunds, roughly double the number as last year. Almost every other carmaker, including Tesla, is racing to seize this market opportunity.
Covid-19 stepped on the gas
All of this is being accelerated by the pandemic. Vehicles sales crashed last March as lockdowns took effect, but they’ve now come roaring back to pre-pandemic levels, according to federal data. Thanks to a flood of financial incentives and the rush to drive private cars after an exodus from cities and public transit during lockdowns, new car sales are set to grow 6.5% over 2020.
Even more remarkably, the average price of a new car driven off the lot is rising. For more than a decade, the average transaction price for US light vehicles (a category that includes passenger cars, sport utility, and crossovers) remained steady around $35,000 (inflation-adjusted), according to Edmunds. Despite the economic pain wrought by the pandemic, that’s now crept up to hit an all-time record high of $40,573 in 2021. “There’s still a large population of well-off consumers who have been taking advantage of favorable financing conditions and sustaining healthy demand in the new car market,” said Edmunds’ Jessica Caldwell in a statement.
The next big test for the electric vehicle market isn’t just whether millions of people will buy them. EVs have won over EV (and Elon Musk) enthusiasts. But most auto buyers remain on the sidelines. EVs represented just 3% of new car sales globally in 2020, and under 2% in the US. That’s set to rise to 2.5% in 2021. A substantial increase, but far from the dominant market share automakers need to pay off their massive investments in the technology.
The bigger challenge for Detroit’s automakers will be changing the culture around vehicles. People don’t buy cars for their fuel tanks. They’re seeking something reliable, affordable, safe, and attractive that may even serve as an extension of their identity (regardless of actual utility: only 25% of truck owners ever drive off-road or tow something, for example).
Electric vehicles don’t automatically check all those boxes for most people. They’ll need to be convinced. GM had a second Super Bowl ad for that. In the one-minute spot, bestselling author Malcolm Gladwell of “The Tipping Point” makes an appeal to the “E generation,” standing on a stripped-down chassis of GM’s future electric vehicles “Change,” he tells the camera. “You can resist it, be left behind, or embrace it and move forward.”
GM now has a new logo, a new tagline (“Everyone in“), and little choice now but to accelerate.