If you haven’t heard, GM put two EV commercials in the Super Bowl! In fact, if Google serves you articles about EVs on a regular basis, your suggested articles are currently filled with articles about the commercials and what they mean for the future of EVs, and quite frankly, I think they’re all wrong.
Legitimately, the best article I’ve seen is our own Zachary Shahan’s take, and I suggest you go read it if you haven’t already. Shahan doesn’t dive into why these ads exist, as I’m about to try to puzzle out, but he dives into exactly what makes them so poor as standalone ads.
The biggest issue, as Shahan pointed out, is that nothing in these commercials is available right now. In fact, when I first saw the Will Ferrell ad, I sent it to a friend who follows the sector a bit and asked for his input. His reply mirrored what my thought was: “It’s nice that GM is now advertising for Tesla.”
I really believe this too — if you see these commercials and they make you wonder about electric cars, you’re probably going to do one of two things. You may go do research online where you find out these vehicles aren’t available yet … but, hey, these Tesla ones are currently available. Or you’re going to go to a dealership where, chances are, the salespeople will laugh at you and tell you electric cars are silly and direct you to the latest gas car. Or perhaps you’ll get put into a Bolt, not exactly a luxury vehicle like the ones shown in these ads.
So, what was GM going for here?
Was This About Biden?
I’ve seen a lot of bad takes about why these commercials exist. In the mainstream media, they’re writing about how, thanks to Biden becoming president, companies now feel like they need to accelerate their EV programs.
That might be true, but if it is, it’s because those companies are run by complete morons who haven’t been paying any attention to what’s going on with the industry. And, while I don’t think highly of the leadership of either Ford or GM, they’ve been at least publicly pretending like they are trying to transition for ages now. In an article I wrote last June, I noted Barra at GM has been there since 2013 and the majority of that time she has been publicly stating that, under her leadership, GM envisions a future with zero crashes, zero emissions, and zero congestion. I mean, it’ll take 8 years for them to convert one of their factories to EV production, but it’s clear they are leaders in this space, right? And in case it isn’t obvious enough, yes, that’s sarcasm dripping off my words.
GM is not and has never been the leader in electric technology, not since they crushed their original EV1 / Impact program. Barra could have come in and dramatically shifted gears, but instead did the usual corporate thing of coming up with a mission that is just PR.
The point is, GM has been stating that it will go electric long before Biden arrived.
But let’s compare — a company that has been talking about going electric for … well … since it was founded is Tesla. It’s the only pure-play electric automaker in the US and on the US stock exchange, and it is the clear leader in the space — one that doesn’t have to spend $10 million for an EV commercial to try to flaunt its business model. You’d assume that Tesla did really poorly under Trump, right?
The day that Trump took office, split adjusted, a share of Tesla [TSLA] would have set you back $48.95. On the day Biden was inaugurated, that same share in Tesla would set you back $850.45. Under Trump, Tesla achieved 1737% growth in share price.
By contrast, if you bought a share of GM the day Trump became president, you would have paid $37.01. When Biden took over, it would have been up to $55.86, for 151% growth.
Let’s be real — Trump was no friend to the electric car. He disparaged them publicly, he teamed up with certain automakers — like GM — to weaken emission standards. But he couldn’t stop Tesla’s success.
Also, GM ran a commercial about its Hummer EV during last year’s Super Bowl! So, let’s get real — this had nothing to do with Biden.
What Else It Has Nothing To Do With
In order to get to the point quicker, here are some other things GM’s ad has nothing to do with, presented in bullet format to get to the point quicker:
- Selling EVs — As noted, none of these vehicles are available, and conspicuous in its absence is the “flagship EV” of the brand, the Bolt, the only electric vehicle available from GM at the moment.
- Informing the Public — Ferrell notes in the commercial that Norway sells more EVs per capita than the US. He specifically doesn’t point out how much more. If people uninformed about the coming EV wave found out more than half of the people who bought vehicles in Norway last year chose one with a plug, wouldn’t that make them more curious about what they have been missing? By not giving any sort of concrete numbers, someone uninformed could believe that Norwary is selling 3% EVs, that we could catch up, and that, since GM isn’t bringing these models until 2025, the transition still isn’t happening quickly.
- Explaining EV Benefits — Perhaps the biggest obstacle to EV sales growth — other than production capacity — is explaining the benefits of EVs. The Ferrell ad says nothing about their benefits. It notes that soon the Ultium battery will allow everyone to drive an EV, which implies the technology isn’t ripe until that battery is being produced. The Edward Scissorhands commercial, meanwhile, shows hands-off driving technology that isn’t EV specific.
Alright, I’ve highlighted a number of things these commercials weren’t about. Let’s explain what they were about.
GM sees the writing on the wall. Tesla is vastly ahead of the legacy company and is moving faster. Transitions are happening quicker than the legacy industry was expecting — according to EV-Volumes, EV sales grew by 43% last year, reaching 3.24 million sales — in the middle of a pandemic — compared with a 14% market decrease in regular vehicle sales.
Let’s just keep the 40% annual growth figure, slightly less than this past year. If that keeps up, we’d have 4.54 million EV sales in 2022, 6.35 million in 2023, 8.89 million in 2024, and 12.45 million in 2025. To put this into perspective, 65.5 million vehicles were sold globally in 2019.
By the way, 40% growth puts us on track for 100% global auto sales being electric by 2030.
Will it keep growing by 40% each year? It’s hard to say — right now, automakers simply aren’t making that many attractive electric vehicle options, which has made it more difficult for growth to grow, while simultaneously ensuring that Tesla is getting paid a lot of money for its zero emissions credits.
Even with analysts like Adam Jonas recently proclaiming that GM is making an incredible turnaround to its business, it is difficult to know if the transition will be fast enough. Jonas believes that GM is leading the way. I still take everything GM does with a huge grain of salt, until I see some actual tangible evidence of change.
It’s also worth pointing out that whenever I think about Jonas, I think back to his Tesla stock price targets in May of 2019, when he stated Tesla could drop to $2 (split adjusted), or rocket up to $78.20, in the following year. One year later, Tesla closed at $165.52 a share, meaning he was so unsure of the industry he covers, his bull case was 3910% higher than his bear case and yet Tesla outperformed his bull case … by 212%. So, I take anything Jonas says with a huge grain of salt, too.
(This is about the point where I usually go: I’ll be a professional stock analyst! My target for Tesla in the next year is between $400 and $15,640 a share! I like cars!)
As an aside aside, also, it’s crazy to think that Tesla’s share price was closing at $165.52 less than nine months ago.
But ultimately, Jonas’s recent proclamation is the same thing GM is trying to tell us with these commercials — basically, “Hey, guys, we’re really serious about EVs, please give us a chance!”
There are two goals:
GM wants to prop up its stock. EVs are hot, and the entire industry has been caught asleep at the wheel by the transition taking place. If GM can convince enough investors that it is really on the EV train, I’m sure that it hopes investors reward the company the same way that investors are currently rewarding Tesla.
GM’s leadership doesn’t want to be fired. If you’re a major shareholder in GM and you’re looking at performance, until just recently you’re looking at a company that spent billions to buy back it’s own stock while that stock price remained basically flat. GM invested $10.6 billion in stock buybacks at a time it claimed to be going all-in on EV production. At this point, shareholders have to be looking at performance and feeling like management has been asleep at the wheel. As I write this, GM is worth less than 10% of Tesla’s current market cap.
I anticipate 2021 to be a bloodbath in legacy auto corporate boardrooms, and GM is trying to avoid that. This commercial was about showing how serious GM is about EVs — by not showing anything. It matches all of these new things that GM keeps saying and doing that are mostly just repositioning the chairs. In November, GM also announced it was spending $27 billion on EVs and AV technology through 2025, an announcement applauded by the same financial analysts that never understood Tesla, but that I still feel is super timid. Put into perspective, GM committed an additional $1.7 billion investment per year for the next four years, or slightly more than half of what it spends in a year on marketing alone.
Until I see GM’s investments urgently converting factories from production of internal combustion vehicles to production of EVs, or until I see GM do something to address how it expects its dealership network to actually sell these vehicles (and to be fair to the dealerships, how they will be able to stay in business with a model that doesn’t include the auto owner constantly having to stop for repairs), I won’t believe it is happening, regardless of what Will Ferrell tells me.
But maybe it will work. As I write this, GM’s stock price has been hovering about 3% higher for the day. It has gained about 30% in the past month.
Is it enough to make the shareholders believe? Maybe.
And that’s what I think this is really all about.
*Disclaimer: I am a Tesla [NASDAQ:TSLA] shareholder who has purchased shares within the preceding 12 months. Research I do for articles, including this article, may compel me to increase or decrease stock positions. However, I will not do so within 48 hours after any article is published in which I discuss matters that I feel may materially affect stock price. I do not believe that my voice could or should influence stock price by itself, and I strongly caution anyone against using my work as your sole data point to choose to invest or divest in any company. My articles are my opinion, which was formulated using research based on publicly available data. However, my research or conclusions may be incorrect.
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