The current state of the automotive market is sketchy, to say the least. On the one hand, Internal combustion engine (ICE) vehicles are getting canceled thanks to regulators pushing toward reducing carbon footprints. On the other hand, electric vehicles, promoted as the “perfect” alternative to combustion, are simply not catching on; many people remain skeptical about battery electric vehicles, and for good reason. As such, GM has officially come forward with plans to offer something that was completely off the table a few years ago: hybrid vehicles.
Somehow, the only hybrid GM sells right now is the C8 Corvette E-Ray. But that’s likely to change.
GM CEO Mary Barra confirmed during GM’s fourth-quarter and full-year earnings calls that the company will bring hybrid options to North America. The automaker currently builds and sells several hybrid versions of existing US-market models in China, such as the Blazer and Equinox.
The Detroit News points out that in April of last year, the Biden Administration released new tailpipe emissions standards intended to push automakers to accelerate the proportion of EVs in their U.S. sales to 67% by 2032, but it’s looking increasingly unlikely that this will happen as the months go by. The proposed rules by the Environmental Protection Agency call for a 56% reduction in tailpipe emissions from the 2027 model year to 2032.
Following that, the Biden Administration announced plans to cut vehicle fuel consumption by nearly half by 2035. That would require automakers to meet an estimated 58 miles per gallon average for fuel economy by the 2032 model year. That would also mean improving fuel efficiency by 2% every year for cars and 4% per year for light trucks starting for the 2027 model year.
Frankly, it’s an unreasonable request, and has so far proven so. But try telling your board of directors that these mandates are little more than Bidenomic fairy dust that will only cripple the company. Or try telling the former CEO of eBay that it’s impossible for GM to “unlock shareholder value” like Tesla can. Rarely do these people stand for the word “no.”
It doesn’t take a genius to see that this creates serious challenges for automakers, especially since the take rate for EVs differs from what any of them projected. Maybe we shouldn’t base such projections off of regulatory mandates? Maybe it should be a little more based on customer demand?
Either way, Barra stated that GM “remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035. But in the interim, deploying plug-in technology in strategic segments will deliver some of the environmental benefits of EVs as the nation continues to build its charging infrastructure.”
The GM CEO, approaching her 10-year mark at the helm, also acknowledged the reduced pace for EV sales, though she noted that third-party forecasts estimate U.S. EV deliveries will rise at least 3% over last year’s sales. Offering plug-in hybrids as an option for a slower transition away from ICE is probably the best way to go; it gives customers a chance to understand the benefits and limitations of electrification before fully committing to batteries.