When it was launched in 1992, the Hummer quickly became associated with the brute masculinity of Arnold Schwarzenegger, then an ex-bodybuilder turned cigar-smoking action film star who had pushed for a civilian version of the Humvee military vehicle.
Arnold wanna-bes incapable of matching the former Mr. Olympia’s still-impressive musculature could compensate for their physical shortcomings by forking out the $US40,000 list price before extras (about US$75,000 in today’s dollars) for an eye-catching heap of steel and rubber that got about 10 miles to the gallon, consuming 23 litres of gasoline for every 100 kilometres.
Mr. Schwarzenegger, of course, later went on to become governor of California and help pass North America’s most far-reaching laws to combat climate change and impose tough fuel-efficiency standards on automakers. But he didn’t stop driving his environmentally unfriendly Hummers, even when almost everyone else on the planet did.
Now, for reasons only Sigmund Freud might understand, General Motors has decided to bring back the Hummer – this time as an all-electric vehicle. The Detroit-based automaker, which bought the Hummer brand in 1999, apparently believes there is a still a market for a mega-mega-SUV even as it aims to make its global operations carbon neutral by 2040.
A new television ad campaign for the Hummer EV, narrated by LeBron James, was kicked off in the United States on the weekend, during the March Madness college basketball tournament. For GM, the ad suggests, managing its transition from making only internal combustion engine (ICE) vehicles to mostly making electric ones is a question of survival. “To achieve greatness once is not the end of the journey. It is only the beginning,” Mr. James says, in the TV spot.
GM will likely never again reach its 20th-century greatness. And the Hummer EV launch illustrates the conflicting messages the company sends to markets as it tries to respond to current consumer preferences while anticipating future ones. The Hummer EV launch itself appears to be more of a publicity stunt aimed at persuading skeptics that EVs are not just for hippies and yuppies. GM also just announced plans to offer an electric version of the GMC Silverado pickup truck after the Hummer EV.
The first Hummer EVs, priced at about US$110,000, will not roll off the assembly line until late 2022 or early 2023. By then, an industrywide transition to EVs may reach a tipping point as U.S. President Joe Biden’s administration rolls out its proposed US$2.3-trillion infrastructure program aimed at turning the U.S. into a green-energy powerhouse.
The Biden plan unveiled last week includes spending US$174-billion over 10 years to increase incentives for EV buyers, install 500,000 charging stations and speed up research and investments in U.S. battery and EV manufacturing facilities. Mr. Biden seeks to reclaim U.S. leadership in EV and battery development from China, where EV penetration is much higher.
But the transition to EVs also carries big risks for a North American auto sector that still revolves almost entirely around ICE-vehicle parts and assembly plants. GM, Ford and Fiat Chrysler still depend overwhelmingly on sales of gas-guzzling SUVs and pickup trucks to turn a profit. And although U.S.-based Tesla has a stock-market capitalization bigger than the Ontario economy, it remains a niche player selling only a tiny fraction of the number of cars built in North America.
In a report last month, Moody’s Investors Service said “it will be tough for [established] car makers to get even close” to the 10-per-cent to 12-per-cent operating margins some of them now generate on ICE vehicles as they transition to mainly EV offerings.
“Once [EVs] become a substantial part of their portfolios, automakers will need to address diminishing use of their substantial assets for building ICE vehicles,” Moody’s said. “This could result in asset write-downs and costs for decommissioning, upgrading or reconfiguring plants. Finally, the industry will have to contend with worker reductions and separation costs, because [EVs] require less labour than ICE and hybrid cars.”
While the transition to a net-zero carbon economy will ultimately lead to the creation of new green jobs, it will not come without causing dislocation for others who currently work in ICE-vehicle parts and assembly plants. Nor is there any guarantee that established North American automakers that cut their teeth building Impalas, Mustangs and Chargers can survive the switch to an EV business model amid competition from nimbler foreign rivals.
For now, the EV transition is still mostly in first gear. Established automakers talk up their EV plans but live off their ICE profits. By 2023, after GM delivers the first Hummer EVs, it may be a very different story.
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