General Motors, the world’s fifth-largest carmaker, said it would stop producing internal combustion engine vehicles by 2035 and “aspires” to become carbon neutral by 2040.
The announcement by GM’s CEO Mary Barra on Jan. 28 came shortly after U.S. President Joe Biden signed an executive order on climate change that has implications for the auto industry. The administration has since also proposed legislation making all new cars emissions-free by 2035 and to decarbonize transport by 2050.
In November 2020, GM said it would spend U.S. $27 billion on developing 30 new battery electric vehicle models by 2025 and build a new plant to make them in Ohio. The company currently produces the Chevrolet Bolt BEV and an electric version of the notoriously thirsty GMC Hummer. It also launched an electric commercial vehicle marque called Brightdrop and has equity stakes in the electric pickup startup Nikola, a company embroiled in controversy after its ex-CEO was accused of fraud.
“I think it’s truly reflective of where the tides are trending in the automotive space, and for companies like GM, whoever can manage to make the pivot the fastest stands to gain. So it’s important to see announcements such as this,” Sarah Petrevan, the policy director for the think-tank Clean Energy Canada, told Lubes'n'Greases. Canada’s market is closely integrated with the United States, and standards developed in its southern neighbor are automatically adopted by Canadian authorities, she explained.
Major original equipment manufacturers around the world have various approaches to the transition to e-mobility by focusing on BEVs, hybrids and fuel-cells or a combination of all three.
“GM and other key players have shown signals to intensify efforts in the development of battery EVs, whereas plug-in-hybrid EVs remain a key business in Ford’s and Toyota’s electrification strategy,” Sharbel Luzuriaga, a senior analyst at the industry consultancy Kline & Co., told Lubes'n'Greases.
According to an estimate by U.K.-based consultancy IHS Markit, 60% of all vehicles sold globally will be electrified (BEV, hybrid and fuel-cell) by 2032, up from about 3% currently. The rest will still have conventional powertrains, adding to the hundreds of millions of ICE vehicles already on the roads.
“This is important leadership from GM, but there’s also another important piece that’s still missing … What happens between now and 2035? You sell a car today and it has at least a 10 to 15-year lifespan on the road. That’s more than a decade of emissions spewing out of your tailpipe,” Petrevan said.
Barra, along with her counterparts at Toyota and Fiat Chrysler, lent support to former U.S. president Donald Trump’s attempt to weaken Obama-era fuel economy standards that GM had already agreed to. GM joined Trump’s lawsuit against the state of California for the right to set its own higher emissions standard.
According to disclosures in its annual report, the motive was protecting profits – SUVs and larger autos offer higher margins than smaller, more fuel-efficient cars.
However, Barra quickly withdrew GM from the lawsuit when then-president-elect Biden unveiled plans for transport decarbonization and electrification. The proposal includes extending the federal tax credit, which will be reinstated for GM and Tesla after the two companies exhausted their quotas in 2020.
“We saw a number of OEMs in the U.S. champion weaker fuel efficiency standards under Trump. Now that Trump is out of office, we see OEMs flock in droves to the California ‘concession position’ as climate leadership, but California’s standard is still weaker than the original standards Obama enacted under his presidency,” she said.
For GM to become carbon neutral by 2040, it intends all of its vehicles and plants be zero emission and it would buy carbon credits to offset those that are not, according to media reports. But there is still more to do now, said Petrevan.
“Meeting climate commitments … is going to mean reducing pollution in the transportation sector, not only a greater uptake of EVs, but reducing emissions in ICE powered cars, until such a time they’re no longer being produced,” she said.
Since climate change seems not to be GM’s primary driver for switching to e-mobility, then sales are. It looks increasingly likely that four-wheeler, light-duty drivetrains will be battery-powered, as jurisdictions in Europe and North America tighten fleet emissions targets and raise the penalties for non-compliance.
The company that dominates is Tesla. While GM clocked up sales of around 20,000 Bolts in 2020, Tesla sold 500,000 units across its range.
VW is chipping away at Tesla's lead, which is greater than the next five companies combined. In the long run, BEV sales for GM, Ford and VW will erode Tesla’s dominant position sales by adopting aggressive plans in the development of BEV lineups.
An announcement like this by such a large automaker could drive the transition to e-mobility faster than anticipated. This in turn would have a deeper effect on base oil production. One industry analyst believes refiners will either have to upgrade product portfolios to address the requirements of new e-fluid technologies or face closure.
“The production of Group I base oils will decrease, while the demand for bright stock and Group III base oils will increase. Many refiners are heavily investing in development and quality upgrade of their capacities,” said Denis Varaksin, a base oil trader at the Berlin-based DYM Resources.
Additive producers are also bound for change, as performance requirements from EV thermal management fluids, e-axel fluids and e-motor greases shift and new tests need to be developed.