THE GRAND TRANSITION WILL LEAVE SOME CONSUMERS BEHIND.

By Peter M. DeLorenzo

Detroit. It was interesting to read reports from Reuters about the Lucid Air, the luxury EV sedan that is coming next year with an “independently verified” range of 517 miles, according to company operatives. Lucid CEO Peter Rawlinson told Reuters reporters Ben Klayman and Paul Lienert that the Air will initially be priced “well north of” $100,000. 

That sounds wonderful and all, but it’s clear that this Grand Transition to BEVs is going to be led by six-figure vehicles. To be sure, I have nothing against these manufacturers asking all the money for their hard-won engineering prowess and crushing development costs, because generating profitability from these show pony BEVs is the name of the game. 

And yes, these $100,000+ spectacucars will draw tremendous attention by luring consumers into showrooms and setting the tone and tenor for the eventual mass adoption of BEVs, at least that’s the plan, anyway. And it’s certainly not the first time that flash and wow have been used to generate buyer interest in this business.

I am reminded of a similar strategy – albeit in a prehistoric time in this business long before the dawn of the EV era - when sexy, attention-grabbing performance cars in the 60s and early 70s lured people into showrooms in droves. A family could check out the latest and greatest hot cars even though Mom and Dad ended up purchasing a more mundane model. For example, how many Chevrolet sedans were sold by the sales pitch that there’s a little bit of Corvette in every Chevy? And how many less-sexy Fords were sold by the presence of a red-hot Mustang in the showroom? That’s just the way it worked, and it worked extraordinarily well.

But the difference for the coming all-electric era is that affordable BEV choices will be hard to come by. Unless you consider prices of $70,000 and up affordable. Yes, there will be less expensive choices, like the next-generation Chevrolet Bolt and other BEV product entries from Chinese, Korean, Japanese and German manufacturers, but it’s not going to be nearly enough. Not even close, in fact. 

I know what the manufacturers will say: “These spectacucars represent the tip of our technological spear, and this ultra-advanced BEV technology will eventually trickle down to all of our BEV product entries at various price points,” or something like that. And they do have a point, because that is exactly how it is supposed to work. A company develops all of the technology for its spectacucars and then amortizes the cost of that technology across an entire range of products to come. It has worked that way for decades in this business – at least for the mass manufacturers – and that isn’t about to change. (The luxury manufacturers? That’s a different story altogether. They charge an arm and a leg while leveraging their Brand Image for all that it’s worth because that’s just how they roll. And that isn’t about to change either.) But it’s also apparent to me that with this Grand Transition to BEVs aimed at the well-heeled buyers in ConsumerVille first, the reality for a lot of consumers is that they will be left out and forced to stick with ICE vehicles for the foreseeable future, simply because they will continue to be reasonably affordable. 

But then again, what is reasonably affordable? The average price of a new car these days is around $37,000, and the average car payment is now more than $500/month. But talking about a $70,000+ BEV and up from there is a substantial leap, and a leap that simply is out of the question for a lot of people.

I have often commented about affordability in this business and I will continue to do so. But affordability in the BEV era is a completely different equation. The latest painful lesson in this regard? Audi has cut the price of its 2021 E-Tron SUV (we don’t write “e-tron” around here because it is lame. -WG) by almost $9,000 because it has been basically sales-proof (and it’s still $66,000, even after the price cut). But then again that’s what Audi gets for rushing a product to market that was underdeveloped and overpriced. And unless the E-Tron gets a total rethink it will not only be sales-proof, its technology will be obsolete vis-à-vis the competition as well, like yesterday. In other words, a giant strudel bowl of Not Good.   

What is the right equation for real people in the BEV era? The first manufacturer that is able to build a stylish, nicely equipped, compact SUV, crossover, or sedan with 350 miles of honest-to-goodness range and price it at $35,000 – all-in with no tax credits – is going to set this business on its ear. I won’t be holding my breath, because it’s two years away at the earliest.

This Grand Transition? It is not only going to leave some consumers behind, it’s going to be a painful one too.

And that’s the High-Octane Truth for this week.