DETROIT FINDS OUT THE HARD WAY: THERE'S NOTHING "GRAND" ABOUT THE TRANSITION TO EVS.

Editor's Note: This week, Peter provides a searing take on the current state of Detroit, and its reversals and missteps along the way to the "Grand Transition." In On The Table, we feature an in-depth look at the 2025 Corvette ZR1, an emphatic statement from the True Believers at Corvette and a "monster" machine in every sense of the word. We also highlight Bentley Motors as it celebrates production of its last handbuilt, high-performance 12-cylinder engine. And we take another look at the Cadillac SOLLEI concept, an all-electric, 2+2 convertible that Cadillac should bring to market. Our AE Song of the Week is "If I Could Turn Back Time" by Cher. In Fumes, we bring you Part XVII of Peter's riveting motorsports series, "The Racers," this week featuring the great British champion, Graham Hill. And finally, in The Line, we have coverage of the Belgian Grand Prix at Spa. Onward. -WG



By Peter M. DeLorenzo

 

Detroit. Over the past few weeks, two things perfectly encapsulated what’s going on in this business right now. In the midst of industry operatives insisting that the EV momentum is growing exponentially, reality suggests something else altogether.

 

In the first case, Ford, led by its CEO Jim Farley, aka “Electric Boy,” did a complete 180 on its plans to spend $1.3 billion on its plant in Oakville, Ontario, in order to turn it into an electric vehicle assembly hub. Instead, the company plans to expand production of its Super Duty pickup – with the various, obligatory propulsion options, according to Ford PR minions – suggesting that it will be able to produce around 100,000 trucks a year, rather than the originally planned three-row electric crossovers, beginning in 2026. Ford says that this plan will add in the neighborhood of 1,800 jobs, 400 more than the EV plant would have.

 

Wait, weren’t we all supposed to be awash in EVs by now, especially Ford EVs? Wasn’t this supposed to be EV Nirvana, where we would all blissfully move around in our whoosh-mobiles, not causing any damage to the environment, even though the creation of batteries exacts a heavy toll to the environment on several fronts? Oh, “they” forgot about that little detail, right? They don’t want us to think about that, do they?

 

So, what happened? Reality happened. Myriad boastful statements by “Electric Boy” about how Ford is going to be an industry EV leader turned out to be unfounded. Because without the profits from its ICE vehicles, especially the incredible, mind-boggling profits generated by its line of pickup trucks, the Dearborn automaker would be dead in the water. The sustenance generated by its ICE vehicles is the company’s financial lifeline, and there’s just no denying it.

But, as always with Ford, there's more. Much more. In a call with the media after the automaker released its second-quarter earnings report last Wednesday (income fell 4%, by the way), Ford CFO John Lawler said that increased warranty costs were "unplanned" and represented about a $700 million increase in warranty expenses for the second quarter compared with the same period in 2023. This was also an $800 million increase from the first quarter of this year. In total, Lawler said the warranty costs for the quarter were around $1.5 billion-$2 billion. But - and this is rich - Lawler insisted that it would be "a one-time issue, though." Really? What unmitigated bullshit that statement is. After all, getting a handle on warranty and launch costs at Ford was the current CEO's primary responsibility. And "Electric Boy" has failed miserably and repeatedly. According to Farley, it will take time for new Ford vehicles of higher quality to make their way into the market, but once they do, warranty costs will be reduced over time. Sure. He's been saying that for the last four+ years. To make matters worse, everyone over in Dearborn has been forced to sing from the CEO's songbook, which means that the choruses of "it won't be long now!" before Ford is swimming in profitability are ringing through the halls with glee. Fundamental accountability is missing in action at the Dearborn automaker, and it's beyond embarrassing at this juncture.

 

Meanwhile, on the other side of town, there’s General Motors, which just announced a thoroughly revised and enhanced 2025 Cadillac Escalade. As I said in “On the Table” last week, GM’s CEO can drone on and on about its EVs that are here – and coming – but who's kidding whom? This new Escalade, with its refreshed interior and exterior and assorted other tweaks, is where the action is, folks, as in ka-ching. Cadillac has moved to solidify its role as the best-selling luxury full-size SUV, because that’s where the ca$h-ola is.

 

For GM, even though the Cadillac Lyriq is nice and all, and the other new EVs – including an all-new Escalade EV – that are beginning to trickle out in an attempt at paying off Mary Barra’s “vision” seem to be emerging slowly but surely, the profits for the foreseeable future originate with its ICE vehicles, period.

As a matter of fact, just this past week GM CEO Mary Barra announced that the company is delaying production of its EV pickups at its Orion Assembly facility in Michigan another six months, until mid-2026. And the launch of the first Buick EV was pushed back until... Who knows? I have to wonder how many other EV programs will be pushed back, delayed or abandoned altogether.

Barra and her counterpart in Dearborn do not look good in any of this. They and their minions are attributing it to the vagaries of the market on the way to the "Grand Transition," but will there be any consequences for these major miscalculations, other than a shrug of the shoulders and a repeat of the Alfred E. Neuman mantra of "What, Me Worry?" There should be, but both Boards of Directors are go-along-to-get-along backslappers. They don't even bother with the sound and fury part; they just signify nothing.

And what about the spectacular new Cadillac SOLLEI EV concept? (See On the Table -WG) It's yet another scrumptious concept from GM Design, home to some of the best designers in the world, but it seems to be another concept "show pony" with no definitive plans for being built, which is nonsensical. Why GM doesn't have a satellite design and order center in Beverly Hills, California, so that people can spec their SOLLEI out is a complete mystery to me. The Cadillac House is wonderful and all, but it's in Warren. Cadillac needs to go to where the potential SOLLEI (and Celestiq) buyers are, and this just in: It ain't Warren.

 

And, oh, by the way, Barra announced in a July 23 letter to shareholders that the company's strong second-quarter financial performance was due to favorable volume, share and margins from its gasoline-powered pickups and SUVs in North America, as well as to increased sales of electric vehicles. (Don't get too excited – GM reported U.S. sales of just 21,930 EVs in the second quarter.) Read that again, and let it sink in. All of GM's profitability is due to sales of ICE SUVs, crossovers and pickup trucks. All of it. GM's EV master plan? It won't be long now, right?

Hear that grinding noise? That’s the sound of hedging going on all over town. You can hear it wafting through the trees and feel it in your bones. And you can see it in the wide array of ICE SUVs and trucks rolling around all across the country. EVs may assuage the intelligentsia, but they don’t pay the bills, and they won’t pay the bills anytime soon.

 

As I’ve said repeatedly in this space, EVs will have their place in our nation’s fleet, but they will only be part of the overall transportation equation. As for the people who suggest that we’ll all be buzzing around in a 100 percent EV world in no time, they are simply flat-out delusional. Our nation’s transportation fleet will have – and should have – a kaleidoscope of options: EVs, Fuel Cells, Hydrogen Fuel Cells, Hydrogen as a fuel for ICE engines, ICEs, and on and on. Besides, let’s not forget that the development of battery technology is accelerating at a furious pace, with the emphasis on lighter weight, the use of fewer rare earth materials, and myriad other improvements. Yes, the EVs of today will look positively antiquated by the time the next decade rolls around, as well they should. Bloated, lumbering, behemoth EVs will never be the answer going forward, thank goodness. And oh, by the way, despite the constant blather generated by the pro-EV types, the charging infrastructure isn’t remotely close to being complete, let alone effective. How long? Give it a decade before there is serious, meaningful progress. Yes, a full decade at least. Not very good, is it?

 

I’ve talked about the “Grand Transition” to an EV-driven automobile industry for years now, but maybe that expression leaves a lot to be desired. Because the real “Grand Transition” and in fact the more precarious one is this: How are these companies going to survive the switch to EVs? How are they going to survive without the profits generated by their ICE vehicle lineup? This is not an inconsequential question. The very future of these companies is on the line now, and for each and every day going forward.

 

I know that certain CEOs – you know who you are – are brimming with optimism and confidence about how wonderful their companies will be once they transition to building a majority of EVs, but a large measure of that optimism is woefully misguided. Another dimension to this burgeoning reality is that these corporate operatives don’t know when the “Grand Transition” really begins. In the meantime, they’re sweating bullets and building as many ICE vehicles that they can crank out. 

 

As Jerry McGuire once famously said, “We live in a cynical world.”

 

We do indeed.

 

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

 

Editor's Note: Click on "Next 1 Entries" at the bottom of this page to see previous issues. - WG