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G.M. Announcement Shakes Up U.S. Automakers’Transition to Electric Cars

Every carmaker is tryingto figure out how to make the leap before governments force it and Tesla andother start-ups lure away drivers.

Anelectric Chevrolet Bolt charging up in Baker, Calif. General Motors announcedthis week that it would phase out the internal combustion engine by 2035.Credit...Philip Cheung for The New York Times

By Neal E. Boudette and Coral Davenport

• Jan. 29, 2021

A new president took office this monthdetermined to fight climate change. Wall Street investors think Tesla is worthmore than General Motors, Toyota, Volkswagen and Ford put together. And China,the world’s biggest car market, recently ordered that most new cars be powered by electricity in just 15 years.

Those large forces help explain thedecision by G.M.’s chief executive, Mary T. Barra, that the company will aim tosell only zero-emission cars and trucks by 2035.

Her announcement, just a dayafter President Biden signed an executive order on climate change, blindsided rivals who usually seek to present a united message on emissions and other policy issues. But it was also years in the making. G.M. has had a love-hate relationship with electric cars going back decades, but under Ms. Barra, who took over in 2014, it has inched its way toward a full embrace of the technology.

She has also shown apenchant for making big moves that her predecessors might have considered brashor impulsive given the company’s reputation for deliberate — or plodding tosome — decision making. When Donald J. Trump became president, she pushed himto relax Obama-era fuel economy standards that G.M. had endorsed when they were put in place. Then, after Mr. Trump lost his re-election bid in November, Ms. Barra withdrew from a lawsuit seeking to prevent California from maintaining its own high fuel standards.

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Now, others are searching for the rightresponse to Ms. Barra’s latest tack. The reaction from automakers and oil andgas companies has so far been muted. But Washington is abuzz with corporatelobbyists complaining in private about what they saw as a calculated move toburnish G.M.’s and Ms. Barra’s reputations even as the industry negotiates anew fuel-economy deal with the Biden administration.

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A senior G.M. executive, Dane Parker,said the company was not seeking to curry favor with the new administration.Its decision, he argued, was based on a fundamental, dollars-and-cents analysisof where the auto industry is headed and the cars that it expects to becomebest sellers in the future.

“We are doing this to build asustainable business,” Mr. Parker, the company’s chief sustainability officer,said in an interview on Friday. “We want to have a business in 15 years that’sa thriving business.”

G.M. has already committed to spending$27 billion to introduce 30 electric vehicle models by 2025, and is buildinga plant in Ohio to make batteries for those cars and trucks. Mr. Parker said the company was looking at sites for more battery plants and working on future electric models.

“To be ready for2035, I need to build battery plants, I need to do battery development, I needto develop electric vehicles,” he said.

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One key driver of that analysis: On hisfirst day in office, Mr. Biden signed an executive order directing theEnvironmental Protection Agency to immediately begin developing tough newtailpipe pollution regulations, designed to rein in the nation’s largest sourceof planet-warming pollution. G.M.’s announcement gives powerful political momentumto that plan, signaling that the nation’s biggest automaker supports theadministration’s single largest policy to fight climate change.

Broadly, of course, the industry hadbeen quietly gearing up for months for a possible change in the White House. RepresentativeDebbie Dingell, Democrat of Michigan and a former G.M. executive, said in aninterview, “I had been saying to all the autos: ‘When Joe Biden gets elected,your world will turn upside down. You’ve got to be at the table or else thisthing gets jammed down your throat.’”

Ms. Dingell isstarting to see that effort bear fruit, as other auto companies are expected toquickly come out in support of Mr. Biden’s plans.

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ABolt factory in Lake Orion, Mich., in 2018. G.M. plans to spend $27billion to introduce 30 electric vehicle models by 2025.Credit...Rebecca Cook/Reuters

But while G.M.’s U-turn materialized inthe weeks after the election, five of its competitors — BMW, Ford, Honda,Volkswagen and Volvo — had already legally bound themselves to tougher fueleconomy standards in a deal with California. G.M. is not party to thatagreement and can operate under the Trump rules until Mr. Biden’s policies areenacted, potentially giving the company more time to invest in research andtechnology.

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When Mr. Trump was president, Ms. Barratold him that the Obama-era rules were too hard on manufacturers, requiring them to sell passenger vehicles that averaged 54.5 miles per gallon by 2025. Mr. Trump relaxed the standards to roughly 40 miles per gallon, which would require no new technology — and would have allowed the emission of nearly a billion more tons of heat-trapping carbon dioxide.

The five autocompanies that signed the deal with California committed to an average fueleconomy of 51 miles per gallon by 2026 and had to start ratcheting up theirstandards with cars sold in 2021 in the state.

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The Biden administration is widely expectedto follow the terms of that California deal as it seeks to impose new federalrules, but they are unlikely to be completed and in effect until 2023 at theearliest.

“From my perspective, G.M. is still inthe environmental doghouse,” said Drew Kodjak, executive director of theInternational Council on Clean Transportation, a research and advocacyorganization that works on emissions reduction policy. “That doesn’t meanG.M.’s statement is not important and groundbreaking, but the proof will be inthe pudding.”

A G.M. spokesman said the company hadnot opposed the higher standards sought by California but supported the Trumpadministration because it thought having a single national standard was moreimportant. G.M. had some reason to tread lightly. Mr. Trump had publiclyattacked the company and Ms. Barra several times, including for a decision toclose a plant in Ohio and increasing production in China.

Ms. Barra still has a prime seat at theWhite House negotiating table. On Thursday, she spoke by telephone to GinaMcCarthy, Mr. Biden’s top domestic climate change adviser, who will play a leadrole in creating the new auto rules, and Brian Deese, the head of the White House National Economic Council, according to a person familiar with the conversations.

While no other largeautomakers have set a target date for selling only electric vehicles, many havemoved in that direction. Ford is spending billions to introduce battery-poweredmodels. Customer deliveries of the first of them, the Mustang Mach E sportutility vehicle, started last month. Volkswagen said last year that it plannedto spend 73 billion euros ($88 billion) on electric vehicles over the next fiveyears.

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Fordis spending billions to introduce a slew of battery-powered models over thenext several years, including the Mustang Mach E.Credit...RyanYoung for The New York Times

The industry isafraid of losing market share to Tesla, the dominant electric carmaker, whichis growing rapidly. Wall Street values Tesla at about $752 billion, about 10times as much as G.M. Several start-ups, like Rivian and Lucid Motors, arehoping to follow Tesla’s footsteps this year.

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And China’s decision late last year torequire that most vehicles sold there be electric by 2035 is also criticalbecause G.M. sells more cars in that country through its joint ventures than inthe United States. And Britain, Ireland and the Netherlands have said they willban sales of new gasoline and diesel cars starting in 2030.

G.M. has been talking about moving tozero-emissions vehicles for about two years. Last March, it unveiled modularbattery technology that it said would lower costs. A few months later, G.M.said it could reach a point where electric vehicles cost no more thangasoline-powered ones more quickly than it had previously expected.

Ms. Barra was getting support and inputfrom an unexpected source — the Environmental Defense Fund, which hadcriticized G.M. in the past. The chief executive had shared a barbecue dinnerwith the group’s president, Fred Krupp, at a conference in 2015, and by last fallthey were in regular contact by phone and email.

“We both had an optimism we could reachcommon ground,” Mr. Krupp said.

In October, G.M. unveiled a Hummerelectric pickup truck, and within a day it had collected enough orders toaccount for all the trucks G.M. planned to make in the truck’s first year.

“That was another inflection point,”Mr. Parker, the chief sustainability officer, said. “It showed consumers reallyare very excited about owning electric vehicles.”

Just a few weeks later, Mr. Biden becamethe president-elect. And by December, G.M. was meeting with his transitionteam, Mr. Parker said. “Our vision of a zero-emissions future aligns very wellwith their vision and their goals.”

At the same time,G.M. signed a pledge, known as the Business Ambition for 1.5 Degrees, to combatglobal warming. By early January, the company was homing in on 2035 as thelikely date for the electric transition, Mr. Parker said. On Jan. 12, Ms. Barraappeared at the Consumer Electronics Show and detailed G.M.’s vision of afuture with no tailpipe emissions, but gave no specific date.

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Mr. Biden was sworn in on Jan. 20, anda week later, G.M. announced the end of the internal combustion engine, thetechnology that has been at the heart of the company, and one of the world’slargest industries, for decades.

“This is a big thing,” Mr. Krupp said.“It really does send a signal that this is the way things are going, and G.M.is going to play their part in accelerating it.”