GM’s Chevy Bolt $ 1.8 Billion Recall Shows Why Auto Manufacturers’ Electric Vehicle Deployments Could Be ‘On Fire’
The Chevrolet Bolt EV recall puns almost spell out for themselves. General Motors’ announcement last week
The recall announced last Friday comes about a month after a previous recall of some 70,000 bolts manufactured between 2017 and 2019. GM put the cost of the recall at around $ 800 million. So repairing all of the recalled bolts could, as Morningstar analyst David Whiston said at the Detroit Free Press, cost GM some $ 1.8 billion. That’s a huge amount for any business, but especially one that went bankrupt in 2009, and said it would spend $ 27 billion on electric and autonomous vehicles over the next few years.
But the significance of the recall by GM, America’s largest automaker, goes far beyond Detroit. The costs of the current electric vehicle push will likely be borne by all U.S. taxpayers and taxpayers, not just electric vehicle buyers. Three weeks ago, President Joe Biden signed an executive order that aims to ensure that half of all new cars sold in the United States in 2030 will be electric. Achieving this, according to the automakers, will require huge sums of taxpayer money in the form of subsidies. According to a recent estimate from AlixPartners, around $ 50 billion will also need to be spent on electric vehicle charging stations. The cost of all these charging stations will likely be passed on to taxpayers in the form of higher electricity bills. These higher rates will impose a regressive tax on low- and middle-income Americans, who likely won’t be able to afford an electric vehicle.
As Reuters reported on August 5, the day Biden signed the executive order, “Detroit 3 automakers have said aggressive electric vehicle sales targets” can only be met with billions of dollars worth of sales. government incentives, including consumer subsidies, electric vehicle charging networks as well as “investments”. in R&D and incentives to expand electric vehicle manufacturing and supply chains in the United States.
Before I go any further, I’ll put my cards on the hood: I’ve been a long-time skeptic of EVs and their potential to conquer the automotive market. Yes, I know the sales of electric vehicles are increasing. And yes, I know almost every major automaker in the world has announced aggressive plans to electrify their fleets. But my skepticism is due to the failure of a century of electric vehicles to gain significant market share among consumers. As Pew Research reported in June, “In each of the past three years, electric vehicles made up about 2% of the US new car market. “There are many reasons electric vehicles don’t pull consumers through the tailpipe, but the main ones are affordability and functionality.
Regardless of their benefits, electric vehicles are still a luxury item that appeals to Benz and Beemer audiences, not low- and middle-income consumers. The average household income for electric vehicle buyers is around $ 140,000. This is about double the American median, which is around $ 63,000.
I saw it myself last month while visiting Costco. Up front was a light blue 2021 Chevrolet Bolt EV Premier that was about the size of a Toyota Corolla. The price: $ 46,280. For that much money, an informed consumer could buy two – yes, two! – the all-new Corolla at Toyota of Cedar Park, a dealership located approximately 20 miles north of downtown Austin.
For decades, automakers have claimed that a fully electric car is just around the corner. Some of this hype has come from GM. As I pointed out in my fourth book, Power hungry, (published in 2010) GM claimed in 1979 that it had found “a breakthrough in batteries” that “now makes electric cars commercially practical”. This boast was included in a September 26, 1979 article in the Washington post, titled “GM Unveils Electric Car, New Battery”. The article explained that the new zinc-nickel oxide batteries would provide the “100 mile range General Motors executives deem necessary to successfully sell electric vehicles to the public.”
And yet, here we are, 42 years later, and GM announces that it will “replace the faulty battery modules of the Chevrolet Bolt EV and EUV with new ones.” In that same press release, the company said the process of replacing the 73,000 recalled cars would result in an “additional cost of approximately $ 1 billion.” So, an elementary division shows that GM’s cost to fix each bolt will be around $ 13,700.
To be fair, that number may be too high. Additionally, the company has said it will try to recoup some of the cost of recalls from its battery supplier, LG Chem. But as CNN Business’s Chris Isidore reported on August 5, replacing the Bolt’s batteries will be an incredibly expensive fix for a car that was initially overpriced. Isidore wrote of the previous $ 800 million recall, saying it “cost about $ 11,650 per vehicle, making it one of the costliest recalls on record per car.” Isidore pointed out that Hyundai was spending some $ 874 million to replace the batteries in “its own electric vehicles (also for the risk of fire, although they are different battery modules. This is just under 11 $ 000 per vehicle.), ”Isidore continued, saying that for GM and Hyundai, the costs of recalls“ are staggering – and exponentially higher than the average price of an automotive recall over the past 10 years, which hasn’t was only about $ 500 per vehicle “.
The cost per vehicle of the recall goes to the heart of the bet that is now being made on EVs, which have the annoying habit of catching fire. As Isidore noted, the Bolt, the only electric vehicle GM sells in North America, has been “linked to at least nine fires” since early 2020, and Hyundai vehicles have been involved in around 15 fires. Meanwhile, three Teslas have caught fire in the past four months.
In April, in the Houston area, two people died after their Tesla Model S crashed into a tree and caught fire. According to a newspaper report, the Tesla’s batteries “continued to ignite despite efforts to extinguish the flames.” Firefighters used approximately 23,000 gallons of water to extinguish the blaze.
In June, in the Philadelphia area, a new Tesla S Plaid caught fire while its owner was driving it. Here in Austin, earlier this month, a Tesla Model X crashed into a gas station and caught fire. As reported by local media Australia, the driver, a teenager, “managed to escape the car before it caught fire.” The article quoted Austin Fire Department Chief Thaier Smith as saying, “Normally you can put out a car fire with 500 to 1,000 gallons of water, but Teslas can take up to 30. 000 to 40,000 gallons of water, maybe even more, to shut off the battery once it starts to burn. “
This recent wave of electric vehicle fires, along with the high cost of purchasing an electric vehicle and the enormous cost of attempting to upgrade our electric grid to accommodate them, are prime examples of the This is why attempting to “electrify everything”, and in particular our transport sector, is fraught with risks. Bolt’s recall shows why policymakers should slow the headlong rush to electric vehicles lest we burn tens of billions of dollars on technology that might just go up in smoke.