May 29, 2022

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Feel It – Automotive!

Vindication for EVs as G7 Signals Gasoline and Diesel Phaseout

7 min read

As a coalition formed around the idea that representative government is a wealth-building asset for industrialized nations, the Group of Seven (G7) wields considerable power over the direction of automotive technology. It has been a long time coming, but last week’s G7 announcement in support of zero emission transport is a significant step in the race to cut global carbon emissions, and a vindication for legacy U.S. automakers that are pivoting towards electric vehicles (EVs).

How the G7 missed a golden opportunity to promote electric vehicles

The Group of Seven includes some of the world’s most important automobile markets, and its origins are coincident with two major milestones in the global auto industry. The first four members — the U.S., the former West Germany, France and the United Kingdom — began to gather informally during the early 1970s, a period in which car-dependent suburban lifestyles were becoming cemented in the U.S. and elsewhere.

In another interesting coincidence of timing, in 1973 the OPEC coalition of leading oil producing nations embargoed exports to the U.S. and threatened to curtail production, sparking a major global oil crisis. That spurred the casual gathering of four industrialized nations to expand their numbers to seven and collaborate officially on economic issues, with the addition of Japan and Italy in 1975, and then Canada in 1976. More recently, EU commission presidents have also been included.

In retrospect, the origin of the G7 appears as a gigantic missed opportunity for promoting electric vehicles over internal combustion technology. For all their wealth, only one of the G7 nations was a leading global oil producer in the 1970’s.

On the other hand, that one oil producer was the U.S., which may have exercised an outsized direction on the G7’s policies regarding automotive technology.

Though electric cars and other vehicles had been on the market in various forms since the 1890’s, the U.S. turned its attention towards producing more oil during and after the 1970s. Efforts to promote 100 percent electric vehicles fell flat. The idea almost died entirely after GM canceled its EV-1 100 percent electric car venture in the 1990’s, though later Toyota’s gas-electric Prius and other hybrid versions became popular.

The U.S. pivots (slowly) to electric vehicles

Despite the expansion of oil production in the U.S. and Canada since the 1970’s, the G7 has finally begun to pivot into zero-emission mobility. The economic impacts of global warming are simply too powerful to ignore.

One indication came in 2015, when the G7 wielded its influence in support of the Paris Agreement on climate change alongside strong backing from former President Barack Obama and leading U.S. corporate energy buyers.

Though it lacked a strong commitment to electric vehicles, the G7’s support for the Paris Agreement was a tacit admission that internal combustion engines were on the way out.

The electric vehicle market certainly could have used some help during that time. As of 2015, legacy U.S. automakers were barely beginning to re-introduce 100 percent electric vehicles to the market, and the startup Tesla was still banking on appeal to a limited pool of luxury car buyers.

Nevertheless, when former President Trump pulled the U.S. out of the Paris Agreement in 2017, the stage was already set for the comeback of electric vehicles in the U.S. Aside from Tesla’s continued growth, GM had already restarted its 100 percent electric drive journey with the introduction of the Bolt EV.

Evidently, GM took the lessons of the EV-1 to heart. The EV-1 was faced with significant obstacles including inadequate battery range and power, a lack of public charging stations, and a power grid that still depended heavily on coal. By the time Trump took office and throughout his administration, GM was deeply engaged in EV battery research and charging station buildout. The company also became a powerful influence on the renewable energy transition, by deploying its buying power to foster clean power projects that impact an entire grid.

Before Trump left office, GM was also forming alliances with other electric car stakeholders, most notably Honda.

The pivot becomes a sprint

GM’s moves were mirrored by other corporate and utility industry stakeholders. Over and above the direction of state and federal policies on decarbonization, industry stakeholders recognize that a strong domestic market for electric vehicles can boost electricity sales. They also recognized that electric car buyers would probably not be satisfied with charging stations connected to a grid reliant on fossil energy.

One such collaborative effort is the Corporate Electric Vehicle Alliance, which formed under the umbrella of the green investor group Ceres. Among the founding members are influential fleet owners like Amazon and AT&T, along with retailers and energy stakeholders including IKEA, Consumers Energy, Direct Energy and Genentech.

Despite Trump’s opposition to decarbonization, GM and other leading U.S. automakers ramped up their 100 percent EV commitment as the 2020 election cycle heated up last year and into the first months of the Biden administration.

In addition to Tesla’s strong performance, GM introduced the budget-friendly Bolt 100 percent electric SUV, and Ford made two hits with its new all-electric Mustang branded SUV and a 100 percent electric version of the popular F-150.

With GM and Ford on board, the third shoe to drop among legacy U.S. automotive brands was Stellantis, the new corporate umbrella for the former FCA Group. The company holds titles to some of the most well-known names in U.S. automotive history: Jeep, Chrysler, and Dodge, and the former Dodge brand Ram Trucks.

The Citroën SpaceTourer, one Stellantis EV available in the U.K. (Image credit: Citroën U.K.)

Other legacy brands that make and sell cars in the U.S. are also sprinting towards the 100 percent electric vehicle goal, as indicated by an industry-wide EV rundown published in Consumer Reports earlier this week.

“A record number of almost 100 pure electric EV models is set to debut by the end of 2024 if all goes according to plan,” Consumer Reports noted.

Helping to push the market is a drop in the cost of electric vehicles, mainly due to continued improvements in EV batteries.

These more affordable models have the potential to sway a significant percentage of the car-buying public toward buying an EV with their efficiency, performance, and lower ownership costs,” explained Gabe Shenhar, who is the associate director of the Consumer Reports Auto Test Center.

The G7 EV commitment is less (and more) than it seems

Against this backdrop, last week G7 members agreed that phasing out gasoline and diesel vehicles will be among the actions taken to cut global carbon emissions.

From a climate action perspective, the commitment appears to fall short. A U.K. government press release announcing the decision appeared to water down the EV pledge by providing other options for decarbonization.

“Leaders will set out the action they will take to slash carbon emissions, including measures like ending all unabated coal as soon as possible, ending almost all direct government support for the fossil fuel energy sector overseas and phasing out petrol and diesel cars,” the U.K. stated.

S&P Global also noted that the new G7 vehicle commitment was “less defined” than its pledges on coal power and industrial decarbonization.

The vagueness could be due in part to the fluid state of non-oil automotive technology. The commitment does appear to leave some wiggle room for compressed natural gas, for example. In addition, the green hydrogen market has yet to catch up to the growing demand for fuel cells, which are currently powered by hydrogen produced from natural gas.

On the other hand, battery-powered electric vehicles are well on their way to taking over the passenger car and light-duty truck markets, and the market for green hydrogen is surging, thanks mainly to the falling cost of electrolysis systems that split hydrogen from water with an electrical current generated from renewable sources. That will help push the market for zero emission vehicles into other areas, including long-haul trucks as well as aircraft, ships and locomotives.

If the G7 commitment seems somewhat less than solid, U.S. auto manufacturers and other global stakeholders are already filling in the gaps.

What does it really take to be a G7 member?

U.S. President Joe Biden has garnered considerable praise for his work in rallying G7 to work together on global decarbonization as well as global corporate tax reform, infrastructure and other pressing issues.

Pulling in the opposite direction is former President Trump and his allies, including 147 sitting members of the U.S. Congress, who continue to raise the false and insidious claim that the 2020 presidential election was stolen, and that Trump remains the rightful president.

Rather than dying with the failed insurrection of January 6, these claims have continued to gather force in the form of hundreds of new state-based voter suppression bills and state-sanctioned phony “audits” of election results that have already been professionally audited and confirmed.

Should Trump and his allies succeed, the effect will be to nullify the legitimate votes of millions of U.S. citizens on a permanent, widespread basis, leading to the question of whether or not the U.S. should be a member of G7 or not.

After all, the basis of G7 is the economic benefit of representative government. Russia was briefly invited to the table, only to be kicked out when it annexed Crimea. Similarly, China was considered for membership but was not admitted. If the U.S. continues along its Trump-fueled track, it could also find itself out in the cold.

Image credit: The White House

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