Shelia Hu and Melissa Denchak, writing for the website NRDC.org, explain the Paris Climate Agreement this way:  
The Paris Agreement is a landmark international accord that was adopted by nearly every nation in 2015 to address climate change and its negative impacts. The agreement aims to substantially reduce global greenhouse gas emissions in an effort to limit the global temperature increase in this century to 2 degrees Celsius above pre-industrial levels, while pursuing the means to limit the increase to 1.5 degrees.
Depending on what metric you use, transportation generates roughly 20% of carbon. It’s impossible to meet the aims of the Paris Agreement without substantially decreasing the amount of carbon emitted through transportation. One of the ten key solutions needed to mitigate climate change from the World Resources Institute article entitled, “10 Big Findings from the 2023 IPCC Report on Climate Change” by Sophie Boehm and Clea Schumer is to shift to electric vehicles.
In the 2006 documentary, Who Killed the Electric Car?, director Chris Paine investigates several different suspects in trying to answer the titular question. There are few celebrities in the film – Mel Gibson, with his typically gruff manner, has some of the funniest moments – but I will excuse you if you’ve never seen it – the movie made less than $2,000,000 at the box office. This is roughly 1% what Michael Moore’s Fahrenheit 9/11 made, when it was released 2 years earlier. Regardless of its box office performance, the question it raises is crucial to mitigating the worst aspects of climate change.
Perhaps the main thread of the film is that EV manufacturers, specifically GM with their EV1 model (which was the first mass-produced electric vehicle in the modern era), sabotaged the EV market by allocating inexperienced personnel to its launch, spending little on marketing and product awareness, and making the overall driving experience harder than it should have been for a car they truly believed in. They also only allowed the car to be leased – meaning that, by 2002, of the roughly 1,000 vehicles that drove off the GM lot under this program, there were none left on the road.
Why would a company do this? The answer can be found in the book The Innovator’s Dilemma by Professor Clayton M. Christensen, published in the year 2000.
To summarize with an example, let’s say that you have a company that sells cameras and film. You are in competition with other camera and film manufacturing to produce the highest quality cameras and film stock for the best price. You sell to consumers through retail locations. Because you don’t want to be left behind, you have a healthy research and development department that is always looking for ways to improve your product. One day, your R & D department discovers a new technology or applies an old one and, voila, you have digital photography. Why wouldn’t you jump for joy at this new technology? Several reasons – you’re not sure if consumers will want this new technology and, more importantly, if they will pay for it. You don’t know if management will see this new technology as a future opportunity or, more likely, a competing product that will cannibalize current sales. When you have a good thing going, it’s often times difficult to see the positives of change.
As Zohir Dossa wrote in a case study entitled, “Back to the Future: GM and the Electric Vehicle”, “while the EV1 could open up new markets and pave GM’s way forward, it would also cannibalize some of the company’s revenue streams – not only vehicle sales but also maintenance and other secondary operations.”
This is where the Detroit automakers found themselves sometime at the turn of the century.
There was a fork in the road – they could continue the path they were going down, with internal combustion engines, which was what had worked in the past, or they could go into the unknown with electric vehicles. Interestingly, Toyota took a middle ground, a hybrid approach as it were, with the Prius, which, while not setting the world on fire, was certainly a successful model.
Detroit, with small excursions, continued down the path it was going, hoping that American consumers would maintain their love for large gas guzzling cars. They have - Per IEA.gov, the share of SUVs on the roads of America rose from roughly 27% in 2010 to 50% today. 
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Enter Tesla. In 2008, they released the Roadster, which, per Wikipedia, had a range of 244 miles between charges. Compare this to the EV1, which maxed out at 105 miles. The second-generation Roadster is expected to have a range over 600 miles when it is released sometime in the next two years.
Tesla is by far the world’s most valuable car company with a market cap of 1.3 T. GM is at 60 B. It’s now 1/20th the size. Per Dossa, “[former GM CEO Rick] Wagoner admitted that ending the EV1 program was the worst decision he had ever made.”
Why was Tesla able to succeed where GM failed? Dossa writes, “Tesla raised $187 million through five rounds of financing, largely led by Elon Musk, who became the chairman of the board. Tesla’s vision was for a high-performance fleet of EVs – vehicles that could outperform their gasoline and hybrid peers in every category. Ironically, the electric powertrain that powered every Tesla vehicle was directly based on prototypes developed by [Alan] Cocconi for the EV1. In 1992, Cocconi had co-founded AC Propulsion, the company that GM first subcontracted for the EV1. Continuing to innovate in the EV space, Cocconi and AC Propulsion developed a TZero prototype, which Musk test-drove in 2003. Powered by lithium-ion batteries, the prototype could go from 0 to 60 mph in under four seconds and had a 300-mile range. When Musk was unable to convince AC Propulsion to begin developing and selling vehicles, he decided to create Tesla Motors.”
Could GM have avoided the fate of being left behind? One of the reasons that the EV1 was abandoned was the battery technology. Superior to lead batteries, nickel-metal hybrid batteries allowed for longer range between charges. They were also deemed to be too expensive – the better battery made the car cost too high to be remain competitive for the market in the early 2000s. Remember, again, this is the time of rising SUV sales – From the office of Transportation Technologies, as part of the US Department of Energy, report from 2000 entitled “AN ANALYSIS OF THE IMPACT OF SPORT UTILITY VEHICLES IN THE UNITED STATES” by Stacy C. Davis and Lorena F. Truett, “During the 1990s, sport utility vehicles (SUVs) became the fastest growing segment of the auto industry, especially those in the medium-size category.  In 1999, SUV sales reached almost 19% of the total light vehicle market and the mix of SUVs on the road, as measured by registration data, was about 8.7%.” The Detroit automakers benefitted from this sales boom because the profit margin on SUVs, which were not priced for the budget consumer, were high.
An old adage applies here – calm seas don’t make skilled sailors.
Dessa quotes a 2009 interview given by Bob Lutz, who was the vice-chairman of GM around this time, “ “All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us – and boom, along comes Tesla.”
We don’t know how much GM invested in lithium-battery technology. However, it is likely to have been several magnitudes higher than Tesla. Per a 2007 article from Newsweek entitled, “Bob Lutz: The Man who Revived the Electric Car”, “ After pouring billions into engineering futuristic fuel-cell cars (still years away from production), GM engineers didn't want to switch gears to a plug-in electric, which they insisted couldn't be run on lithium-ion batteries.”
At some point, the funding was cut off and, due to the financial crisis of 2008, GM had to be bailed out by the banks. It’s impossible to run a counterfactual – who knows what would have happened if GM had used their first-mover advantage and become what Tesla is today? Could they have done this or was the corporate culture too entrenched? It’s impossible to say. 
We do know that they remained once bitten, twice shy on EVs for a long time after the failure of the EV1: while there was a plug-in Hybrid (the Volt), the Chevy Bolt was the first pure EV released after the EV1 debacle. It debuted in 2016.
Where are we today? From the website CarEdge, “Propelled by big manufacturer incentives, EV market share is nearing 9% of all new car sales in America. Tesla still dominates with 44% of the EV market in America, but continues to see rising competition and falling market share.”
There are still many open questions – will the pure EV market ever exist solely by itself or will we always have hybrids? If Chinese companies like BYD get a foothold in the country, what will Detroit do? 	
In May of last year, Elon Musk told a Paris tech conference, per the Guardian, “Tesla competes quite well in the market in China with no tariffs and no deferential support. I’m in favor of no tariffs,” Musk said.
However, the US government sees tariffs differently. Per an ARSTechnica article from April 2024, Jonathan M. Gitlin writes, “The United States has won an important battle in its war to keep low-cost Chinese electric vehicles from American car buyers. Today, Reuters reports that the Mexican federal government has responded to pressure from the US and will not offer incentives to Chinese automakers, like BYD, that are looking to establish North American manufacturing operations.
BYD last met with Mexican officials in January, according to Reuters, where it learned that Chinese automakers would not be offered tax breaks or cheap land to build factories.”
BYD seems undeterred from this setback. Earlier this month, Michael Wayland wrote an article for MSN entitled, “Why this China-made BYD Shark pickup is drawing attention in the global truck market”. He quotes Ford CEO Jim Farley, who, when asked about the Shark said, “It's a great product. It's sold well. They're trying to sell in high volume in Mexico, but it's also being localized in Thailand… If we want to be a global player in pickups, like we are now, we have to compete." Wayland goes on, “BYD has not announced plans to sell the Shark in the U.S., but it has entered countries where GM, Ford and Toyota have sold pickup trucks globally, including Australia, Brazil and Mexico.”
Per a press release from August 2024, “Ford focuses its next generation of electrified and digitally advanced vehicles where it has competitive advantages – commercial vans, mid-size and large pickup trucks, and long-range SUVs – and will offer a range of electrification options designed to speed customer adoption, including lower prices and longer ranges. In its fully electric portfolio, Ford plans to introduce an all-new commercial van that will begin production in 2026 in Ohio, closely followed in 2027 by two new pickup trucks – a medium-sized pickup based on the platform designed by Ford’s California skunkworks team and a next-generation truck to be assembled in Tennessee. Ford’s new affordable electric vehicle platform marks a major step forward in the company’s strategy to bend the cost curve on electric vehicles, allowing the company to introduce multiple vehicle styles for both retail and commercial customers at a faster pace, with more personal digital customization.”
It’s likely that the bi-partisan support for higher Chinese tariffs will buy the automakers some time in order to be able to compete on price and features. How long? It’s hard to say. Political winds will be blowing at cross purposes – the right tends to favor free market competition but also tend to favor, at least the hawks do, anything to limit the rise of China. The left tends to favor labor, which will almost certainly be harmed if EVs become the only vehicles available but also recognizes the dangers of climate change and see the move to electric vehicles as a way to maintain the current standard of living while addressing climate concerns.
Let’s say that we get to 2027 and the climate crisis has only gotten worse and there is more political pressure to accelerate EV adoption. What can American companies do in order to compete with their Chinese counterparts?
Let’s assume that the United States retains an edge in AI and that Detroit does what it has done in the past – looks to features in order to maintain their profit margins (see lane assistance, backup camera, etc). What is a feature that does not currently exist but could allow for a competitive edge, at least for a while?
Autonomous Driving.
Admittedly, I’m skeptical of what I’m about to write for a variety of reasons, which I’ll touch upon shortly. Here’s the idea: consumers would be willing to pay a premium if they buy a driverless car (ie. no need to steer, increased safety on the road, fewer accidents, etc). How much? Per a white paper from McKinsey and Company “Paying up for autonomous driving”, 50% of those surveyed would be willing to pay up to $9,999 (guys, can we just say ten grand?) per vehicle for something called “advanced highway autopilot”. 
Tesla has a similar feature, though they’ve had to walk back claims of its effectiveness over the years.
Obviously, this feature does not exist in most vehicles and the Detroit automakers would have to do a cost-benefit analysis of the feasibility but, given the earlier note from Ford, they’re clearly looking at features as a way to maintain higher profit margin. 
I forgot to mention – digitally advanced vehicles basically means that automakers are going to thow a ton of extra features and computers into their vehicles with the hopes that consumers will see the additional benefits of said features – and pay for them. 
If McKinsey is right – that driverless cars is the big enchilada – I’m worried: per Maja Stefanovic’s article from here.com, “Leveling up AI: how close are we to self-driving cars?,” autonomous driving cars may not be here for a while – “According to recent predictions, the automotive industry will not develop a fully self-driving car until 2035.”
I’ll also point out that we’ve been down this road (no pun intended) before. 
Apple (a company that doesn’t have an inherent fear of technology) spent roughly 10 years and between 10 & 20 Billion dollars trying to build a driverless car before giving up in 2024. I will leave links to both The Verge article “Crash of the Titan: a short history of Apple’s doomed car project” & the DW article, “Apple pulls the plug on its self-driving e-car project.” They’re both worth a read, along with the book After Steve, if you’re interested in this topic.
Does any of this mean that a driverless car is impossible? No. I just don’t think that any of the Detroit automakers have the ability, even if they saw this as a do or die move, to raise the kind of capital it would take to make this a reality, given the timeframe. If Apple can’t do it in 10 years, why do we think Ford would be able to?
Which takes us back to Tesla. Of the America automakers, they’re the closest to making this technology a reality and have the ability to borrow money if need be. Also, should this technology be realized by them it would be incredibly valuable – they could lease it to the other American automakers and make bank that way.
Should we feel sympathy for the Detroit automakers? I have a hard time getting there, I’ll be honest. I feel that they have dragged their feet for years and knew about the climate crisis at least as far back as the 1980s, if not sooner. They could have invested more heavily in R & D, especially after the SUV boom of the 1990s, and choose not to. In many ways, the marketplace is the way it is today because of their inability to look to the future. You could also make the argument that they haven’t really learned from their past. From a 2023 article from Fast Company entitled, “Why Detroit is the biggest obstacle to Widespread EV Adoption” Bill Van Parys writes, “While down about $10,000 from a year ago, the average price for a new electric car in April was still $55,089. At the same time, automakers are pulling the plug on popular, less expensive EV models, like the Chevy Bolt, in favor of pricier SUVs, signaling their intention to keep large, profitable, combustion trucks and SUVs in production through 2035. So, despite all the encouraging momentum, there is still concern that EV adoption—and environmental protection—is being undermined by the same American legacy automakers responsible for their production.” The Fast Company article also covers the ways in which the auto industry has fought against increased emissions standards, even when those standards are lower than what the auto companies have publicly committed to. We’ll call it there for today.
For anyone who has the means for a Harvard Business Case, I highly recommend Back to the Future if you’re at all interested in this topic. I found it very informative. 
As always, I apologize to anyone’s name I may have mispronounced in this essay.
Thank you for listening to this episode of Elegant Ramblings. If you’ve enjoyed what you’ve heard, please consider liking and subscribing to the channel on iTunes or YouTube. You’ll be able to find show notes there. Hope you enjoyed. Bye for now.