Automotive > Powertrain, Body, Chassis & Safety Blog

GM's Nikola Shell Game

by Roger Lanctot | Sep 09, 2020

At an industry event last year in Japan a senior General Motors executive in charge of electrification took the stage and commenced his talk by putting a picture of a massive GM diesel extended cab pickup towing an equally monstrous trailer on the multiple screens at the front of the room. At the time, the air was filled with reports of Tesla’s Cybertruck and Rivian’s EV plans and the emergence of Lordstown Motors on the EV pickup scene. Was GM promoting diesel propulsion? In Japan?

GM was months away from formally announcing the Ultium platform and this executive appeared to be highlighting diesel propulsion – though he did include an Ultium-like slide highlighting GM’s EV architectural vision. In a fireside chat afterwards, along with a hydrogen propulsion expert from Kyushu University, this same executive refused to comment on GM’s EV pickup plans.

This corporate caution on display on stage and in conversation later over lunch revealed a major car maker in conflict with itself. Startups like Rivian and Lordstown Motors were gathering attention to their EV pickup plans. Tesla was touting its Cybertruck. While GM – and Ford Motor Company and FCA – were looking like deer in the headlights hanging on to their profitable internal combustion-based business in pickups.

GM is hoping to dodge that deer.

General Motors’ stock got an 8% boost yesterday from the announcement that the company plans to take an 11% stake in wannabe truck maker Nikola Motors. The strategic partnership has Nikola using GM’s Ultium battery system and Hydrotec fuel cell technology in future products, including the Badger electric pickup, NZT side-by-side, and the One, Two, and Tre semi trucks, according to reports.

GM says it will engineer, validate, homologate, and build the Nikola Badger pickup truck, arriving no sooner than late 2022.  Nikola will exchange $2B in common stock for these services and access to GM’s existing parts and components. In comments quoted by Automotive News, GM and Nikola are already collaborating on the infotainment system for the Badger. 

Nikola will be responsible for sales and marketing of the vehicles and will retain the Nikola Badger brand. Like its just-announced deal with Honda, this pact with Nikola suggests a budding market for GM’s vaunted Ultium battery technology. At the same time, though, it casts doubt on GM’s confidence in its own ability to successfully deliver battery-based vehicles to the market.

At the very moment GM was announcing the Nikola relationship, word was arriving that GM dealers were chaffing at the company’s demands for direct dealer investments to prepare for the coming influx of new EVs. The Automotive News reports that GM is seeking investments of between $120,000 and $200,000 from dealers in both sales and service.

The report reveals resistance among dealers to GM’s EV push – and it is resistance compounded by GM’s investment requirements. It is reminiscent of past requirements including Hummer dealers that were coerced into building quonset-hut style showrooms. This is hardly an auspicious launch of EV technology across GM’s dealer network. One might have anticipated cash infusions from GM, rather than required investments from the dealers.

One of my sons bought a Chevrolet Bolt a few weekends ago and I can vouch for the lack of preparation among dealers. A quick search of available charging stations on the GM customer portal turns up a list dominated by Nissan dealerships – not a single local Chevy dealer appears to be equipped with a charging station available to the public.

GM does have a collaboration with charging network provider EVgo which should help resolve this customer pain point – but it’s clear that GM has failed to define a joined up strategy to promote EV technology and the Ultium platform, convince dealers to staff up and prepare service and sales operations, and align corporate policy and marketing messages. GM is still advocating on behalf of the Trump Administration’s efforts to reduce fuel efficiency standards.

(I won’t bother to contrast this to Tesla Motors’ comprehensive global approach to promoting EV tech.)

The Nikola announcement has the odd effect of checking all sorts of financial boxes for GM including finding a customer for its fuel cell and battery technology and giving it a stake in a company that CEO Mary Barra describes as “an industry-leading disrupter.” Only in the cloud cuckoo land of EV startups could a company like Nikola be seen as an industry-leading disrupter.

Nikola has a phantom vehicle with a phantom powertrain and a phantom distribution network. With the relationship with GM, Nikola clearly demonstrates that it is a shell company with little or no intellectual property and no proprietary in-vehicle tech. The industry-disrupting Badger will now become a GM clone.

It’s hard to say whether this is worse for GM – i.e. Badger could sell its pickups at a loss and undermine GM’s own EV pickup sales – or for Nikola – i.e. why buy a clone when you can get an original. Maybe it’s worse for GM investors who have bought into this shell game.

The infotainment play, in particular, is amusing as GM has almost given up on crafting its own signature infotainment experience. Valuable dashboard real estate has been surrendered to a combination of on-screen solutions from Lear/Xevo, SiriusXM, and, soon, Google. The average Chevy Bolt user, like my son, is practically compelled to use smartphone mirroring of Apple CarPlay or Android Auto if they want navigation, since there is no embedded navigation offering – for an EV!

The Nikola tie-up is corporate distracted driving at its best and reveals GM’s tortured attempt to pivot from internal combustion engines in its most profitable pickup truck segment – where the company recently fought its way back to a number two slot – in favor of profit draining EVs and all the challenges posed by the unique demands placed on an electric pickup truck. 

At best, the Nikola investment can be seen as a hedge against unforeseen developments in the EV pickup market. If EV pickups take off, GM can boost Badger. If EV pickups struggle, GM can stick to its ICE knitting and let Badger wither…all without damaging the core GM business.

It sounds good. It sounds safe. But it is guaranteed to fail. GM has a lousy history cultivating brands: Oldsmobile, Pontiac, Hummer, Saturn, Maven. The introduction of the Ultium EV platform is a better late than never stratagem (particularly sad given the fact that GM showed a skateboard-like EV platform originally at the New York Auto Show more than 15 years go) and the system is assessed by experts to be competitive – a nod to enduring GM technical acumen. But GM continues to fail in marketing, messaging, and commitment.

The real failure, though, lies in the demoralization and demotivation of individual contributors and leaders at GM. Time and again, GM turns to external deals and relationships to burnish its brand rather than highlighting and following through on organic initiatives and resources.

The company abandoned its Maven mobility brand while clinging to its ill-conceived Cruise autonomy boondoggle. At the same time, the company has been suffering a hemorrhage of senior female leaders including Alicia Boler-Davis (former GM executive vice president global manufacturing and labor relations – now Amazon vice president global customer fulfillment); Julia Steyn (Maven CEO – now VectoIQ chief commercial officer); and Dhivya Suryadevara  (GM executive vice president and chief financial officer – now Stripe chief financial officer).

GM’s stock price got a nice boost from 

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