Automotive > Powertrain, Body, Chassis & Safety Blog

GM Already Suffering Hummer Hangover

by Roger Lanctot | Nov 02, 2020

If you had any doubt about the enduring antagonistic relationship between new car dealers and auto makers you need look no further than General Motors. No sooner had GM announced the impending arrival of its much-ballyhooed GMC Hummer EV lineup – including pickups and an SUV – than news broke from Reuters with confirmation from GM that only about half of GMC dealers had agreed to sell the high-priced battery-electric trucks.

Let's be clear. GM dealers should be fighting for the chance to sell this monster EV.

The news from GM coincides with an announcement from Tesla Motors that the company intends to add 52 service centers in 2021 – or a new such center every week. So GM’s existing network of franchised sales and service providers is balking at supporting a critical new vehicle launch, while Tesla is expanding its own service network globally.

GM’s inability to get its GMC dealers on board the Hummer EV gravy train (reservations have already closed) reveals the structural impediments facing the legacy internal combustion-centric automotive industry as it confronts the accelerating electrification of vehicles of all types. Dealer enthusiasm is tempered by consumer ambivalence toward EVs generally and a pervasive lack of awareness and information.

The report on GMC dealer indifference is no doubt fueled by reported facilities and personnel investment requirements from GM ranging from $120,000 to $200,000. That a couple of hundred thousand dollars could stand in the path of joining the Hummer EV juggernaut is a sad coda to this high profile launch.

It is particularly stunning given the fact that electrified powertrains have been behind two previous GM vehicles – the EV1 and the Chevrolet Volt – that inspired extraordinary consumer enthusiasm and passion. GM famously repossessed the leased EV1’s from their owners and crushed them. Despite being the best-selling plug-in hybrid of its day, the Volt’s production ended in March 2019.

Of course, car makers like GM must also wrestle with what has been a money losing proposition building and selling EV sedans – typically for less than it was costing to make them. But the Hummer EV – at $121,000 – is expected to represent a very different value proposition - and a profitable one.

Now, GM has made a huge marketing blast in support of the Hummer EV with a first-time vehicle reservation process a la Tesla and news of multiple vehicle models with extraordinary performance characteristics. The marketing message was virtually unprecedented for GM – with added impetus from GM CEO Mary Barra in a LinkedIn blog post:

“Our zero-emissions, all-electric future is underway right now, and we are moving faster than ever… The pace of progress is visible in our recent $2B investment at our Spring Hill, Tennessee plant to transform it to build EVs, including our Cadillac LYRIQ. This is our third site, joining Factory Zero in Detroit-Hamtramck, and Orion assembly in Lake Orion, Michigan, to build electric vehicles. These investments underscore how committed we are to transform GM and our brands into an all-electric lineup. 

“We also revealed the world’s first all-electric supertruck: the GMC Hummer EV. Powered by our Ultium battery system, Hummer EV proves there are no compromises when it comes to innovation and capability, offering zero to 60 in approximately three seconds, 1,000 horsepower and 11,500 lb.-ft. of torque.

“Ultium, our highly flexible global EV platform is a game changer in driving down costs, increasing range and opening the design potential. It’s also a differentiating technology platform that is bringing other companies to our doorstep. EVs – and the technology we’re engineering to create them – are key to the growth trajectory at GM. I believe with all the assets we have, we will win. And we will create a more sustainable world for future generations.”

Perhaps GMC dealers are tuned in to the latest research from J.D. Power showing declining interest among consumers in battery-electric vehicles. JDP’s Mobility Confidence Index for battery electric vehicles remains neutral, the company says, decreasing among American drivers to 54 from 55 (on a 100-point scale) while increasing among Canadian drivers to 58 from 57.

JDP concludes that more than two thirds of prospective vehicle buyers have never had the experience of being in a battery electric EV and concerns remain regarding range and charging times. The JDP study appears to suggest a lack of consumer enthusiasm for EVs and a need for car makers to do a better job of preparing the market for the tsunami of more than 50 new EV car models soon to arrive in dealerships.

In fact, luxury car makers such as Audi and Jaguar Land Rover have indeed struggled to capitalize on the same kind of enthusiastic reception that has greeted Tesla’s EVs or even the GM EV1 or Volt. Part of the problem is the sour tang of old fashioned dealer relationships that call for dealers to make investments in support of new models instead of the car maker subsidizing the launch of such a radical new vehicle as the Hummer EV.

It’s not as if GM dealers don’t have some history with the Hummer brand. Many dealers that took on Hummer a couple decades ago made million-dollar investments in facilities upgrades – altering the appearance of their dealerships and introducing test tracks.

These same highly committed dealers subsequently had the rug pulled out from under them when gas prices soared and Hummer sales plunged. The introduction of the more fuel efficient Hummer3 was insufficient to save the brand, which was subsequently shelved though notably not sold.

The after effects of that era remain with quonset-hut-style architectural accents still in place years after the brand’s first demise. With GM making billion-dollar investments in EV manufacturing and million-dollar investments in marketing one would expect the company to be enticing dealers with upgrades to add EV charging stations and with an array of marketing tools to target a growing EV clientele.

That is not what appears happening - albeit GM has announced some dealer-oriented initiatives - and the lack of enthusiasm threatens to undermine the very foundation of GM’s rejuvenated market ethos built around Vision Zero (emissions, fatalities, congestion) and core EV powertrain investments. It would be a shame if GM were to fritter away what ought to be rightly perceived as a huge market advantage from an existing network of 4,500 new car dealers.

Of course, outfitting all 4,500 of those GM dealers to sell Hummer EVs is impractical. At its peak, the original Hummer line up was offered by only 170 dealers. Still, GM ought to step up with a dealer electrification program including an EV-centric sales pipeline and unique customer experience a la the Chevy Volt. Volt owners a few years ago and Bolt buyers today are treated differently by GM, but it’s not at all clear that they are prioritized by dealers. That will have to change or the fizz around the $121,000 Hummer EV will turn to a fizzle.

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