GMC’s All-Electric Hummer Pickup Highlights GM’s New Strategy on EVs – The Wall Street Journal


General Motors Co.


GM 6.75%

spent a decade trying to sell mainstream buyers on electric vehicles by offering small, plug-in cars with quirky names like the Spark and Volt.

Now, it is trying a different tactic: appealing to customers who have deep pockets and want to be seen riding in style.

The company’s GMC revealed a new all-electric Hummer pickup during an extended commercial that aired during the World Series Tuesday night.

GM executives are resurrecting the Hummer name—once a symbol of gas-guzzling excess before the brand was phased out in 2010—on a big, pricey plug-in truck in an effort to draw more affluent buyers willing to pay a premium for the technology.

So far, interest in electric vehicles has been tepid, and selling pricier models could help GM absorb the higher cost of producing them, which for now is more expensive than gas-powered cars, analysts say.

Set to go on sale late next year, the electric Hummer will be the first model in a string of new battery-powered vehicles on which GM Chief Executive Mary Barrahas pinned her growth strategy.

The new approach—to sell a small number of expensive models first, and introduce lower-priced versions later on—is taken from

Tesla Inc.’s

playbook, analysts say. Tesla for years sold the Model S sedan, many of which sell for more than $100,000, before introducing its mainstream Model 3 sedan, now priced around $35,000.

GM said the new Hummer pickup truck would be priced at $112,595 when it goes on sale for the 2022 model year. A later version will go on sale the following year for about $100,000, the company said. The truck will be able to travel about 350 miles when fully charged, GM said.

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GMC Brand Chief Duncan Aldred said the truck’s features and performance should entice buyers for whom saving gas or polluting less might be secondary concerns. GM has said a version of the truck will produce 1,000 horsepower and have sports-car-like acceleration.

“People who never wanted an EV, or maybe were of the opinion they would never get one, we think when they see what this is, it will change their minds,” he said.

The approach faces challenges. Several expensive new electric models from other car companies have garnered only modest sales and failed to put a dent in Tesla’s dominant position as the electric-vehicle sales leader.

And the lack of electric-charging stations and limited battery range of electric vehicles compared with gasoline-powered cars remain barriers for many buyers considering a switch.

Dozens of new electric-vehicle models are expected to arrive at dealerships in the next few years. We followed eight Wall Street Journal reporters in four countries to see if they, and the world, are ready to make the switch.

The Hummer also is likely to confront several rivals around the time it hits showrooms, many of which will be lower-priced. Tesla has said the electric pickup truck it is developing, the Cybertruck, should go on sale by late 2021, at a starting price around $40,000. Several electric pickup trucks are on tap from startup companies, too, including one from Rivian Automotive LLC, to be priced around $70,000.

“We’re all still waiting for the highly successful non-Tesla electric vehicle,” said Karl Brauer, an analyst for iSeeCars.com, an automotive research site.

GM’s top-down pricing approach could mean it will take many years before electric-vehicle sales generate enough volume to drive down those higher costs, analysts say. Gas or diesel vehicles now account for about 98% of GM’s global vehicle sales, which totaled 7.7 million last year.

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“To truly believe GM’s commitment to its EV plan, we will need to see EV volumes materialize,” Credit Suisse analyst Dan Levy said last spring. GM is targeting one million electric-vehicle sales annually by 2025.

GM’s shares were up over 7% Tuesday afternoon after

Bank of America

said investors are underestimating how well the company is positioned for growth in electric and autonomous vehicles and services. GM also disclosed plans to spend $2 billion to convert its assembly plant in Spring Hill, Tenn., to build electric vehicles.

Research firm AutoPacific Inc. forecasts about 10,000 Hummer electric-pickup sales in 2023. It predicts about 39,000 sales for the Cybertruck and 18,000 for Rivian’s pickup, named R1T.

Peter Lanzavecchia, owner of Burns Buick-GMC in Marlton, N.J., near Philadelphia, said dealers are counting on the Hummer and other electric trucks that GM has promised to fend off newcomers.

“The dealer network is hoping to pre-empt the Tesla Cybertruck with this and for GM to assert its leadership on electric trucks,” Mr. Lanzavecchia said.

So far, interest in electric vehicles has been tepid and selling pricier models could help GM absorb the higher cost of producing them.



Photo:

GM/Associated Press

GM still sells the Chevrolet Bolt, a small electric car introduced in 2016, and plans a larger SUV version of the Bolt. Both of those vehicles are based on older technology, while the Hummer will be the first to use GM’s proprietary electric-vehicle system, called Ultium. The second is scheduled to be a luxury Cadillac crossover in about two years.

The auto maker chose one of the more controversial nameplates in its history as the first entry for its new electric technology. Mr. Aldred said the Hummer name had cachet and an upscale connotation that would match the new truck. He said participants in marketing focus groups responded well to the idea of a green Hummer.

AutoPacific analyst Paul Waatti said the Hummer name likely will still carry baggage with some buyers, but younger consumers, who are more likely to be early adopters of electric vehicles, might not have a preconceived negative image of the name.

Hummer had its origins in the military vehicle known as the Humvee, which is still made by AM General of South Bend, Ind.

Despite returning paltry fuel economy of around 10 miles a gallon, it became a popular model in the early 2000s before soaring gas prices hurt sales. It also became a target of environmental groups, which criticized the Hummer as a polluter that symbolized self-indulgence.

Attorney Susan Norton is the sort of buyer GMC is courting. She still drives an early 2000s Hummer that has nearly 200,000 miles on it. She is first on the list to buy the new electric Hummer pickup from her dealership, Williamson Buick GMC in Miami. The fact that the truck is electric is an afterthought for Ms. Norton.

“I’ve always liked the Hummer’s size and the design,” said Ms. Norton. “I want to buy one despite it being electric.”

Write to Mike Colias at Mike.Colias@wsj.com

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