Why GM and Ford face a long road ahead in the race to low-carbon transportation

Ford Motors
Ford showcased its autonomous vehicle technologies during this year's CES and plans to invest $11 billion in its EV transition between 2015 and 2022.

In the sort of proclamation that seems to have become business-as-usual for the automotive sector, Ford Motor last week pledged (PDF) to accelerate its investments in electric vehicles — with $11 billion committed by 2022 across its fleet.

The 114-year-old U.S. automaker has 40 EVs planned before that timeframe, including 16 full-battery models such as an electric suburban utility vehicle with a 300-mile range by 2020. 

"At the highest level, we need to narrow our full lineup of nameplates to a more focused lineup that delivers stronger growth, less risk and better returns," said Jim Farley, executive vice president of Ford and president of Global Markets, in remarks prepared for an industry conference. "We are repositioning the company to offer best-in-class, human-centered vehicles and mobility services. That's our vision."

It had better be. Ford, along with every automaker that set the pace for market share during the internal combustion engine era, is vying for pole position on an entirely new race track. As countries from China and France to India and the United Kingdom pledge to phase out gas- and diesel-powered vehicles within the next 20 to 30 years, the auto giants will see sales idle or stall out entirely unless they address their fleet emissions more aggressively.

CDP
Which legacy auto companies will navigate this disruption most successfully depends largely on your point of view and which metrics you consider, according a new analysis by climate research organization CDP. "It is promising to see traditional carmakers step up to the market to meet global shifts in demand for EVs," said CDP's CEO Paul Simpson.

Indeed, most are talking a good game, inspired by predictions that up to one-third of new car sales will come from zero-emissions and hybrid models by 2030.

The largest U.S. automaker, General Motors, for example, last year steered its course more explicitly toward an "all electric" future, and in early January, GM's CEO Mary Barra suggested that the company will turn a profit on its EV portfolio by 2021 due to its substantial research into better battery technology and new production techniques intended to reduce pricey EV price tags. Those vehicles might not necessarily be available on its home turf, though: GM expects China to fuel the hunger for low-carbon transportation.

Reuters estimated the aggregate investment that the leading global automakers are putting at upwards of $90 billion toward electrified vehicles, with more than half that amount from companies based in Germany.

By the way, that doesn't include the billions thrown around by today's EV mind-share leader, Tesla. Nor does it account for the related and separate research and development funding that the automotive industry  and the tech sector  is putting into autonomous and self-driving vehicle design and services.

BMW, Daimler and Toyota lead the pack

So, which companies are setting the best course for the future? Hint: Look at what's happening outside of the United States, according to the CDP analysis.

The research considers three areas: the ability to navigate transition risks (fleet emissions reductions, manufacturing footprint, and resilience); potential to capture new low-carbon market opportunities (investments in advanced technologies and renewable energy); and overall ability to demonstrate a holistic approach to climate governance (everything from disclosure to supplier engagement). The first two areas each account for 40 percent of the weighting, and the third accounts for 20 percent.

If you consider these things in aggregate, two German companies rise to the top of the CDP list, BMW and Daimler, followed by Japan's Toyota. BMW ranks "consistently well" across all three areas; Daimler gets props for its EV, autonomous vehicle and energy aspirations; and Toyota is recognized for its Environmental Challenge 2050 strategy, which is striving for zero emissions across the company's entire vehicle lifecycle.

The ranking switches up dramatically if you look at the three areas separately.

When it comes to managing transition risks, India's Tata Motors (including subsidiary Jaguar Land Rover) is making the most impressive progress, the CDP report suggests. The highlight: "It has significantly reduced Jaguar Land Rover fleet emissions in the EU and its exposure to emerging markets and luxury vehicles may provide some resilience to disruptive technologies."

If you're interested in assessing ambition potential, GM's R&D powerhouse looks like the one to beat based on its deep advances in both EVs and mobility as a service. "It is working towards an 'all-electric future,' has ambitious automation targets, and is investing heavily in the areas of autonomous vehicles and ride-sharing services," according to the report. The most visible expressions are its investments in the Maven and Lyft ride-sharing services, and the Cruise Automation technology.

And if you're looking at overall climate governance, you should brush up on what France's Renault is doing. "The company performs consistently well across most metrics, which comprehensive emissions reduction targets, high levels of data assurance and supplier engagement, and a holistic lifecycle analysis," the CDP report authors note.

Even though Renault did well on this measure, its overall standing dropped significantly in this report, compared with the one that CDP published one year ago. This year, it was No. 7 overall. Last year, it held the No. 2 spot.

What about the U.S. companies?

One thing you'll notice about this data, gleaned from the reports that each of these 16 companies filed in response to the CDP's request for climate-related metrics, is that the two U.S. automakers on the list — Ford and GM — finished in the bottom half.

That's because although both are investing heavily in innovation, both still need to pull off significant reductions in their overall fleet emissions story to meet new regulations that will be in place during the 2020 to 2021 timeframe, according to the CDP report. GM actually ranks dead last in the transition risks portion of the analysis, while Ford was No. 14.

The CDP studied only legacy companies for this ranking, which is why Tesla — which only sells EVs — isn't considered. The brands featured on this list were chosen from a list of publicly traded firms, based on average market capitalization. (There were 15 companies on this same ranking; Subaru was added to this year's list.)

Three automakers did not respond to CDP's information request: China's Geely (which owns Volvo) and Great Wall (the country's largest SUV maker), and South Korea's Kia (minority-owned by Hyundai, which was included).

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