With shift to electric, carmakers look to tackle grid problems and reinvent the wheel
Just as watch maker Swatch is planning to make car batteries, and Sony has partnered with Honda to make cars, GM and other automakers are evolving into technology companies.
Khodrocar - General Motors’ decision to create its GM Energy unit is aimed at transforming the company from a pure-play automaker into a high-tech leader, a senior company executive said. And analysts say the shift could be a bellwether for the auto industry.
"We’ve been evolving from automaker to platform innovator,” Hossein Hassani, GM’s vice-president of EV ecosystem, said in an interview. "It’s really a reinvention of what this company is.”
GM announced in October that a new business unit will offer stationary battery packs, solar panels, electric vehicle chargers and other energy-management products for homes and businesses. It is a transformative play that aims to both hedge its US$35-billion investment in EVs and autonomous vehicles and to help buffer against the auto industry’s tumultuous future, analysts say.
"This is certainly not the old GM,” said Alan Amici, chief executive officer of the Center for Automotive Research (CAR) in Ann Arbor, Mich. "If you want to be competitive, you have to be a tech player.”
The GM Energy unit will draw on the battery and software expertise GM accumulated while developing its electric vehicles, the company says. GM Energy will sell batteries, solar panels and hydrogen fuel cells, as well as cloud-based software that can link these offerings with electric vehicles and utility companies. The products, some of which will be provided by partners, can be tailored for individual homeowners as well as businesses, including electric fleet vehicles.
The commercial arm of the venture is under way, Hassani said. Home energy systems, which include stationary storage packs similar to Tesla’s Powerwall, will debut in the United States with the sales launch of the Chevrolet Silverado EV in early 2024, and a few months later in Canada.
Just as watch maker Swatch is planning to make car batteries, and Sony has partnered with Honda to make cars, GM and other automakers are evolving into technology companies.
Among the needs GM is addressing is the unstable power grid in the United States. On average, U.S. electricity customers experienced just over eight hours of electric power interruptions in 2020, according to the U.S. Energy Information Administration.
Rather than worry about whether the grid can support increased energy demand from EVs, Hassani said: "We turned it around [and asked]: How can EVs support the grid?” The goal, he said, is to provide resiliency to individuals and businesses that face disruptions through power outages.
"GM Energy … is a very real solution to an economic problem,” Hassani said.
Not every vehicle manufacturer has the heft to follow suit, said Stephanie Brinley, principal automotive analyst for IHS Markit, in Detroit. She said GM’s scale has allowed it to make energy utilities investments smaller manufacturers don’t have the capacity to make.
Ford also has enough "reach and scale” to get into the energy business but has not shown as much ambition as GM to do so, said CAR’s Amici. Even so, Ford has noted that its F-150 Lightning electric pickup truck can drive power tools and supply electricity to homes during blackouts.
Stellantis, the company created when Fiat Chrysler merged with Europe-based PSA (the Peugeot Group), is a "fast-follower” – in other words, not as far advanced as many of its competitors, said Amici, who was a Fiat Chrysler executive before joining CAR.
Volkswagen, for its part, has "really doubled down on their EV investments,” said Amici.
Volkswagen announced on Sept. 22 that its charging unit Elli has partnered with Brussels-based Elia to collaborate on ways to integrate EVs into the electricity system. The vehicle-to-grid concept allows customers to inject the electricity stored in their EV battery back into the grid, drawing energy from it when necessary. Volkswagen said the partnership will explore price incentives to encourage drivers to contribute to the electricity system when the vehicle is parked.
Hassani described the GM Energy unit as "a very natural progression” from the development of electrically powered vehicles.
Brinley, the automotive analyst, says GM remains a carmaker at its core and is pursuing the energy unit as an "adjacent” business that could become a significant revenue stream for the company. GM estimates the potential market of products and services at between US$125-billion and US$250-billion.
"It’s a way to create new revenue; It’s about making money,” Brinley said. "It’s not the first example of companies that have jumped into adjacent businesses.” Yet she cautions that GM’s Energy unit is far from a "slam dunk” investment.
"They’ll have to find consumer interest and demand,” said Brinley. With about 3,000 utility companies in the United States, she said GM will have to work through a complex web of regulations.
Hassani said GM is undaunted by the regulatory complexities. "We have a history of taking complex issues and bringing it down to simple terms for our customers,” he said.
Hassani said the energy unit’s success relies in part on identifying opportunities that the customers themselves haven’t seen yet.
One of those opportunities is "bi-directional charging” – in essence using the EV to provide power to a home or even the grid. Hassani said the business unit has a nascent bi-directional pilot project with Pacific Gas and Electric Co. in California.
Amici said there is an "element of experimentation” in the energy unit venture that is reminiscent of the Maven ride-sharing program, which GM ran from 2016 to 2020. It closed when it became a casualty of reduced commuting during the pandemic.
"I appreciate GM’s effort,” said Amici. He added that GM taking chances is good for the industry over all.
"We’ve been evolving from automaker to platform innovator,” Hossein Hassani, GM’s vice-president of EV ecosystem, said in an interview. "It’s really a reinvention of what this company is.”
GM announced in October that a new business unit will offer stationary battery packs, solar panels, electric vehicle chargers and other energy-management products for homes and businesses. It is a transformative play that aims to both hedge its US$35-billion investment in EVs and autonomous vehicles and to help buffer against the auto industry’s tumultuous future, analysts say.
"This is certainly not the old GM,” said Alan Amici, chief executive officer of the Center for Automotive Research (CAR) in Ann Arbor, Mich. "If you want to be competitive, you have to be a tech player.”
The GM Energy unit will draw on the battery and software expertise GM accumulated while developing its electric vehicles, the company says. GM Energy will sell batteries, solar panels and hydrogen fuel cells, as well as cloud-based software that can link these offerings with electric vehicles and utility companies. The products, some of which will be provided by partners, can be tailored for individual homeowners as well as businesses, including electric fleet vehicles.
The commercial arm of the venture is under way, Hassani said. Home energy systems, which include stationary storage packs similar to Tesla’s Powerwall, will debut in the United States with the sales launch of the Chevrolet Silverado EV in early 2024, and a few months later in Canada.
Just as watch maker Swatch is planning to make car batteries, and Sony has partnered with Honda to make cars, GM and other automakers are evolving into technology companies.
Among the needs GM is addressing is the unstable power grid in the United States. On average, U.S. electricity customers experienced just over eight hours of electric power interruptions in 2020, according to the U.S. Energy Information Administration.
Rather than worry about whether the grid can support increased energy demand from EVs, Hassani said: "We turned it around [and asked]: How can EVs support the grid?” The goal, he said, is to provide resiliency to individuals and businesses that face disruptions through power outages.
"GM Energy … is a very real solution to an economic problem,” Hassani said.
Not every vehicle manufacturer has the heft to follow suit, said Stephanie Brinley, principal automotive analyst for IHS Markit, in Detroit. She said GM’s scale has allowed it to make energy utilities investments smaller manufacturers don’t have the capacity to make.
Ford also has enough "reach and scale” to get into the energy business but has not shown as much ambition as GM to do so, said CAR’s Amici. Even so, Ford has noted that its F-150 Lightning electric pickup truck can drive power tools and supply electricity to homes during blackouts.
Stellantis, the company created when Fiat Chrysler merged with Europe-based PSA (the Peugeot Group), is a "fast-follower” – in other words, not as far advanced as many of its competitors, said Amici, who was a Fiat Chrysler executive before joining CAR.
Volkswagen, for its part, has "really doubled down on their EV investments,” said Amici.
Volkswagen announced on Sept. 22 that its charging unit Elli has partnered with Brussels-based Elia to collaborate on ways to integrate EVs into the electricity system. The vehicle-to-grid concept allows customers to inject the electricity stored in their EV battery back into the grid, drawing energy from it when necessary. Volkswagen said the partnership will explore price incentives to encourage drivers to contribute to the electricity system when the vehicle is parked.
Hassani described the GM Energy unit as "a very natural progression” from the development of electrically powered vehicles.
Brinley, the automotive analyst, says GM remains a carmaker at its core and is pursuing the energy unit as an "adjacent” business that could become a significant revenue stream for the company. GM estimates the potential market of products and services at between US$125-billion and US$250-billion.
"It’s a way to create new revenue; It’s about making money,” Brinley said. "It’s not the first example of companies that have jumped into adjacent businesses.” Yet she cautions that GM’s Energy unit is far from a "slam dunk” investment.
"They’ll have to find consumer interest and demand,” said Brinley. With about 3,000 utility companies in the United States, she said GM will have to work through a complex web of regulations.
Hassani said GM is undaunted by the regulatory complexities. "We have a history of taking complex issues and bringing it down to simple terms for our customers,” he said.
Hassani said the energy unit’s success relies in part on identifying opportunities that the customers themselves haven’t seen yet.
One of those opportunities is "bi-directional charging” – in essence using the EV to provide power to a home or even the grid. Hassani said the business unit has a nascent bi-directional pilot project with Pacific Gas and Electric Co. in California.
Amici said there is an "element of experimentation” in the energy unit venture that is reminiscent of the Maven ride-sharing program, which GM ran from 2016 to 2020. It closed when it became a casualty of reduced commuting during the pandemic.
"I appreciate GM’s effort,” said Amici. He added that GM taking chances is good for the industry over all.
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