ZEUS: Electric vehicles steal CES

The Vegas consumer electronics show has long been big on cars. This year it meets the EV hype head on.

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc.)

SAN FRANCISCO (Callaway Climate Insights) — Some might argue there’s nothing better than starting the year in Vegas. For most veterans of CES, the annual consumer electronics show in early January, the non-stop, city-wide event with morning-to-night speeches and glitzy displays is more of an extension of a New Year’s hangover.

Still, in its 54th year and going virtual for the first time thanks to Covid, CES is doing its best this week to maintain that luster online. Leading the way are the electric vehicles. General Motors (GM) kicked off with a keynote presentation that teased more than a dozen electric concepts to come in the next few years, from a Chevrolet Bolt crossover next month to a Halo autonomous pod (above) from Cadillac, to a commercial electric van business called BrightDrop to even an electric Hummer, the GMC Hummer EV. Of course, GM also teased the possibility of air taxis to come, as no CES would be complete without flying cars.

Sono Motors released plans for a car covered in solar panels, while Sony revealed that it’s battery-powered Vision S, which stole the show last year, is far enough along to be tested in Austria.

Cars are never the entire show. Other cool technologies included touchless kitchen and bathroom taps and handles by Kohler, in a nod to the pandemic, and transparent, digital N95 masks by gaming company Razer, which alter your voice to make it more normal and provide an array of light and sound options.

But CES has been increasingly about cars for more than a decade now, with each year unveiling more digital options and more control of your automobile by computer, for better or for worse. In the wake of the great financial crisis a decade ago, it was hard to really stimulate a boom in auto buying. Indeed, most car companies needed bailouts.

But the surge in interest in EVs, prompted by Tesla (TSLA) and now including Nio (NIO), Fisker (FSR), and Lordstown Motors (DPHC), and their stocks, has lit a fire under manufacturers like GM and Ford (F) and Volkswagen (VLKAF) that should fuel a broad new fleet of EVs in coming years. Events like CES are perfect for these sort of introductions and have latched on to the visual stimulus these new vehicles provide.

For investors, there’s lots to ponder, as the hype behind these vehicles often exceeds the reality of their production capabilities. Look at the collapse of Nikola Corp. (NKLA) shares last year as an example. Electric car sales of more than two million in 2019 were up 40% over the previous year, but flat to down in 2020 as the pandemic bit into buying.

That still gives them a roughly three or four percent share of the total automobile market globally. Bigger in places like Germany and Norway, where electric cars are more popular. Though judging from the enthusiasm behind introductions like we’ve seen in Vegas this week and the rush to EV stocks, the demand is there. The key will be production, and the costs, which are still too high for most.

Three percent sounds like a niche and very well could be for years to come. But a fund manager I spoke with this week told me a tale of how he remembers sitting around with his company’s investment committee 25 years ago talking about the market penetration of mobile phones.

He said the phones had about 4% to 6% of the market back then and the big question was whether they’d get to 10%.

For EVs, and for the need to cut fossil fuel emissions in general, this is one where the hype and the reality need to come together soon. And not just in Vegas.