By John D. Stoll
Electric vehicles have long posed a chicken-or-egg conundrum for auto executives.
Buyers too often find them to be pricey, ugly, limited on range or unavailable. Car companies won't invest because we aren't interested in buying. We aren't interested because there's little to choose from. So, thirsty SUVs and pickups, powered by cheap gasoline, keep driving the U.S. car market.
Yet, American business can't stop talking about electric vehicles in 2020. Manufacturers are introducing battery-powered versions of nearly anything that moves, and EV startups are standing in line to go public. This past week Volvo Group introduced an electric Mack garbage truck and Ford Motor Co. broke ground on a factory to make electric F-150 pickups. Next month General Motors Corp. unveils a battery-powered Hummer.
It would be easy to credit the hype to Tesla Inc. Chief Executive Elon Musk. He's brilliant and enigmatic. His cars are well-designed and fun. His company is thriving and has spawned aspiring copycats -- including Nikola Inc., which is facing government scrutiny -- that have attracted billions from investors.
What's powering the buzz now is there are buyers. Not individual gear heads and technophiles shelling out big bucks for a Tesla, electric Jaguar or e-Porsche, but companies committing to hundreds of thousands of sturdy, affordable, workaday electric cars and trucks.
Widespread use by big fleets theoretically leads to lower battery costs and a better charging network, two of the biggest impediments facing EVs. Uber Technologies Inc. Chief Executive Dara Khosrowshahi told me recently that bulk buyers like ride-hailing firms or delivery and e-commerce services can "provide that shock to the system and then start creating the flywheel moving in the positive direction."
This is somewhat akin to how Microsoft Corp. came to dominate (Windows on every office desktop), and why companies like Zoom Video Communications Inc., Snowflake Inc. and Slack Technologies Inc. are so attractive. Investors couldn't care less if little old me uses a gadget or app; they're far more interested in whether that gadget or app appeals to businesses that drive rapid and mass adoption.
Ride-hailing rivals Uber and Lyft Inc. this summer launched initiatives aimed at getting millions of their contract drivers to tool around in electric vehicles. Amazon.com Inc. made similar waves last summer when it ordered 100,000 electric vans from Rivian Automotive.
Tech titans aren't only ones diving in. United Parcel Service Inc., Republic Services Inc., and Anheuser-Busch have made splashy commitments to buy zero-emission vehicles in various configurations and in large volume.
"What we need to do is move EV investments beyond shiny PR announcements to core ways of doing business," Lyft President John Zimmer said in an interview earlier this summer. "This is where the world is going, and we're going to push it there hopefully faster than it would have gone anyway."
These orders are critical for EV companies large and small, Republic Services' president, Jon Vander Ark, told me last month. The garbage company's desire to go electric is expediting innovation in heavy trucking, he said. "You've got to have a trumpet."
It's best if that trumpet is made of gold. Uber is committing $800 million on EV-related programs through 2025, for instance. Amazon pumped a nearly $700 million investment into Rivian.
Thomas Healy, the CEO of electric- and hybrid-truck startup Hyliion Inc., told me last week the company's outlook brightened when it received an order for up to 1,000 electric 18-wheelers from Agility Global Integrated Logistics. The Kuwait-based Agility ships goods for big producers.
The order, announced in June, corresponded with Hyliion's announcement it is pursuing a listing on the New York Stock Exchange this autumn. The company already has sold trucks and services, but the Agility deal bolsters the business case.
"Having that customer order is the light at the end of the tunnel that says 'Yes, people want this, this is the right product,'" Mr. Healy said. "But then, it puts an extra layer of pressure on us. We've got to go execute."
Auto makers spanning Detroit to Wolfsburg to Tokyo have promised a load of new EVs, but we've heard it before. In 2009 -- with gasoline prices above $4 a gallon nationally and GM and other auto companies seeking government bailouts -- industry executives promised to electrify fleets.
Will they carry through this time with gas averaging $2.18 a gallon? A broader look at how innovation works teaches us that these companies can only kick the can down the road for so long.
In 1975, Steven Sasson invented the digital camera in Eastman Kodak's laboratory shortly after graduating from engineering school. Instead of finding ways to fast-track the technology, Kodak questioned its viability.
"What's an electronic photo album going to look like?" he was asked during an early presentation. "When is this actually going to be practical." Fifteen years? Twenty?
Kodak stuck to film while competitors exploited its bright idea and buyers warmed up to it. On a 1998 family vacation to Yellowstone, Mr. Sasson stood at Old Faithful as many of the people wanting to take pictures pulled out digital cameras.
Not long after, digital cameras started showing up in mobile phones. The eggs were scrambled, the chickens fried and Kodak had missed its moment.
Write to John D. Stoll at john.stoll@wsj.com
