2020 Auto News Auto Sales USA automobiles

Auto Buyers Will Soon Have More Brand Choices Than at Any Time Since World War II

Many of the new brands in the U.S. are EV makers, but not all.

Lucid Motors, a California-based EV maker, plans to unveil its first production model during a web event next month, the Lucid Air set to go on sale during the coming model year.

The startup is just one of a long list of new brands hoping to crack the U.S. market during the next several years, a list that also includes the likes of Fisker, Lordstown Motors, Faraday Future, Bollinger, Vantas, BYD, Great Wall and others.

The U.S. automotive market has long been a relatively closed club. While a handful of new brands have pried open the door in the past half century, far more have either shut down or walked away. But if even a fraction of these new entrants actually makes it into showrooms American buyers will soon have more brands to choose from than at any time since World War II.

Automakers “have always wanted to get into the U.S. It’s a coveted market,” said Stephanie Brinley, principal automotive analyst with IHS Markit. “It’s a difficult market to get into, but not impossible (though) it takes a lot of volume to be profitable.”

During the past 120 years, the U.S. has seen more than 800 brands come and – most of them – go, according to the archives of the Henry Ford museum in Dearborn, Michigan. The vast majority of them popped up during the industry’s pioneering days, names like Chalmers, Maxwell and Duesenberg. The Depression wiped out hundreds of them. Others, such as Studebaker and Packard, struggled on through World War II but couldn’t generate the economies of scale needed in an increasingly costly business and were gone by the 1960s.

The post-War period did see the arrival of a new wave of import brands, including European marques such as Renault, Volkswagen, BMW and Mercedes-Benz, as well as Japanese players like Toyota, Honda and Nissan. Even among them, many struggled. The 1990s kicked off a new exodus, names like Renault, Peugeot, Fiat, Daihatsu and Suzuki falling by the wayside.

Detroit’s Big Three, meanwhile, have pared back. Ford dropped Mercury and the short-lived Merkur, while Chrysler – in its various incarnations – abandoned names such as Plymouth and Eagle. And, following its bankruptcy a decade ago, General Motors pulled the plug on Hummer, Pontiac, Saturn and Saab.

It’s not that there haven’t been plenty of wannabes. After World War II, industrial magnate Henry Kaiser hoped to launch his own brand, announcing at an industry confab he was ready to back it up with a $100 million investment. “Give that man one white chip,” responded GM’s then president. Kaiser didn’t last long, nor did Malcolm Bricklin, who tried to launch his own brand in the 1970s.

But some things have changed and the door appears to be open wider than it has been in years. The nascent shift from internal combustion to electric power is offering significant opportunity, especially for companies hoping to ride the coattails of Tesla.

Up-and-coming EV makers can only hope to enjoy a fraction of the recent success of the California-based automaker, currently the most value car company – measured by market capitalization – in the world. Ignoring a slew of naysayer – in fact, mocking a great many of them – the company has broken from the pack, notably Fisker which debuted at the same time and were largely seen as rivals, to become the biggest seller of electric vehicles in the U.S. — and the world.

After starting with a small roadster with limited range, the company now offers four models, with a next-edition roadster in the works as well as a pickup truck and a semi truck on the horizon. It’s growth has been rocket-like in recent months, prompting the company to announce a five-for-one stock split in an attempt to make the shares “more affordable for employees and investors.”

Not including Tesla, the list of EV startups is a long one, with some of the most promising thought to be Lucid, Detroit’s Rivian and Nikola. The latter firm took advantage of the latest means of raising lots of money fast, a “special purpose acquisition company,” also known as a “blank-check company,” allowing it to quickly list on a stock exchange. Fisker and Lordstown plan to use that strategy, as well, later this year.

How many of these EV entrepreneurs will make it is far from certain, and the road to market is already littered with fallen brands such as AMP and Bright Automotive, while others, such as Faraday Future, are barely holding on.

“The jury is still out on the new electrics,” said Brinley. “They’ve got a long way to go before we know if they really will be a presence.”

Part of the challenge is that EVs currently account for barely 1% of the U.S. market. While many experts are forecasting a big surge this decade, that remains to be proven out and the start-ups will have to face down not only Tesla but the established automakers who are investing tens of billions each year in new electric models.

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