‘Heritage’ Won’t Be Enough in the Great Electric Car Transformation

All three makes were out of business by the 1950s, although Delage—a French Grand Prix constructor in the 1910s and ‘20s, and builder of sleek, opulent roadsters and coupes in the 1930s—recently returned as a small-batch atelier, funded by four billionaires. Last year, it showed the Delage D12, a baroque, $2.5 million hybrid-electric hypercar MotorTrend headlined as “a Hallucination From Mushroom Mountain.” 

It wasn’t the first time a classic French racing marque attempted a comeback at the intersection of flash, speed, and tech. Volkswagen Group’s revival of Bugatti comes to mind. In 2021, electric vehicle innovator Rimac, creator of the first all-electric hypercar, the Concept_One, took over Bugatti from VW, with VW group member Porsche as a minority shareholder. Christened Bugatti Rimac, the astonishing pair-up spotlights how EV technology is changing the calculus of ultra-high-performance cars. It’s also something we in the columnist game call foreshadowing.

Despite the occasional rebirth, car brands, on the whole, are no more permanent than pop singers or tapas restaurants. Dozens of brands shook out during the industry’s first decade, flamed out during the Great Depression of the 1930s, or after a valiant year or two in startup mode, failed to launch entirely. 

Some failed brands were caught on the wrong side of a technology inflection. Stanley, which didn’t give up its steam-power dream until the 1920s, and Detroit Electric, which built electric cars until 1939, were done in by manufacturers solving the last barriers to the wide-scale adoption of internal combustion engines: the electric starter replacing the hand crank and improvements to fuel efficiency, not to mention the affordability of fuel and ubiquity of gas stations and their helpful, smartly-dressed attendants. Stanley and Detroit Electric are worth mentioning, as we’re in the midst of another technology shift that will accelerate as the decade rolls on.

Still other auto brands that survived into the 21st century have been struggling to make their way in a world their founders would hardly recognize. The global automakers that own them are, like Volkswagen spinning off Bugatti to an EV company, gambling on a strategy of transformation to extend their relevance: These brands will become the coal-mine canaries for companies’ high-profile strategies to go electric-only during the next decade.

As unconscionable as it may seem, nearly every global automaking enterprise has in the past year rolled out a plan to stop selling vehicles with internal combustion engines and go all-electric by the mid-2030s. Whether or not they can engineer such a sweeping transformation, not to mention navigate the colossal, multi-industry supply-chain effort it will require, and continue to thrive afterward is the great economic question of our lifetimes.

The state of modern automotive brands as that transformation unfolds has haunted me since shooting my mouth off on The Smoking Tire podcast a few weeks ago. I riffed that Alfa Romeo and Jaguar, two of my favorite marques going back to childhood, might not survive the next decade in a way people like me, who romanticize the sound of Giuseppe Busso’s and Harry Weslake’s twin-cam engines like they were Shakespeare’s lost sonnets, might recognize.

The coming technological upheaval will affect every aspect of automakers’ trade, from design and production to sales and marketing. As barriers to the adoption of electric cars continue to fall, some of the largest industrial concerns on the planet are undertaking an unprecedented organizational change. They are taking a cue from Wall Street, which has signaled automakers’ share prices will be rewarded handsomely for the effort.

For General Motors alone, it’s a $35 billion bet on going all-electric by 2035 that will impact every corner of its sprawling business. You can see the beginnings of its plan in GMC’s Hummer EVs and in Buick’s intent to go EV under the Electra sub-brand. (This is where we remind GM, in our smuggest Comic Book Guy voice, that the classic Buick Electra was named after an airplane named after a Texas heiress named after a nymph in Greek mythology, not an electron.)  

As automakers look to build real businesses from selling EVs—not just use them as compliance units to meet emissions regulations as we saw at the start of the 2010s—it makes sense to leverage luxury brands, and the profit margins they can generate, as the tip of the spear. With demand for high-end EVs increasing, and the overall size of the luxury car market expected to increase from $449.7 billion in 2019 to $655 billion in 2027, as Fortune Business Insights predicts, the true value of automakers’ luxury brands is not their racing histories or their legions of fans, it’s their ability to turn a profit while delivering electric vehicles to the cobblestone driveways of wealthy, early adopters. The hope is that positioning EVs as a premium product, where Tesla has led the way for years, will eventually drive costs down and democratize the technology. 

“It really has most to do with economics,” said Ed Kim, chief analyst at AutoPacific, about automakers leading the EV charge with their luxury brands. He’s referring to the gap between the cost of building internal-combustion cars and battery-powered ones, which McKinsey and Company put at $12,000 per car, back in 2019. Thanks to the supply-chain screw-down of the pandemic years, that figure likely hasn’t improved. Commodity analysts at BloombergNEF predict cost parity won’t come until 2027.

“It's hard to overstate just how big of a deal battery costs are in building the business case of an electric vehicle,” Kim said, “because it is by far the most important, most expensive part. So the best way for an automaker to make a successful business case for an electric vehicle is to do a luxury one, just because the margins are inherently a lot higher.”

All of this is happening as the largest automakers are desperate to remake themselves as tech players: developing electric vehicles; introducing software-led, recurring revenue streams; and pushing the upgrade path of driver-assistance systems all the way to self-driving. All that to say, big disruptions are coming to the auto business, as they have to every other industry, and many of the old assumptions will no longer be valid. 

Legacy brands like Jaguar and Alfa Romeo, and Alfa’s Stellantis sister Maserati, have great history and brand cachet but a checkered present in terms of sales consideration and brand awareness. Press-ganging these brands into service as upscale EV makers sounds horrifying to enthusiasts, but can accomplish a few business goals. First, like most luxury brands they offer more ways to boost the bottom line with accessories, personalization, and services to absorb the production cost gap. Second, these brands have existing pipelines to market, with dealer networks eager to get a foothold in something that feels like a growth strategy.

At risk is nothing less than these brands’ hard-won legacies. No doubt all of us enthusiasts will soon be standing around in someone’s basement blowing vape smoke, as a home-brewed IPA bubbles quietly in the background, and wondering if Fangio would ever be caught dead driving an electric Maserati. 

Let’s face it: We in the car bubble like to think every great automotive marque is a sacred covenant between some genius engine builder and a winning racing driver made six decades ago. But there’s no entry on companies’ balance sheets for enthusiasm. I’m as guilty as anyone of forgetting, at times, that automotive brands—even those with a deep heritage and strong product association—are just businesses, and mostly public ones with shareholders to feed. 

Carmaking at scale is a monumental undertaking; it is the art and science of profiting on thin margins in a tortuous, capital-intensive domain. It includes the costs of raw materials, R&D, and production, alongside the administrative challenges of government regulations, labor contracts, dealer franchise laws—which vary state by state—and the political climate and externalities of every country or economic region in which an automaker operates. Excuse them if they don’t, institutionally, really give a fuck who won the French Grand Prix in 1957. 

Still, unless automotive enthusiasm is truly on the outs (it’s not), marques with high-performance legacies must at least make a go of building EVs that fit the brand promise. Alfa Romeo and Maserati, for example, must invest in driving dynamics, even as the business demands unifying their platform architectures to reduce the cost of production. That’s an R&D needle they’ll have to thread to catch up with highly capitalized competitors like Porsche and BMW M, which are further down the road to producing viable enthusiast EVs.

The appeal of brands like Alfa Romeo, Maserati and Jaguar should be as counterprogramming to buyers looking for something other than what volume players like BMW, Mercedes-Benz, Lexus, and Audi produce. But replacing a fire-spitting, Ferrari-designed V6—in Alfa Romeo’s case—with common-stock electric motors makes differentiation hard to achieve. You have to wonder: Alfa Romeo is going electric because it has to, but did anyone really ask for that?

Then there’s the problem, and a considerable one, of getting non-enthusiasts—you know, the people who buy and lease most new cars—to pay attention to them. Remember, Porsche became the powerhouse it is—after nearly going out of business in the early 1990s—by creating a virtuous cycle: introducing vehicles that sell in higher volumes to fund the development of enthusiast cars and the motorsports efforts that give its brand cachet, which helps sell higher-volume cars.

“[Alfa Romeo and Maserati] still have a ton of work to do in terms of brand building,” Kim said. “Right now, their challenges are more about getting the word out about their brands, and getting consumers to consider those brands, more so than developing the product, because from an R&D perspective, they've got access to all the mechanical components that they need to make good EVs. But both brands do suffer from a lack of consumer awareness and consideration.”

Moreover, the Stellantis brands (Alfa Romeo and Maserati) will soon take very different paths to the EV market from Jaguar’s. While Alfa and Maserati will use Stellantis’s standard EV platforms, shared among several of the company’s brands, Jaguar will move upscale to compete with Aston Martin and Bentley, with a dedicated EV platform dubbed “Panthera.” It’s “absolutely bespoke,” Jaguar Land Rover CEO Thierry Bolloré told Autocar.

“JLR has been struggling financially in recent years,” Kim said. “[Jaguar and Land Rover] really tried to become bigger volume players, they made a huge investment in that strategy, and that strategy failed. So instead of drawing upon high volume, mass-market platforms, they're going way upscale for less volume, but greater margins.” 

How that will play out for Jaguar is a mystery that won’t be revealed until 2025, a time gap Jaguar fans like me will inevitably fill with scenarios of electric doom. Management should at least start outlining an EV future that doesn’t leave us out. Unless, you know, it does. Asked whether or not Jaguar’s EV plans included a sports car, Bolloré was noncommittal in a conversation with Top Gear. “I’m not going to answer that right now because it’s a question of importance for us, and we will answer when we have decided exactly what we want to do with this new portfolio of Jaguar.”

“Jaguar as a brand has, has occupied everything from regal, stately luxury all the way to the XJ220 [supercar].” Kim said. “The brand has occupied a pretty wide span over the years. All they’ve really said is that ‘we're going to take the brand way upscale.’ they haven't talked about what form of luxury the next generation of Jaguar will take.”

Then there’s Lotus. Part of China’s Geely Motors—along with Volvo and its all-electric brand Polestar—Lotus has perhaps the most thrilling motorsports history among legacy brands, along with an engineering division that can make its own coffee (that’s a metaphor) with deep knowledge of vehicle dynamics. They’re also the lowest-volume automaker among legacy brands, traditionally, but Lotus now has a very ambitious EV-only growth plan that will see it become a player in the luxury-vehicle space. That plan is far more conventional than anything Lotus has done in the past, considering founder Colin Chapman’s “simplify, then add lightness” ethos is awfully hard to apply to volume-selling EVs.

“Geely has been kind of pleasantly and surprisingly, hands-off with Volvo up until this point,” Kim said. “[They] really let Volvo flourish and provided them with the capital to do it, and then learned from all that. I think that puts Lotus in probably the strongest position they've been in decades. I actually feel more optimistic about Lotus than I would have felt five years ago.”

I interviewed Lotus CEO Matt Windle recently, and asked him what fans of the Lotus brand, some of whom still balk at the company’s “overly complex” Elite Type 75 shooting brake it released in 1974, might think of Lotus’s move to become an EV company—complete with SUVs now.

“People say, ‘[Lotus founder Colin] Chapman would be turning in his grave.’” Windle said. “Actually, I don't think he would because he was always pretty agnostic about powertrain. He wanted the best solution for the product that he was trying to achieve. When I say that, people don't necessarily agree, but we're innovators. We want to move forward.”

Either way, the wildcard of this transformation will be the progression of EV motorsports. Once a full spate of multicolored-livery, aero-optimized, 200-mph battery-electric cars line up on the grid, perhaps the rest of the EV-enthusiasm picture will come into focus. Whatever happens, there will always be racing, at least I’m pretty sure of that. Legacy brands might be best served by continuing to uphold their histories on the racing circuit. 

There’s another, less rosy picture to consider, as legacy brands and their parent companies are forced to compete with modern EV startups unencumbered by traditional business models, attitudes, and policies. Perhaps worse, they may have to face down a high-octane, cash-rich consumer tech brand (i.e., Apple), which could decide, after all, to grab a piece of one of the few mass markets worth its time. (Don’t discount Baidu in China.) Such newcomers may or may not have the competence, firepower, and ambition to wrestle sales away from companies with a century’s experience mass-producing cars—or find the profit margins to warrant the titanic effort—but their presence in the market will have consequences for everyone. 

Mike Spinelli has covered cars and car culture in print, online, and on family cable TV, which is as glamorous as premade pancake batter. Send him tips, comments, and story ideas at wheelspin@thedrive.com.