Automotive News Europe — 2022-11-14
General Motors plans to tell investors that the company expects its electric-vehicle program to be profitable in 2025, the same year it’s targeting sales of 1m battery-powered cars, people familiar with the matter told Bloomberg.
CEO Mary Barra will outline a plan at GM’s on 17 November investor day to show how the automaker can cover investments for battery plants and assembly, and build the Ultium battery program’s margins.
Executives also plan to detail GM’s push to go from selling just about 44,000 EVs this year in the US -- at a loss -- to profitably becoming one of the nation’s biggest EV producers, said the people, who asked not to be named because the presentation has not been made public.
After years of development, GM is signaling it’s finally ready to start producing EVs in enough volume -- with a new battery pack -- to grow sales and start lowering costs. Its push into EVs is expected to get underway in earnest next year when its mass-market Chevrolet brand starts selling a battery-powered Silverado pickup and more-affordable Blazer and Equinox electric crossovers.
GM wants to make a case that it will soon be one of the top players in the industry’s push to replace internal-combustion engines with electric powertrains. At the same time, the road to selling EVs in big numbers and doing it profitably in three years also underscores just how far behind other automakers are when compared to Tesla, which earned $5.5bn in net income last year selling only EVs.
Barra’s EV push is the biggest piece of the plan GM announced last year to double revenue by 2030 to about $280bn. The effort relies on growing market share by creating a lineup of electric models that sells in parallel to internal-combustion vehicles. The company will also try to get new revenue from software-related services and its Cruise self-driving vehicle unit.
“The 2021 investor day was a really big deal and a transformative event,” said Morningstar analyst David Whiston. “It was very bold. The stock did not shoot up because it’s all very long term. This next event will probably keep the story arc going.”
GM is working to use its large network of plants and suppliers to catch Tesla’s dominant position in EVs. Bank of America analyst John Murphy forecasts GM could pass Tesla in EV sales in 2025 simply because GM will offer more models and have more production by then.
While GM expects its EV program to start generating profit in three years, the battery-powered models will still have lower margins than its internal-combustion vehicles. Profits from the existing lineup will continue funding development of EVs and the more than $2bn a year GM spends on its Cruise unit, one of the people said.
GM President Mark Reuss, CFO Paul Jacobson, product development chief Doug Parks and Travis Katz, who runs GM’s BrightDrop electric delivery-van business, will also be at the presentation, Barra said on the company’s earnings call in October.
Parks is slated to lead the battery discussion. He will explain how GM aims to boost power density in its Ultium batteries and take out costs, one of the people said. GM has said that the Ultium batteries will be 60% cheaper to build than the Chevy Bolt’s battery. The second-generation Ultium battery, which goes into production in the next several years, is expected to drop costs another 40%.
On last month’s quarterly earnings call, Barra said this week’s presentation will “go deeper into the second phase of our EV growth strategy.” The second and third phases of GM’s plan to double revenue and improve margins include expanding Ultium and using the Ultifi software platform to create other services, she said.
GM and partner LG Energy Solution have opened their first Ultium plant in Lordstown, Ohio, and started production in August. The factory is making battery cells for the Hummer pickup EV and Cadillac Lyriq SUV, both of which are selling in small numbers as GM slowly increases production. The second battery plant opens next year in Spring Hill, Tennessee.
Barra said GM will also share new details about the expansion of GM’s Super Cruise hands-free driver-assist program and Ultra Cruise, which allows drivers to take their hands off the steering wheel over more miles and in more driving conditions.
Investors will be most interested in GM’s EV push, Whiston said, because they are waiting to see if anyone can get the volume that Tesla has.
“GM will not sell at the prices of Teslas, so maybe they will not match the profits,” Whiston said. “But they should be able to show good margins. If Tesla can do it, there is no reason GM, Ford and others cannot do it. They’re just behind on product lineup and manufacturing.”