GM ELECTRIC VEHICLES TO BE PROFITABLE BY 2025, CEO SAYS
General Motors says it expects its portfolio of electric vehicles to turn a profit in North America by 2025 as it boosts battery and assembly plant capacity to build over 1 million EVs per year.
CEO Mary Barra used the pledge to kick off the company’s investor day event Thursday in New York.
The profit figure includes vehicle sales revenue, benefits from emissions tax credits, and revenue from software and parts sales, she said.
Barra said the company’s EV portfolio appeals to a broader range of customers than the competition, in a lineup that includes a small SUV for around $30,000, plus a luxury SUV, pickup trucks, and Hummer SUVs in the next two years.
The Detroit automaker has a goal of selling only electric passenger vehicles by 2035.
GM is sticking by a pledge made by Barra to sell more EVs in the U.S. than market leader Tesla by the middle of the decade.
“Our commitment is to lead the industry,” Chief Financial Officer Paul Jacobson told reporters ahead on the investor day event. “We believe that with the infrastructure that we put in place and the vehicles that you’ll see today, we’ll be able to get there.”
The 2025 profit prediction is on a pretax basis that includes the capital costs of building battery factories and converting internal combustion plants to electric vehicles.
Jacobson said it will take time for individual electric vehicles to get to “low- to midsingle digit” profit margins in 2025 as costs are spread over more vehicles. EV profit margins will go higher once clean energy tax credits from the federal Inflation Reduction Act are applied, Jacobson said.
GM customers, he said, should be able to get half the $7,500 federal EV tax credit next year, reaching the full credit by mid-decade. To get the credits, EVs and batteries must be built in North America, with battery minerals sourced on the continent.
Despite economic volatility and the possibility of a downturn, GM appeared more confident in this year’s financial results, saying Thursday it expects full-year pretax income to be $13.5 billion to $14.5 billion. That’s within the previous guidance range of $13 billion to $15 billion.
GM also said its Brightdrop commercial vehicle unit, which is making electric vans and carts, will contribute over $1 billion of revenue next year.
The company says its modular Ultium EV architecture is flexible enough to allow multiple battery chemistries and cell sizes, and it can handle multiple vehicles. That’s one reason the company says the next two years put it on a path to double revenue by 2030.
Doug Parks, product development chief, said EVs are much simpler to build than internal combustion vehicles. For example, the Chevrolet Silverado EV has 45% fewer parts than its combustion equivalent, he said.
As for the new vehicles, GM will roll out an all-electric version of the Chevrolet Corvette next year, President Mark Reuss said.
“This will again set the standard of the world for performance,” he said.
Reuss gave glimpses of other new or revamped GM vehicles that are coming in the next two years. New internal combustion vehicles will be based on the existing underpinnings, saving costs, yet allowing the company to do significant upgrades, he said.
Reuss also took a shot at U.S. electric vehicle sales leader Tesla, telling analysts that more than 11,000 Tesla owners had vehicles serviced at a GM dealership. He said the dealer network is a big competitive advantage.