General Motors Co. Chief Executive Officer Mary Barra says this is the year that GM moves past its traditional rivals and starts its attempt to close the gap on Tesla Inc. in the electric-vehicle race.
(Bloomberg) — General Motors Co. Chief Executive Officer Mary Barra says this is the year that GM moves past its traditional rivals and starts its attempt to close the gap on Tesla Inc. in the electric-vehicle race.
It’s a long-awaited push. GM has talked for four years about 30 new EVs that will use its Ultium battery, but only recently started production of it. The battery will let the company roll out seven new EVs this year, including the Cadillac Lyriq SUV, Chevrolet Silverado pickup and Blazer SUV. In Barra’s estimation, GM will pass traditional rivals like Ford Motor Co. in EV sales and start taking ground won by Tesla over the past decade.
“This is our breakout year,” Barra said in an interview. “I don’t think I know, I know this is our breakout year because of the products we have and the demand we’ve seen.”
Barra enters a defining year in her leadership of America’s largest automaker. In August, she will be the longest-standing GM CEO since the legendary Alfred Sloan vacated the job in 1946, when he assumed the chairmanship until 1956. Her push into electric vehicles accelerated in the first quarter and will ramp up further next year. By 2025, GM will build 1 million EVs and could pass Tesla’s sales, according to a forecast from Bank of America Corp.
This is also a year in which GM won’t have excuses. Semiconductor supplies have improved, so the company should be able to boost sales of both conventional models and electric vehicles. The battery plant in Ohio, operated by Ultium Cells LLC, is ramping up production by 20% each quarter, giving the EV assembly plants what they need. GM has vowed to expand EV revenue to $50 billion by 2025 — and do so profitably.
The company sold just under 40,000 EVs last year, finishing a distant third to Tesla and behind Ford as well. Almost all of GM’s plug-in sales were the Chevrolet Bolt compact, which uses prior-generation technology. This year, Tesla will still be the top EV seller with 427,000 vehicles sold, according to researcher LMC Automotive, which sees GM passing Ford and selling 117,000.
“Strong progress is being made by the traditional OEMs, but there is still of a chasm to fill to catch Tesla’s sales volumes,” Kevin Riddell, an analyst with LMC, said in an email.
Longer Route
GM decided to take the slow road to electrification by building a battery pack and dedicated EV platform rather than move faster with converted internal combustion hardware. As a result, Tesla maintains a huge lead, while Ford has slipped ahead of its traditional rival. Korean automakers Kia Corp. and Hyundai Motor Co. have also established a presence.
There is an advantage to having delayed, though. GM’s rivals are all working on their own version of Ultium, which GM can use for everything from a small electric Chevy Equinox SUV to the 9,000-pound Hummer EV. Now that the platform is in place, battery production is growing and GM has greater flexibility. Rivals, in contrast, have mostly converted existing hardware to fit a battery — which can be a limiting factor.
GM’s strong earnings last year — and an expected repeat in 2023 — are a key factor that lets the company spend billions on its EV business. Earlier on Thursday, Barra vowed the company would meet its financial targets this year, which include earnings before interest and taxes of as much as $12.5 billion. It met its guidance in 2022.
“No one believed us when we said we’d achieve our guidance,” she told investors at a recent conference in New York held by Wolfe Research. “No one said we’d meet our guidance and we did.”
Cruise Targets
It will also be a defining year for Cruise, GM’s self-driving car unit. Cruise is charging fares for robotaxi rides in San Francisco, Phoenix and Austin, Texas. The company has applied to expand service hours in San Francisco and may look to expand in other cities. Its goal is to bring in $1 billion in revenue in 2025 and grow total fares to $50 billion by the end of the decade.
Cruise, however, burns $2 billion a year in cash for GM and has had glitches that have caused traffic problems. The company’s safety record has been good, but profits are still years away.
Barra said GM will continue to fund Cruise and has plans to expand the robotaxi service to goods delivery and personal autonomous vehicles. GM doesn’t have plans to seek outside funding for now.
“There’s not an imminent issue of funding,” Barra said. “We’re very committed to Cruise. It’s an incredibly important part of our future.”
Her ambitions for 2023 could be complicated by a US recession, however. Barra said GM is watching the economy closely and planning for different scenarios, but so far demand has remained strong.
“We are still seeing relatively strong prices. We’re still seeing demand for our highest contented trucks and SUVs,” she said. “We plan conservatively, but right now we’re seeing strong US demand out there.”
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