While electric vehicles are now a fundamental part of our future, the all-important question of profitability has often been asked by critics and probed by industry analysts alike. It’s no secret that, generally speaking, eking out profit margins is a harder ask with a battery electric vehicle than with one powered by internal combustion.
But GM’s CEO Mary Bara is apparently unfazed, as she plans to tell investors that the company’s EV program is expected to turn a profit from 2025 — that’s according to Bloomberg, who cites unnamed sources close to the company.
General Motors has shown a certain bullishness with its electric vehicle strategy, with the company previously predicting that it would overtake Tesla as the top EV manufacturer by 2025. That alone is a Herculean task, considering that GM didn’t manage to crack 10 percent of Tesla’s EV numbers last year, with just 25,000 sales compared to Tesla’s 350,000.
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This year’s EV sales are not much better, at around 44,000 units. To add insult to injury, each of these has been at a loss. The transition to EVs for legacy automakers is by no means inexpensive, with investments in technology, production, and raw materials meaning that ICE models will continue to fund the development of EVs for now.
However, in favor of GM is scale and affordability, with a host of new models planned for the following years. Things will kick off in earnest with the launch of the 2024 Silverado EV pickup, 2024 Blazer EV SUV, and 2024 Equinox crossover — the latter coming in at around $35,000. GM is also leveraging its extensive network of plants and existing suppliers to increase production and lower costs when it comes to EVs.
While profit per unit may end up being less than Tesla, 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. This could also be impacted by the fact that the long-mooted, more affordable Tesla Model 2 is nowhere to be seen either.
Battery costs have been slashed too. GM’s product development chief Doug Parks is expected to elaborate on how the General’s new battery tech will help keep money in investors’ pockets. GM’s Ultium battery tech is said to be 60 percent cheaper to build than what was fitted to the Chevy Bolt, while a second-generation battery will reduce costs by a further 40 percent.
Other potential avenues for increasing profitability lie in GM’s ongoing software development, which includes the semi-autonomous 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.
While there’s still a long way to go, GM’s aggressive strategy, driven by sales volume and cutting costs, may pay off.