At its “Investor Day” last week, GM said its income from EVs would exceed the revenue from Ford’s hugely-profitable F-Series trucks, and its EVs would produce profit margins almost matching its ICE vehicles.
GM told attendees at the annual Investor Day gathering that it plans production of one-million EVs a year from its five North American factories that would need three US battery plants building a massive 1.2 million battery cells a day.
The one-million EVs GM plans to build in 2025 is equal to nearly half of the 2.1 million total vehicles it produced in North America last year, according to estimates from the Automotive News Research & Data Center. Only about 33,000 of the vehicles it made last year were electric.
GM said its U.S. battery cell capacity should top 160 gigawatt-hours by the middle of the decade. At the same time, battery cell costs should decline from about $US87 ($A131) per kilowatt-hour in 2025 to less than $US70 ($A105) per kWh in the second half of the decade.
Taking emission credits and revenue from areas such as aftersales into account, GM said it is expecting EV margins in the low to mid single-digit area.
Automotive News reports that at the Investor Day gathering, GM said it expects to generate more than $US50 billion ($A75b) in revenue from EVs and $US225 billion ($A339b) in total revenue in 2025.
Income in addition to EVs will come from software, its BrightDrop electric delivery van unit and Cruise, the self-driving vehicle company majority-owned by GM.
It said that this compares with GM’s global revenue last year of $US127 billion ($A191b).
Ford said it plans to build two-million EVs a year from 2026 and that operating profit margin per EV would be 10 per cent.
Ford has sold 25,765 units of its most popular EV, the Mustang crossover Mach-e, this year to the end of August, and 6842 F-150 Lightning EV utes since it started deliveries in April.
GM told Automotive News (AN) that its EV profitability estimates did not include the impact of forthcoming federal tax credits.
GM CFO Paul Jacobson said at the Investor Day that: “We actually estimate that these tax credits are going to be worth $US3500 ($A5265) to $US5500 ($A8277) per vehicle coming from GM through 2025.”
“Together, these credits could add five to seven points of margin to the EVs, which puts us in a position where the tax credits are accelerating what we were already going to do and get our vehicles to ICE-like margins by 2025.”
In a move that has overtones of an agency model, GM said additional savings of up to $US2000 ($A3000) a vehicle could be realised by expanding a digital retailing platform and shifting to a regional fulfilment model for EVs.
GM has already opened two centralised EV fulfilment centres in California and one in the Southeast that aim to reduce vehicle delivery times to as few as four days.
GM president Mark Reuss said during the investor event that: “The biggest enterprise wide cost savings will come as we and the dealers change how we handle inventory, which means we’re reducing how much we’re … incentivising vehicles that were ordered that aren’t popular.”
“At the same time, we’ll improve the customer experience by delivering the exact vehicles our customers want quickly and efficiently.”
Mr Reuss said this strategy would give GM’s US franchised dealership network a competitive advantage and that included an advantage over startups that sell EVs directly to consumers.
In what appears to be a hybrid agency model, GM dealerships will continue to receive EVs for test drives and immediate delivery, but GM will hold additional EVs at the regional centres.
GM has said the approach reduces floorplan costs and the likelihood that unpopular vehicles will sit on dealership lots.
AN reported that GM also has launched a digital retailing tool, currently working with the Chevrolet Bolt EV, that will be expanded in 2023 to include Cadillac.
Mr Reuss said that about 3200 dealerships are enrolled in the platform, representing about 80 per cent of GM’s US network.
GM said its EV delivery unit BrightDrop is on track for $US1 billion ($A1.5b) in revenue next year and up to $US10 billion ($A15b) in revenue and 20 per cent profit margins by the end of this decade.
BrightDrop has more than 25,000 reservations and letters of intent from customers including Walmart, Hertz and Verizon, and it will launch a subscription-based software platform in 2023 to give commercial customers more operational visibility through a user portal and mobile apps.
GM currently sells four EVs at US dealerships: the Cadillac Lyriq midsize crossover, the GMC Hummer EV pickup, the Chevrolet Bolt EV hatchback and the Bolt EUV compact crossover.
Next year, it plans to launch electric versions of the Chevy Silverado, Equinox and Blazer; an SUV version of the Hummer; and a hand-built Cadillac electric sedan, the Celestiq.
Buick, which plans to introduce its first US EV in 2024, and Cadillac are expected to have fully electric lineups by the end of the decade.
GM opened its first Ultium battery plant, in Ohio, this year. A second plant, in Spring Hill, Tennessee is planned to open in 2023, followed by a third, near Lansing, Michigan, by the end of 2024 with Indiana the likely location for a fourth battery plant.
By Neil Dowling
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