The CEO claims that this year GM will start making profits with electric vehicles.
Will electric vehicles become more affordable?
GM is preparing to start making profits from its electric vehicles by the end of this year, as confirmed by CEO Mary Barra. She also reiterated that the company plans to phase out sales of internal combustion engine vehicles by 2035, a goal set in 2021 along with the promise to achieve carbon neutrality by 2040. Although GM faced manufacturing and supply chain issues that impacted battery production in late 2023, Barra assured that these inconveniences have been resolved.
Currently, Tesla leads electric vehicle sales in the United States and has reported profits from these models since 2021. Ford, the second largest electric vehicle manufacturer in the country, has recorded losses exceeding one billion dollars in the first two quarters of the year due to its Model e electric vehicle division. Other manufacturers like Rivian and Lucid are also facing challenges, staying afloat thanks to third-party investments.
The demand for electric vehicles continues to rise, although the growth rate is variable across the country, leading manufacturers to adjust their launch strategies and include more hybrid models. One factor hindering the adoption of electric vehicles is their high costs, although customers can access federal tax incentives of up to $7,500 only if the vehicle is manufactured in the U.S. and meets strict pricing and battery material sourcing standards designed to compete with China’s cheaper production.
At present, only a few GM models, such as the Chevy Equinox and Blazer EV, qualify for these incentives. However, the company is investing to reduce battery prices and make it easier for consumers to access those benefits. One of GM's highlighted plans is the opening of a new battery cell development center in 2027 in Warren, Michigan. Additionally, GM is building a $3.5 billion electric battery plant in Indiana in collaboration with Samsung SDI, and another in Lansing, Michigan, in partnership with LG. They have also increased production at already operational plants in Spring Hill, Tennessee, and Warren, Ohio. GM is expected to receive around $800 million in government subsidies for electric battery manufacturing in the United States thanks to the current government's Inflation Reduction Act.
GM also intends to lower battery costs by incorporating lithium iron phosphate (LFP) batteries in future electric vehicles, just as Tesla and Ford already do. Although this chemistry typically offers a lower driving range compared to the nickel, cobalt, and manganese (NCM) batteries used in its current models, the company believes this will not significantly impact its range. According to statements from Darryll Harrison, vice president of communications, all GM electric models have an approximate range of 300 miles or more, and they expect to achieve "over 350 miles" in their larger vehicles with LFP batteries.
The GM Chevy Equinox is offered as one of the most affordable electric vehicles on the market, priced below $30,000 after tax credits. While it lacks Apple CarPlay, the popular Tesla Model 3 also sells for around $35,000 after incentives and does not offer this feature. For years, Tesla has had a wide and reliable electric vehicle charging network that facilitates road trips, but GM can now access it through a CCS to NACS adapter that it offers for sale, and it is also investing in its own charging stations in collaboration with EVgo.
