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Autos

GM’s Realization: No Electric Car Profits Until 2025?

Author: Madison Cates December 3, 2023December 2, 2023

General Motors (GM) has set its sights on profitability in the electric vehicle (EV) market by 2025, aiming for mid single-digit pretax profit margins. While acknowledging the current loss on each EV sold, the company’s Chief Financial Officer, Paul Jacobson, expressed optimism during a Barclays conference in New York. The envisioned profit margins reflect a shift from prior estimations, now factoring in gains from U.S. government clean energy tax credits.

GM’s journey toward EV profitability hasn’t been without challenges. According to Associated Press, Jacobson highlighted struggles in scaling up EV manufacturing, particularly in machinery for battery cell stacking at assembly plants. These hiccups, arising after cell production at a joint venture battery plant in Ohio with LG Energy Solution, contributed to operational setbacks.

Jacobson elucidated that the present margins on EVs stand “substantially negative.” The company is investing in building battery plants and retooling factories, leading to underutilization as EV production scales up alongside demand. Despite this, Jacobson emphasized the company’s commitment to navigating this transitional phase. The slower growth in U.S. EV sales during the past year hasn’t deterred GM’s forward-looking approach. Although the growth rate has declined from 90% year over year in June 2022 to about 50% this year, GM is resolute in meeting evolving market needs.

GM’s strategy entails introducing a series of electric SUVs, including a Chevrolet Equinox starting close to $30,000, a Chevy Silverado EV pickup truck, GMC Hummer EVs, and upcoming Cadillac SUVs. Additionally, plans for a new version of the Chevrolet Bolt in 2025 are in the pipeline. The focus on these higher-margin EV models is a key element in GM’s plan to bolster profitability. The company envisages leveraging economies of scale and cost distribution across a broader vehicle base as sales escalate, alongside substantial savings in battery costs.

However, GM’s aggressive production strategy comes with a caveat. While targeting a manufacturing capacity of 1 million EVs annually by 2025, the company emphasizes responsiveness to market demand. Jacobson underscored a reluctance to inundate an unready market or engage in extensive discounting of EVs.

Amid GM’s ambitious plans, its stock price rose about 1% to $31.82 following the announcement of a $10 billion stock buyback program and a significant dividend increase. This move aligns with the company’s concerted effort to not only revamp its EV lineup but also strategically position itself in a rapidly evolving market.

As GM navigates the complexities of EV manufacturing and aims for profitability, its strategic focus on higher-margin models, efficient cost distribution, and adaptable production capacities will likely define its success in this burgeoning market segment.

Author: Madison Cates

Title: Managing Editor

Bio:

Research journalist, Freelance writer, Managing editor

Expertise: automotive content, trending topics.
Education: LeTourneau University, Bachelors of Science in Business Administration.
Over 400 articles and short news pieces published across the web.

Experience: Madison Cates is a journalist located in the great state of Texas. She began writing over eight years ago. Her first major research piece was published by the Journal of Business and Economics in 2018. After growing up in a household of eight brothers and a dad who was always restoring old Camaros, she naturally pivoted her freelance career into the automotive industry. There, she found her passion. Her experience paved the way for her to work with multiple large corporations in automotive news and trending topics. Now, she now finds her home at Wealth of Geeks where she proudly serves as Managing Editor of Autos. Madison is always down to geek out over the latest beautiful cars on the market, and she enjoys providing her readers with tips to make car ownership easier and more enjoyable.

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Share on X (Twitter) Share on Facebook Share on Pinterest Share on Reddit <use href="#<svg width="1em" height="1em" viewBox="0 0 32 32" class="scriptlesssocialsharing__icon flipboard" fill="currentcolor" aria-hidden="true" focusable="false" role="img"> <title>flipboard</title> <path d="M24.997 13.001h-5.998v5.998h-5.998v5.998h-5.998v-17.995h17.995zM1.004 1.004v29.991h29.991v-29.991z"></path> </svg>" xlink:href="# flipboard “> Share on Flip itGeneral Motors (GM) has set its sights on profitability in the electric vehicle (EV) market by…

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Autos

GM’s Realization: No Electric Car Profits Until 2025?

Author: Madison Cates

Title: Managing Editor

Bio:

Research journalist, Freelance writer, Managing editor

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Author: Madison Cates

Title: Managing Editor

Bio:

Research journalist, Freelance writer, Managing editor

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