GM expects to see profitability from its EV products from the second half of the 2024 calendar year onward, per statements made by General Motors CFO Paul Jacobson during the Barclays 2023 Global Automotive and Mobility Conference. Jacobson addressed several aspects of the automaker’s EV business, including scale, an influx of higher-priced products, lower battery materials costs, and more efficient production. Jacobson also indicated that some challenges have impacted the automaker’s goal of reaching a 400,000-unit EV production target in North America.
General Motors previously announced its 400,000-unit North American EV production target last year, but as Jacobson explained during his recent presentation, the automaker has faced several challenges in the ramp-up to meet that goal, although the automaker still expects to have a million units of capacity by 2025.
“I don’t think they’re fatal challenges at all,” Jacobson said, “and I think we’ve identified a lot of it in terms of the technology and the machinery to be able to stack the cells into modules.”
Jacobson said that GM’s EV profitability plan includes new EV parts and accessories, as well as the company’s digital and software-enabled services, most of which is poured into the company’s EV products. The profitability also includes greenhouse gas benefits. Jacobson also addressed a delay in production at the GM Orion plant, set to produce the Chevy Silverado EV and GMC Sierra EV.
“What we did is we saw an opportunity,” Jacobson said regarding the Orion plant. “We still have an opportunity to scale trucks at Factory Zero in Detroit-Hamtramck, but we have the opportunity to delay and defer Orion to actually incorporate several changes across the board [to make production more efficient].”
With regard to General Motors’ EBIT margins, Jacobson said that the automaker has successfully “put together a lot of infrastructure,” including cell plants and vehicle assembly, adding that the automaker was “building for the future.”
“As you look from 2023 to 2024, we actually expect over 60 points in EBIT margin improvement on the EBIT portfolio in 2024,” Jacobson said.
“The fixed cost per unit in 2024 is going to be about $20,000 a vehicle lower in 2024 than it was in 2023. You can see that, as we look at relative profitability across the industry, we’re actually absorbing a significantly bigger piece of the fixed cost today that, as we scale up, starts to come down on a per-unit basis,” he added. Jacobson said that cost per-unit is expected to drop another $5,000 in 2025.
Some of the improvement will also come from a higher mix of higher-profit vehicles like the GMC Hummer EV and Chevy Blazer EV, while models like the previous-generation Bolt are discontinued. The next-gen Bolt will ride on the lower-cost Ultium LFP program.
Finally, battery costs are another point of improvement, with GM expecting a $4,000 per vehicle cost improvement from 2023 to 2024. The lower costs include both streamlined production and lower costs for raw materials.
“I still believe that GM is a really, really strong investment, even at the prices of the increase yesterday, and you’re going to continue to see a commitment to drive shareholder value from the company going forward,” Jacobson said.