GM anticipates that its growing lineup of electric vehicles will achieve positive variable profit during the fourth quarter of 2024, according to statements made during the Investor Day presentation by General Motors CEO and Chair Mary Barra.
This does not mean that EVs are profitable for GM overall, but it does indicate that profit will soon be higher than variable costs such as labor and raw materials. Positive variable profit means EV units are now covering the variable costs needed to produce them and are beginning to contribute to covering fixed costs as well.
Mary Barra remarked that “this inflection point in EV profitability is arriving much faster than many people thought.” In fact, it arrived slightly faster than Barra herself predicted in 2022. At that time, during that year’s Investor Day presentation, she forecast profitability would be achieved by The General’s electric vehicles in 2025.
Barra also said the automaker is “on track to produce and wholesale approximately 200,000 GM branded EVs in the region this year.” She highlighted two key factors in making the company’s EVs profitable, including the fact it “engineered a dedicated EV platform which is far more efficient and scalable than adapting existing ICE vehicles.”
She also said “the scale, the quality and the efficiency” of General Motors’ U.S. battery plants “separates us from competitors who have not launched dedicated EV platforms or built their own cell plants.” Related to this factor, the carmaker expects to save $6,000 per vehicle by switching to lithium iron phosphate (LFP) batteries.
The next-generation Chevy Bolt EV will utilize LFP batteries, while the company’s electric trucks may also soon use LFP. Hastening this process, a new battery cell development center will soon open in Warren, Michigan to spearhead battery research. The Ultium brand is also getting the axe for both EV battery and EV motor technology from General Motors as the company explores new technologies and partnerships beyond those through its Ultium Cells joint venture with LG Energy Solution.
Overall losses for GM’s EV portfolio should shrink by about half in 2025, dwindling from $4 billion to $2 billion, thanks to the transition to positive variable profit. Paul Jacobson, the automaker’s Chief Financial Officer, remarked that the company predicts the Inflation Reduction Act (IRA) “benefit to be approximately $800 million in 2024 and only expanding from there.” He also pointed out that the goal is “long-term profitability without any IRA benefits.”
Rendering Of The Next-Gen Chevy Bolt EV
The General expects its North American EV production to top 200,000 units in 2024. Against this backdrop and the planned unveiling of the next-generation, 2026 Chevy Bolt EV, GM President Mark Reuss said “we don’t need to create a skunkworks to create affordable electric vehicles,” apparently taunting Ford.
Turning to individual models, the Cadillac Escalade IQ is expected to be GM’s most profitable electric nameplate to date.
Comments
So, back of the envelope math says GM is getting about $4k of taxpayer money for each of their 200k EVs and is still losing $20k/vehicle. So, each EV is selling for about $25k less than it costs to manufacture.
And GM continues to be over-obsessed with EVs. Now, is that poor management, or what?
Material and Labor costs are breakeven at the moment, the investment loses ( money spent on infrastructure and factories, depreciation and interest etc), they will be able to beat by scaling up. By same calculations Lucid loses $400k per vehicle sold etc.
The WEF and Blackrock sure are good for making companies lose billions upon billions of dollars for their agendas.