The latest GM electric cars and trucks can travel more than 300 miles on a charge, and one -- the Chevrolet Equinox -- lists at USD 35,000 before a USD 7,500 federal tax break.Electric vehicles have had a hard year. Sales have been disappointing. Former President Donald Trump has regularly disparaged them. And even many environmentally conscious car buyers have been choosing hybrids instead.
Yet the CEO of General Motors, Mary Barra, says the company is still committed to doing away with combustion engine cars in the United States by 2035 -- and she may have good reason for her optimism.
GM says it will start making money on battery-powered models by the end of the year -- becoming the only U.S. automaker aside from Tesla to achieve that feat. Sales of GM's electric vehicles are starting to take off. And the company just introduced a model that sells for less than USD 30,000 after a federal tax credit.
GM and other manufacturers have delayed investment in electric vehicle projects. But in an interview, Barra rebuffed the notion that the transition from internal combustion has run out of juice. She said GM was determined to uphold its 2021 pledge to phase out sales of gasoline cars by 2035 in the United States.
"That is the plan we're still executing," she said.
Her expression of resolve comes at a critical moment. Without GM, the largest U.S. carmaker, it is unlikely that the country can move away from internal combustion engines and the greenhouse gases they emit.
Tesla has largely driven the growth of electric vehicles. But lately, the company's sales have slowed, and its CEO, Elon Musk, has sought to focus the company on long-shot plans to build autonomous taxis and humanoid robots while saying little about new consumer models.
Barra went to Spring Hill, Tennessee, south of Nashville, this month to show that GM was serious about electric vehicles and to reassure investors that they could make money on them.
GM has retooled a plant in Spring Hill to produce electric Cadillacs and has built an enormous battery factory nearby. It has invested more than USD 4 billion as part of a plan to build electric vehicles in numbers that will drive down sticker prices while increasing profit margins.
The latest GM electric cars and trucks can travel more than 300 miles on a charge, and one -- the Chevrolet Equinox -- lists at USD 35,000 before a USD 7,500 federal tax break.
In 2022, two years into the pandemic, new electric vehicles were quickly snapped up. That is no longer true, but U.S. sales of such cars and trucks still grew about 11% in the third quarter from a year earlier. Electric vehicles now account for 9% of the new car market, according to Kelley Blue Book, and some analysts expect them to hit 10% by the end of the year, up from 8% in 2023, as the Equinox and other affordable models reach showrooms.
GM did especially well during the third quarter, registering a 60% increase in electric vehicle sales largely because of new models like the Equinox and an electric Chevrolet Blazer. One in five Cadillacs sold in the United States from July through September was electric.
Tesla still sells five times as many electric vehicles as GM does. But given the early stage of this new technology, analysts said, Barra's main competition is Ford, Hyundai and other established automakers that are competing for the same customers as GM.
"They don't have to beat Tesla," said Tom Narayan, an analyst at RBC Capital Markets who follows the auto industry. "They just have to beat everybody else."
Barra's personal commitment to electric vehicles was on display late last year when problems manufacturing a key battery component stalled production.
Earlier in her career, all of it spent at GM, Barra oversaw all the company's production machinery. She drew on that expertise, spending "many days," she said, alongside engineers in a Detroit factory who were trying to fix an assembly line critical to battery manufacturing. Barra said she wanted to "understand the situation -- ask questions and then get them the support they needed."
Once that problem, which involved packaging battery cells into modules, was solved, GM swiftly increased production at battery factories in Spring Hill and in Warren, Ohio. Both those factories, and a third under construction in Lansing, Michigan, are part of a joint venture with LG Energy Solution of South Korea. GM is planning a fourth battery factory, in New Carlisle, Indiana, with Samsung, another Korean manufacturer.
GM has recruited several senior executives from Silicon Valley for technology expertise. In June, the company hired David Richardson from Apple to lead software development, an area where most carmakers have struggled. Kurt Kelty, a former high-ranking executive at Tesla and Panasonic, a big battery supplier to Tesla, joined GM in February as vice president in charge of batteries.
GM has also locked in a steady domestic supply of lithium, a metal critical to batteries, by investing in a Nevada lithium mine called Thacker Pass.
Big car companies like GM have struggled to move as quickly as Tesla, and some industry observers remain skeptical.
The United States, where GM is strongest, accounts for only 11% of global sales of electric vehicles. China, where GM has struggled, accounts for 69%. Even if GM makes gains in EVs in the United States, "they are going to be leading sales in a market that is still moving slowly," said Karl Brauer, executive analyst at iSeeCars, a used car website.
But as the market for electric vehicles expands, GM's ability to churn out millions of cars -- everything from Cadillac Escalades that can sell for more than USD 150,000 to the Chevrolet Trax, which retails for around USD 25,000 -- may give it an advantage.
GM offers nine electric vehicles from its Cadillac, Chevrolet and GMC and delivery van divisions, including the Cadillac Lyriq, made in Spring Hill. That's roughly twice as many models as Tesla, which gets most of its sales from two products. GM has plans to introduce several more models in the coming months.
Strong sales of gasoline and diesel vehicles have helped GM ride out fluctuations in electric vehicle demand, Kelty noted. "Maybe I shouldn't say that," he said, "but it's bringing in a lot of profits that enable us to do some really creative things and really invest in the future."
The Spring Hill battery plant, with automated assembly lines overseen by workers dressed in gray full-body suits to protect the sensitive machines from contamination, has allowed GM and LG to become one of the biggest makers of batteries in the United States. That puts the company in a position to reap cost savings that come with mass production.
The cells are 2 feet long and encased in silvery pouches. Twenty-four cells are packed into a module, which in turn are tethered together in battery packs. The number of modules varies based on the size of the vehicle and their driving range. Using the same battery modules for many different vehicles cuts costs.
By building batteries in the United States, GM can take advantage of federal subsidies that will be worth USD 800 million to the company this year. The incentives were included in the Inflation Reduction Act, part of the Biden administration's effort to create a battery industry that is not dependent on China.
Those subsidies are at risk. Trump has vowed to repeal or undermine President Joe Biden's auto and energy policies. That will present a conundrum for the Republicans who dominate politics in Tennessee, Georgia and other Southern states that have benefited the most from the IRA.
GM's investment in Spring Hill, which once produced Saturn cars, has turned the small city, set amid rolling green farmland, into a boom town. The 2020 census put the population at 50,000, but Jim Hagaman, the mayor, said the town may now have as many as 65,000 residents.
Hagaman, who is not affiliated with a political party, said he was confident that GM's investment in Spring Hill was not dependent on politics. "They'll still build cars," he said.
