General Motors (GM) is poised to become profitable in its electric vehicle (EV) segment by the end of this year, as confirmed by CEO Mary Barra in a recent interview with The New York Times. This milestone aligns with GM’s broader strategy to transition away from internal combustion engine vehicles by 2035, a commitment first announced in 2021, alongside an ambitious goal to achieve carbon neutrality by 2040.
As the EV landscape continues to evolve, GM has faced its share of manufacturing and supply chain challenges, particularly related to battery production, which temporarily delayed the rollout of several new electric models. However, Barra expressed confidence that those issues have been resolved, allowing the company to refocus on its commitments and timelines.
Currently, Tesla leads the U.S. market in EV sales and has enjoyed profitability in this sector since 2021. Meanwhile, GM’s chief competitor, Ford, is grappling with significant losses exceeding a billion dollars in its Model e division over the first half of this year. Other EV firms, like Rivian and Lucid, are also struggling to turn a profit, relying heavily on external financing to sustain operations.
Despite the wavering growth rates of EV demand in the U.S., manufacturers are adapting their strategies, incorporating hybrids more frequently to appeal to consumers. The high costs associated with electric vehicles remain a barrier to entry; however, federal tax incentives of up to $7,500 are available to purchasers of qualifying domestic EVs, contingent on strict rules surrounding pricing and battery sourcing. Currently, only a limited number of GM models, including the Chevy Equinox and Blazer EV, meet these criteria.
In response to this market dynamic, GM is making strategic investments to enhance battery technology and affordability, aiming to qualify more models for tax incentives. The automaker has plans to establish a new battery cell development facility in Warren, Michigan, by 2027, and is constructing a $3.5 billion EV battery plant in Indiana in partnership with Samsung SDI, along with another facility in Lansing with LG. Additionally, production capacity is being increased at existing facilities located in Spring Hill, Tennessee, and Warren, Ohio.
According to reports, GM is set to receive approximately $800 million in subsidies for its U.S. battery manufacturing efforts, partly driven by the Biden administration’s Inflation Reduction Act. To further reduce costs, GM is looking to incorporate lower-cost lithium iron phosphate (LFP) batteries in future models, similar to strategies employed by Tesla and Ford. While LFP batteries typically offer a reduced driving range compared to more expensive nickel cobalt manganese (NCM) batteries, GM remains optimistic that its vehicles will continue to achieve an impressive range; most current models exceed 300 miles, with plans to provide over 350 miles in larger LFP variants.
One of GM’s standout offerings is the Chevy Equinox, which is marketed as one of the most affordable EVs in the market, priced under $30,000 after tax credits. While it lacks some tech features found in competitors, such as Apple CarPlay, it competes with Tesla’s popular Model 3, which is available for around $35,000 after incentives.
Historically, Tesla has dominated the EV charging infrastructure landscape, allowing for convenient long-distance travel. However, GM is now able to access this network thanks to the availability of an NACS to CCS adapter, which is sold separately, while also investing in its own EV charging stations through a partnership with EVgo.