Electric vehicles are becoming more common on American roads, and Detroit's Big Three is having a bit of a rough time with the transition from making and marketing gas guzzlers to helping consumers adopt the plug.
Last quarter, Ford's EV division lost $1.1 billion in EBIT, and has recently announced a paradigm shift in its EV strategy that includes hybrid-electric vehicles in the mix.
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Rival Stellantis isn't doing much better. Dodge dealers are worried that it won't be able to convince buyers to buy EVs. Jeep's best-selling plug-in hybrid is the subject of a huge recall, and it is struggling to sell acres of unsold cars.
Following an announced shift towards plug-in hybrid technology in January, General Motors (GM) laid out its idea to tackle profitability with its EVs at its Investor Day on Oct. 8. There, one GM executive took a shot at Ford and its plan to crack the EV formula.
A GM exec's potshot in the dark
At its investor's day on Oct. 8, General Motors President Mark Reuss took a jab at Ford, specifically a relatively young, California-based team its CEO Jim Farley calls the 'skunkworks,' after the eponymous special projects team at Lockheed Martin.
In remarks while giving his presentation to investors and shareholders, Reuss bragged that GM was able to bring down EV costs by reducing the number of parts in its vehicles, among other cost-cutting measures.
One vehicle that reflects the mantra is the 2026 Chevrolet Bolt. While the visuals were withheld from the webcast, Reuss reassured that the newest version of its small EV will have "the latest technology" and "will be a moneymaker" for GM.
“We don’t need to create a skunkworks to create affordable electric vehicles," Reuss said. "We know how to do this."
What is Ford's "skunkworks"?
Ford's "Skunkworks" team has been a key talking point of CEO Jim Farley since late 2023. According to Farley, the California-based team consists of former Tesla and Apple employees and was established to create a new line of 'affordable' electric vehicles.
The Blue Oval CEO feels that this team, which is physically separated from Dearborn's bureaucracy, can make an EV that can edge not just Tesla, but what it sees as the new "real enemy:" Chinese automakers like BYD and Geely.
"We recruited the most technically skilled and creative professionals from inside and outside Ford to drive a radical change in how we develop an electric vehicle," Farley said in August 2024.
"The work of this highly talented team has evolved into a critical enabler of our electric vehicle strategy. These electric vehicles will have lower costs and will not be compromised in any way."
The first vehicle developed by the Skunkworks team will be a midsize pickup on a new, smaller platform, coming in 2027. Farley said that this new truck is for "customers who want more for their money — more range, more utility, more usability."
More Business of EVs:
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- Study: EV charging stations have a secret built-in business benefit
- Mercedes latest tech is ahead of Tesla in one key area
A reality check for GM from analysts
Though GM executives like Reuss and CEO Mary Barra played the optimistic angle during its investor presentations on Oct. 8, the reality is that, like Ford, GM is losing money on EVs and anticipates losing more money.
GM CFO Paul Jacobson said it anticipates operating losses on EVs to soften by $2 billion to $4 billion, but according to Bank of America analyst John Murphy, he hinted that the automaker "dug a bigger hole" in comparison to Ford; roughly $5 billion in EV losses on investments in EV and battery technology.
Analysts generally left the event optimistic. Wedbush's Dan Ives maintained his 'Outperform' rating on GM stock and $55 price target, citing the automaker being "laser-focused" on its strategy.
"Importantly, GM believes EV losses have peaked this year while focused on significantly increasing profitability in 2025 as GM grows its EV sales faster than the market, moving to the number 2 position in the US," Ives said in his note.
Bank of America analyst John Murphy reiterated GM stock's Buy rating and $85 price target, noting that the event was "constructive" but did not provide much commentary on other monetary siphons like its Robotaxi firm Cruise or insight into strategy in an important key market that American automakers are struggling in.
"Contrary to expectations, GM did not provide detailed comments on future strategic steps in China, apart from reiterating the message that GM is serious in competing and winning in this market," Murphy wrote in his note. "Recall that GM, similar to other Global OEMs, have been under meaningfully pressure in China due to local competition."
General Motors stock is traded under GM on the New York Stock Exchange. As of writing, GM stock is up 3.88% from the bell, at $47.79 per share.
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