(GM) CEO Mary Barra makes a bold prediction that the automaker can outsell legacy electric vehicle manufacturer Tesla (TSLA) within three years.
Competition in the EV market continues to heat up and the Detroit giant is facing many obstacles to reach that goal, including the increase in interest rates, economic growth contracting and a recession looming.
The shortage in semiconductor chips has impacted automakers, halting assembly lines at GM, Toyota and other companies. Last week Toyota said it was adding two additional days to its summer shutdown due to a global semiconductor shortage.
Barra remains steadfast that GM could defeat Tesla by selling more higher-priced specialty EVs, she said in an interview with The Associated Press.
Conquering Tesla would mean outselling the Austin, Texas-based EV maker tenfold - GM sold only 25,000 EVs in 2021 in the U.S. while Elon Musk's Tesla sold abut 352,000.
EVs only account for 5% of the total number of new cars sold even though awareness and sales of have increased in the U.S. during the past few years. Americans have hesitated to change even as the number of charging stations have increased.
Image source: Chevrolet.
GM's Lower Cost EV Strategy
Barra said to sell more EVs, automakers have to design, build and manufacture cars that are more affordable and cost $30,000 to $35,000 to reach a goal of selling 30% to 50% of them.
GM is planning to fulfill that promise already by slashing the Chevrolet Bolt small SUV to start at $26,000 later in 2022.
The Detroit-based automaker also plans to sell a Chevy Equinox small SUV with 300 miles of range for about $30,000 in the fall of 2023.
Less expensive EVs remain a challenge for Tesla whose Model 3 base price starts at $46,990 and remains its cheapest vehicle.
Prices can be managed by innovations to keep battery costs cheaper and avoiding the higher costs for lithium, Barra said.
GM has other EVs in the works for drivers who can afford to spend money and want more room - Hummer EVs, an upcoming electric Silverado pickup truck and a Cadillac luxury SUV.
Between selling the more affordable and smaller EVs and the massive SUV versions, GM plans to offer a lineup of 30 battery-powered vehicles by 2025.
“What we have coming, it’s in the heart of the market,” she said, without providing details.
By 2035, GM plans to only sell EVs and abandoning internal combustion engine vehicles after selling them for 113 years.
One constant concern among current and potential EV owners is finding easy access to charging stations. GM announced last week it would help finance 2,000 charging stations at 500 Pilot Travel centers along interstate highways that are 50 miles apart.
“If the only vehicle you own is going to be an EV, you have to feel confident of charging,” Barra said.
GM began by selling the Bolt sedan, its 100% EV back in December 2016. The automaker then moved on to offer a SUV/crossover version, the Bolt EUV, and sought to attract customers who wanted more cache with the electric version of the iconic Hummer pickup/truck.
The company also plans to reenter Europe with EVs after it divested its Opel brand in 2017 due to years of losing money.
“All I can tell you is I think it’s a huge growth opportunity for the company, and we’re excited to be back,” Barra said.
GM's First Discount Program
The veteran car maker also launched the first discount program for customers who are fans of its premium Cadillac brand. GM will provide a discount for buyers of Lyriq electric SUV, Cadillac's first-ever electric vehicle.
The $5,500 discount will be offered only to a limited number of Lyriq customers, Michael Albano, a GM spokesman, confirmed to TheStreet. The vehicle's base price will decline from $62,990 to $57,490 for customers who will be part of the program, the Cadillac Lyriq Targeted Private Offer.
How Semis Play a Factor
The global shortage in semiconductor chips remains problematic for automakers. The shortages will continue into 2023, Barra said.
GM also changed its strategy in acquiring semiconductor chips and plans to work with only three types of chips that the company will purchase and control by 2025. The current method gives the upper hand to part supply companies that buy the chips, leaving GM with scant knowledge.
The new strategy of acquiring semiconductor chips will also bring a much needed change - the new chips will be able to complete several functions, which cuts down on the number of them used in each car and truck.
GM can also buy the chips in larger quantities because they will be more standardized and avoid supply chain disruptions in the future, Barra said.
“We’re also working with a select group of strategic companies to source these for the volumes," she said. "We’ll have much better control and a stable supply.”
