Get all your news in one place.
100’s of premium titles.
One app.
Start reading
InsideEVs
InsideEVs
Technology

GM Pushes On With The Key To Its EV Future: Profits

As 2024 has dragged on, I've increasingly come to think that the electric vehicle transition is less about cars that plug into something and more about control over the energy future. That future is battery-powered—for home generators, mobile devices, grid power and much more beyond cars—and gaining control of the battery supply chain and battery costs is where car companies can lead the way. And General Motors is making some real progress on that front.

Today on our Critical Materials morning news roundup, we look at three so-called "legacy" carmakers and their approach to EVs: GM, Volkswagen and Honda. Let's dig in. 

Get the best of InsideEVs delivered straight to your inbox.
For more information, read our
Privacy Policy and Terms of Use.

30%: GM Sees Progress On The EV Front

Chevy EV Lineup 2024

GM CEO Mary Barra promised that 2024 would be a kind of do-over year for its aggressive future electric car plans. After all, 2023 saw countless setbacks with battery production, software challenges and other headaches. I'd say that in the past couple of weeks alone, we've seen strong evidence that it's working: EV sales in Q3 alone topped 70,000, and at yesterday's Investor Day event, Barra and her team offered some promising news on the profit front. 

"We believe our EV losses have peaked this year and we’re focused on significantly improving profitability next year," Barra said. She added that GM is aiming for "positive variable profit" in this quarter.

I'm very proud of InsideEVs' team coverage yesterday on all of this so I won't recap it all here. But I will stress that one of the biggest things keeping down EV adoption is how unprofitable they tend to be for automakers; they don't control much of the battery supply chain or production methods and batteries themselves continue to be costly. Now, both of those factors are changing fast, and GM appears to be leading the way. Here's CNBC's take:

The EV tailwinds are split between savings from increases in volume and lower costs, including for raw materials and battery production.

[GM CFO Paul Jacobson] said GM’s capital spend also is expected to be consistent in 2025 with this year. GM’s 2024 financial guidance includes anticipated capital spending of between $10.5 billion and $11.5 billion.

GM has improved its EV variable profit by more than 30 points year over year through the third quarter, Jacobson said.

GM CEO Mary Barra said Tuesday the automaker is on pace to produce and wholesale about 200,000 EVs for North America in 2024, achieving profitability on a production, or contribution-margin basis, by the end of this year. That guidance is down from a prior target of 200,00 to 250,000 EVs, which had been lowered from as high as 300,000 units.

Also assisting GM’s earnings in 2025 are expected reductions to fixed costs, which have come down by $2 billion over the past two years net of depreciation and amortization, as well as relatively stable demand and incentive spend by the automaker.

By contrast, let's look at Ford. It's done some groundbreaking things with EVs over the past years. But the fact that sales aren't in the hundreds of thousands annually yet, and the fact that it continues to lose money on the Mustang Mach-E and F-150 Lightning, led it to punt some plans back a few years and cancel one electric model entirely

Either way, if you want more EVs, they have to make money. And even as GM revises some of its battery plans, it seems to be getting there. 

60%: Volkswagen Says It Will Have Eight New EVs By 2027

Volkswagen brand CEO Thomas Schaefer with the Volkswagen ID. 2all Concept

At this point, I'm extremely skeptical of any automaker who says they'll have "X number of EVs by Y year." I can't even keep track of the claims Volkswagen alone has made on that front; here's an article from 2019 that promised 70 electric VW Group models by 2025. (That isn't happening.) 

But this latest pledge seems somewhat more realistic. I can't find the original source interview from Germany's Auto Motor und Sport quite yet, but Reuters picked up a quote from VW brand CEO Thomas Schaefer that claims eight new EV models are on the way by 2027: 

"We have to produce our vehicles profitably and put them on the road at affordable prices," the publication quoted him as saying. It also reported that the ID.2 small car model would be developed in 36 months instead of 50 months. 

This was probably made as Schaefer debuted the new Volkswagen Tayron/Tiguan, which is kind of its bread and butter these days as it sorts out its EV strategy. As we've covered routinely this year, VW is facing a raft of challenges with labor costs, uneven demand for EVs and lower sales in Europe and China—not to mention competition with Chinese EV newcomers. 

90%: Meanwhile, Honda Hedges Its Bets

Honda Series 0 Prototype

Honda announced some very exciting things at its Tech Meeting event in Japan, which our own Kevin Williams covered extensively with more coming today. A lot of that involves new factories in the U.S. and Canada to produce this next generation of high-tech cars. 

But Honda's not completely committed, or at least, is staying flexible, its CEO told Bloomberg

Honda Motor Co. said it’s open to altering its electrification roadmap if demand for pure battery cars continues to wane, a sign the Japanese automaker may ultimately join international peers in walking back electric vehicle targets.

“There’s enough room to adjust the time line of establishing EV factories globally and change our strategy should things move in an unexpected direction,” Chief Executive Officer Toshihiro Mibe told investors at Honda’s technology day last week. That could include delaying setting up some battery production lines, he said.

But it's worth noting this aggressive R&D spend should yield technologies that can be deployed on all sorts of cars, including hybrids:

The company has also developed compact e-Axle systems, which combine motors and inverters, to make EVs more spacious, it said. It will also apply a new welding technology, which helps to make car frames lighter.

Here's hoping the company figures it out, because Japan Inc. so far doesn't look especially competitive as a long-term EV player. 

100%: What's Your Read On How 'Legacy' Automakers Are Doing In The EV Race?

2024 Chevrolet Equinox EV

GM could be the big winner in 2024, along with Hyundai Motor Group. How about the rest? 

Contact the author: patrick.george@insideevs.com

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.