Photo: Chevrolet | Edited
After boasting about surpassing Tesla, first globally and later in the US only, GM's Mary Barra is back on the ground with a more realistic perspective. At a Sanford Bernstein conference, Barra said EV battery costs are too high to build profitable EVs in the $30,000 to $40,000 price bracket. And that's exactly where the upcoming Chevrolet Equinox EV stands.
General Motors CEO Mary Barra showed a more down-to-earth posture during a Sanford Bernstein conference on Friday, admitting that Tesla has the lead in EV technology. It wasn't always like that, as only a year ago, Barra said GM would lead in EV, with plans to overtake Tesla by the mid-decade. Barely months after making that statement, Barra narrowed her scope to just North America. Soon, she announced that GM will have one million EV production capacity in the US by 2025, which essentially conceded Tesla was out of reach.
GM's CEO is known for her bullish statements regarding electric vehicles, despite having nothing to support her posture. Last November, Barra doubled down on her "one-million EV" claim, saying that not only will GM sell one million EVs in 2025, but it will do so profitably. That's certain to have caused laughs at Tesla and even Ford, another traditional carmaker chasing the EV market leadership. Unlike GM, though, Ford made clear steps toward achieving this goal, although its EV business is projected to lose about $3 billion this year.
And yet, despite Barra's bold prediction, GM barely sold 1,000 Ultium EVs in 2022 and another 1,000 in the first quarter of 2023. Its only volume EV, the Chevrolet Bolt, sold around 40 times more in each period, but it would be discontinued at the end of the year. GM said it wants to focus on Ultium-based EV production, with plans to produce 36,000 units by the end of the year. Despite GM's plans to boost EV and battery production, this looks increasingly unlikely. There's a reason for that, and Mary Barra may have revealed it at the Sanford Bernstein conference.
GM's CEO acknowledged Tesla's lead in EV technology, profitability, and scale, but she's still confident that this lead will not be permanent. Intriguingly, Barra said that battery costs are still too high to build profitable, mass-market EVs that cost between $30,000 and $40,000. Barra predicted that EV and gas-powered vehicle costs would equalize "sometime in the latter part of this decade... maybe a little longer."
This blatantly contradicts her previous statement about becoming profitable by 2025. Also, it puts the upcoming affordable Chevrolet Equinox EV, which should sell in that price bracket, in an awkward position. GM said it intends to sell the Chevy Equinox EV for as low as $30,000. If it does not make money even if sold at $40,000, we wonder how GM will sustain the transition to EVs into the next decade.
This is clearly a problem for GM and possibly for other traditional carmakers. Tesla is already selling the Model 3 below $40,000 right now, so making a profit at this price point is possible. The problem is that GM cannot do it, and that's Mary Barra's problem.
GM's CEO is known for her bullish statements regarding electric vehicles, despite having nothing to support her posture. Last November, Barra doubled down on her "one-million EV" claim, saying that not only will GM sell one million EVs in 2025, but it will do so profitably. That's certain to have caused laughs at Tesla and even Ford, another traditional carmaker chasing the EV market leadership. Unlike GM, though, Ford made clear steps toward achieving this goal, although its EV business is projected to lose about $3 billion this year.
And yet, despite Barra's bold prediction, GM barely sold 1,000 Ultium EVs in 2022 and another 1,000 in the first quarter of 2023. Its only volume EV, the Chevrolet Bolt, sold around 40 times more in each period, but it would be discontinued at the end of the year. GM said it wants to focus on Ultium-based EV production, with plans to produce 36,000 units by the end of the year. Despite GM's plans to boost EV and battery production, this looks increasingly unlikely. There's a reason for that, and Mary Barra may have revealed it at the Sanford Bernstein conference.
GM's CEO acknowledged Tesla's lead in EV technology, profitability, and scale, but she's still confident that this lead will not be permanent. Intriguingly, Barra said that battery costs are still too high to build profitable, mass-market EVs that cost between $30,000 and $40,000. Barra predicted that EV and gas-powered vehicle costs would equalize "sometime in the latter part of this decade... maybe a little longer."
This blatantly contradicts her previous statement about becoming profitable by 2025. Also, it puts the upcoming affordable Chevrolet Equinox EV, which should sell in that price bracket, in an awkward position. GM said it intends to sell the Chevy Equinox EV for as low as $30,000. If it does not make money even if sold at $40,000, we wonder how GM will sustain the transition to EVs into the next decade.
This is clearly a problem for GM and possibly for other traditional carmakers. Tesla is already selling the Model 3 below $40,000 right now, so making a profit at this price point is possible. The problem is that GM cannot do it, and that's Mary Barra's problem.
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