General Motors is investing tens of billions of dollars to produce new electric vehicles and, it hopes, catch up to Tesla.
But those ambitious goals appear distant. This year, the company is struggling to produce a new electric car battery pack meant for the electric vehicles it plans to introduce over several years.
On Tuesday, GM’s CEO, Mary Barra, said the delays were “disappointing” and stemmed from a supplier’s inability to deliver automated manufacturing machinery.
“We are working on multiple fronts to put this behind us,” she said in a conference call with analysts.
Many investors are increasingly worried about the company’s plans because electric vehicles are the fastest-growing segment of the auto industry and are the most important piece of Barra’s long-term strategy for GM.
The company’s share price was down about 4% Tuesday morning after the conference call.
A big fear for investors is that GM, Ford Motor Co. and other large automakers stand to lose customers as more drivers buy battery-powered cars. In China, Europe and California, where electric vehicles account for a significant and growing share of new car sales, once dominant automakers like Volkswagen and Toyota have been losing market share to Tesla and Chinese automakers like BYD.
Two years ago, Barra said, GM aimed to double annual revenue by 2030, to about $280 billion. Much of the increased business is supposed to come from electric vehicles and new revenue from software and services linked to those cars and trucks. The company has also set a goal of phasing out internal combustion models by 2035.
Right now, GM is “way behind where they should be,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, a consulting firm. “If they’re having trouble with the first wave of these new EVs, and if they can’t roll them out, that’s not good for the next wave of higher-volume models.”
In the first half of this year, GM built just 50,000 electric vehicles, and about 80% were Chevrolet Bolts that use an older battery pack made by a supplier. In the United States, GM sold fewer than 2,800 vehicles that used its new, modular Ultium battery packs, which are made at an Ohio factory that the company owns with LG Energy Solution. Two other Ultium factories are under construction, in Tennessee and Michigan.
Barra said GM was sticking with a previous forecast that it would make 400,000 electric vehicles in North America from 2022 to 2024, and it is expected to make 100,000 in the second half of this year. But she did not repeat an earlier prediction that the company would make more than 1 million in 2025, most of which were supposed to use Ultium technology.
Ultium battery packs are made from Lego-like modules that can be combined in different sizes. By using them in many vehicles, from compact cars to large pickups, GM hopes to reap economies of scale and gain a cost advantage over other automakers.
GM had said it would stop making the Bolt, but Barra said the company now planned to update the car with Ultium technology.
For now, the sluggish electric vehicle rollout isn’t hurting the company’s bottom line. GM said Tuesday that it made a profit of $2.6 billion from April to June, an increase of 52% from a year earlier. Revenue totaled $44.7 billion, up 25%.
GM’s chief financial officer, Paul Jacobson, said the company had benefited from higher prices and strong sales of trucks and SUVs in North America. The average price of the vehicles that GM sold in the second quarter was $52,000 — about $1,600 more than in the first quarter of the year.
GM sold 833,000 cars and trucks in North America in the second quarter, a 26% increase from a year earlier. In the rest of the world, it sold 147,000 vehicles, about 8,000 fewer than a year earlier.
Jacobson also said GM now expected to earn $9.3 billion to $10.7 billion this year, up from a previous target of $8.4 billion to $9.9 billion. The company also expects to reduce costs by $3 billion by the end of 2024, $1 billion more than an earlier forecast.
The company could struggle to hit its financial targets this year if the United Auto Workers go on strike. The company’s contract with the UAW ends in September, and management and union officials recently started negotiating a new deal. The union has taken a more aggressive posture to the talks under a new president, Shawn Fain.
GM currently offers only a few vehicles that use Ultium batteries. They include the Cadillac Lyriq, an SUV; the GMC Hummer, which has a starting price of about $90,0000; and large delivery vans made by a new division called BrightDrop.
This summer and fall, GM is supposed to add three electric Chevrolets: the Blazer and Equinox SUVs and an electric Silverado pickup. The company had previously said the Silverado would go on sale in the spring, but the truck is now not expected until the fall.
This article originally appeared in The New York Times.
By Neal E. Boudette
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