GM Doubles Down on Fresh EV Product, But It Has a (Gas) Ace Up Its Sleeve

The big spending, production hiccups, and software snafus are largely in the rearview mirror at General Motors, which is now ramping up its portfolio of electric vehicles and expecting them to be profitable as early as this year. There is more certainty and stability now than a year ago, GM Chairperson and CEO Mary Barra told investors today on a call to report first-quarter earnings. “I feel better with where are,” she said. “Everything is on track.”

GM spent historic amounts in recent years to launch its Ultium-branded based EVs across the Chevrolet, Cadillac, GMC, and Hummer brands so far, with electric Buicks coming soon. In addition to developing the new family of electric vehicles, plants have been retooled and GM now has two battery cell joint-venture plants in operation. It has also been writing its own software for these complex vehicles after previous issues on EV models.

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Production Nightmare Fixed

It has not all gone smoothly. There were problems with the automated machinery that assemble the modules that go into the battery pack in the production facility. GM could not build enough modules for projections, which meant vehicles trickled out in embarrassingly low numbers. High-capacity lines are now in place and with the logjam cleared, production is steaming ahead. Throughput of battery modules is up 300 percent since last fall, Barra said, and numbers will continue to accelerate over the course of the year. “The module ramp-up issue is behind us.” The Ultium cell facility in Spring Hill, GM’s second battery cell plant to go online, has begun shipping cells and is ramping up faster. It should be at full capacity by the end of the year. GM has been able to reduce cell costs significantly, said chief financial officer Paul Jacobson.

Production of EVs in North America has increased 74 percent. Deliveries of Ultium-based EVs were up 36 percent in the first quarter compared with a year ago. Sales of the Cadillac Lyriq are up 50 percent in the U.S. and the electric crossover now accounts for one in five Cadillac sales, second only to the Escalade. The Lyriq is outselling EV nameplates from European luxury brands, Barra said.

Software Snafus Addressed

The other issue: software problems that forced a stop-sale on the 2024 Chevy Blazer EV after customers reported problems with their screens and charging experience. Those issues have also been resolved and Barra said she is confident in the team’s new process and validation. The goal for the next couple of months is to launch with quality on time and the automaker is on track to do that. As new software migrates across more vehicles, GM plans to grow subscriptions and services. “I feel good with where are with software,” Barra said.

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GM currently has probably the best portfolio in its history, Jacobson said. March sales of full-size pickups outpaced the industry and sold with fewer incentives than the competition, Barra says, while the 2024 Chevrolet Colorado, the 2024 MotorTrend Truck of the Year, was the fastest-growing truck. The Chevrolet Trax and Buick Envista subcompact crossovers have proven to be strong sellers, a sign consumers seek more affordable vehicles which are getting harder to find in today’s marketplace.

Chronology of GM EVs on the Way

GM has started delivering the Chevrolet Blazer EV again, and the 2024 Equinox EV will be in showrooms this year, billed as the most affordable, long-range SUV with a starting price of $35,000 and it is eligible for the $7,500 consumer tax credit. The Equinox is rated at 319 miles of range. Upcoming EV launches expand the Cadillac lineup with the smaller Optiq crossover, the highly customized Celestiq, and the Escalade IQ full-size SUV.

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Also on tap are the 2024 Chevrolet Silverado EV RST and 2024 GMC Sierra EV full-size pickups. GM has increased their range by 10 percent to 440 miles, which GM says makes it top of its class and about 40 miles better than the median range for the segment. Anecdotally it has gone farther, and it also requires fewer charges when towing in a media test. More affordable trims for the Equinox, Blazer, and Silverado EVs will be available in the second half of the year to grow volume and market share. A new Ultium-based Chevy Bolt will arrive in late 2025, positioned as one of the most affordable EVs.

Barra said she is confident that continuing to scale EV production is the right move. After years of spending to prepare for the transition, production is scaling up and GM can focus on reducing cost and making money on them. The automaker has reached the point where it can spend less and achieve the same result. For example, GM has taken $12,000 in cost out of the Lyriq. GM still hopes to deliver 200,000-300,000 EVs this year, depending on demand, at which point GM will record variable profit on them.

Updating Models with Combustion Engines

Among vehicles with internal combustion engines, the redesigned 2024 Chevrolet Traverse, Equinox, and GMC Acadia are launching this quarter, and the 2024 Buick Enclave follows this summer with Super Cruise for the first time in a Buick. Chevrolet is already teasing the Corvette ZR1 coming this summer, with a pair of turbochargers. Later this year, GM has updates of the Chevy Tahoe, GMC Yukon, and Suburban SUVs with redesigned tech-focused interiors, more cameras for advanced safety systems, better ride and handling, and updated styling. GM has installed equipment at its Fort Wayne assembly plant to make the next-generation Silverado and Sierra with internal combustion engines with a launch late this year.

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Even Cruise, the self-driving division that was sidelined after a car dragged a pedestrian, is back on the road in Phoenix to validate the improved safety of its system. It is starting slow, with manual driving as Cruise updates its mapping and generates more data. It will progress to supervised hands-free driving and then unsupervised as GM works with regulators to restore trust and get the project back on track and expand to other cities. “We believe in the tech and are making it better,” Barra says, while also looking at outside investment.

GM First-Quarter 2024 Earnings

The product updates came on a call to report first quarter earnings. GM reported a strong quarter, with a 24 percent increase in net income, prompting the automaker to raise its profit forecast for the year. Net income was $2.9 billion for the first three months of the year on $43 billion in revenue. Adjusted earnings grew a modest 1.8 percent to $3.9 billion. North America continues to drive profit, with $3.8 billion in revenue, up 7.4 percent. Revenue was a record for a first quarter at $36.1 billion, up almost 10 percent.

GM now expects adjusted earnings for the year to fall between $12.5 billion and $14.5 billion with net income of $10.1 billion to $11.5 billion. The automaker wants to reduce its fixed costs by $2 billion by the end of the year through voluntary employee buyouts and cutting back on marketing. GM will do everything it can to keep the momentum going, Barra says. 2024 should be a strong year for the General.