General Motors’ electrification strategy, centered on the company’s promise of an “all-electric future,” saw further augmentation last week as GM’s CEO Mary Barra promised an increase in financial investments in electric vehicles (EVs) along with promises of additional hiring in order to execute its plans.
Speaking at the virtual Barclays Global Automotive Conference, GM announced the company promises to spend $27 billion through 2025 on both electric cars and autonomous vehicles (AVs), up from the $20 billion it had promised prior to the coronavirus pandemic.
GM also expects to hire 3,000 people to focus on the technology underpinning the company’s aggressive direction, particularly in the areas of electrical systems, infotainment software and control engineering.
Despite the challenges faced during the pandemic, GM’s efforts have continued apace, and in the latest announcement the company says its work on EVs has accelerated during the course of the year while highlighting new milestones it expects to reach.
These efforts will manifest in the promise to launch 30 EVs around the world by 2025, seeing more than two thirds of those being available in North America, with vehicles across all GM brands: Cadillac, GMC, Chevrolet and Buick. TriplePundit has already covered recent announcements of Cadillac’s new electric Lyriq, and most recently GMC’s Hummer EV, the first of many next-generation electric vehicles.
Underpinning the push to electrification is the company’s Ultium battery technology, which being modular, will allow flexibility in deployment across a diverse range of vehicles and use cases.
Already - and it must be noted, prior to any of GM’s Ultium powered vehicles hitting showroom floors - the company says it is now working on the second-generation of Ultium batteries, which the automaker says will be both cheaper and able to provide a superior driving range.
In context, GM says by mid-decade battery costs will be 60 percent lower than batteries in use today in the Chevrolet Bolt EV, with twice the energy density expected. This will bring the company’s EVs closer to price parity with internal combustion engine vehicles, while edging up expected driving ranges to as far as 450 miles per charge.
Most importantly, GM insists these improvements in battery technology will allow Ultium EV vehicles to be profitable from the first generation on, which is absolutely imperative considering the company promises 40 percent of its vehicle entries will be EVs in the U.S. by the end of 2025.
Significantly, too, is GM’s assertion that the Ultium platform will reduce vehicle development timelines drastically. Using its experience in developing the GMC Hummer EV, the company says whereas 50 months was previously the benchmark to develop a vehicle, it took just 26 months to produce the Hummer EV. This means GM expects to be able to bring new vehicles to market faster than planned.
CEO Barra wants to place GM in a leadership position, saying, “climate change is real, and we want to be part of the solution by putting everyone in an electric vehicle.” But the company is not alone in bolstering investment in EV technology and will likely face stiff competition, not just from Tesla, but other traditional automakers as well.
For example, of Volkswagen’s promised $177 billion investments in technology in a comparable time period, the company is allocating 73 billion Euros (roughly $86 billion) towards EV and AV development.
But it’s not just a matter of throwing money at it, because the proof of concept will be how well these companies execute. VW has had teething troubles with the launch of its ID3 EV due to software problems, and the market still awaits the first delivery of an Ultium powered GM vehicle.
Then there is the question as to whether there is sufficient demand for GM’s portfolio of electric vehicles; a significant risk since it will make up almost half the company’s vehicle offerings by mid-decade. Without doubt, the stakes are high in this game and GM’s commitments should be applauded at the same time as we appreciate the risk being taken in reading the tea leaves.
The stock market indicates that the strategy is the right one, however. Even before GM announced the increased level of investment in EVs to $27 billion by 2025, UBS analysts elevated GM’s stock price target to $50 per share, in large part due to an EV focus. At the time of writing, the company’s stock is at a 52-week high and vanishingly close to a five-year high.
UBS analyst Patrick Hummel says the market will see GM as more of an “aggressive” electric vehicles manufacturer over the next year or two, instead of a slow-growth manufacturer like the rest of the Detroit carmakers and predicts, “With a focus on crystallizing value of its EV strategy...GM will likely get more credit for being a relative winner in the transition.”
We look forward to seeing the proof of the pudding, when the rubber hits the road.
Image credit: Chevrolet Media Relations
Phil Covington holds an MBA in Sustainable Management from Presidio Graduate School. In the past, he spent 16 years in the freight transportation and logistics industry. Today, Phil's writing focuses on transportation, forestry, technology and matters of sustainability in business.