On Thursday, General Motors (NYSE:GM) revealed its plans to significantly reduce manufacturing expenses for electric vehicles (EVs) by 2024 while simultaneously increasing production of more profitable vehicle models. GM’s Chief Financial Officer, Paul Jacobson, expressed confidence during a Barclays event, outlining projections for improved EV profit margins and aiming for mid-single-digit earnings before interest and taxes margin goals by 2025.
🔑 Content Highlights:
✨ GM’s bold move to reduce EV manufacturing costs by $20,000.
✨ Aiming for 1 million EVs by 2025, with a shift to high-profit models like the Hummer.
✨ Billion-dollar blueprint unveiled: share buybacks, increased dividends, and reduced expenditures.
✨ Strategic partnerships with LG Energy Solution and Samsung SDI for economical battery production.
✨The visionary plan to dominate the electric vehicle market and redefine the future of driving.
Jacobson emphasized GM’s commitment to being the best version of itself rather than attempting to emulate Tesla. To reassure investors, GM recently announced measures such as $10 billion in share buybacks, a 33% increase in dividends, and a substantial reduction in expenditures within its autonomous vehicle division, Cruise.
While GM had initially set a goal of producing 400,000 EVs from 2022 to mid-2024, it recently retracted this target. Jacobson stated that there would be a “meaningful” increase in EV production next year, with a goal of achieving 1 million units of EV capacity by 2025.
GM plans to reduce fixed costs for EVs in 2024, targeting a roughly $20,000 decrease per vehicle compared to 2023. The company considers battery production tax credits and reduced greenhouse gas emissions when evaluating EV profitability.
In 2024, GM anticipates a shift towards manufacturing more high-profit EVs like the Hummer and the Blazer, while temporarily halting the assembly line for the Bolt and introducing the next generation of Bolt models. The majority of the 56,000 EVs sold by GM in the U.S. this year are Chevrolet Bolts.
To lower battery expenses, GM plans to cut costs on raw materials and reduce dependence on expensive imported battery cells. Partnering with LG Energy Solution, GM is constructing three battery cell plants in the U.S., with one already operational in Ohio.
In April, GM announced plans for a joint venture battery plant with Samsung SDI, aiming to introduce more economical batteries to the market from 2026 onwards. GM’s shares were up 0.78% in afternoon trading on Thursday.