General Motors hopes to catch up with Tesla by investing tens of billions of dollars in producing a series of new electric vehicles.
But the automaker appears far from reaching those ambitious goals. The company has struggled this year to produce new electric vehicle battery packs for electric vehicles it plans to introduce over the next few years.
“It’s been a bit of a challenge,” Chief Financial Officer Paul Jacobson said on a conference call with reporters on Monday afternoon.
GM built just 50,000 electric vehicles in the first half of this year, most of which used old battery packs made by suppliers. GM’s sales in the U.S. sold fewer than 2,800 vehicles using the new modular Ultium battery packs made at its Ohio plant jointly owned by LG Energy Solutions. He has two other Ultium factories under construction in Tennessee and Michigan.
GM once said it planned to produce 400,000 electric vehicles in North America between 2022 and 2024, and more than 1 million by 2025, most of which would use Ultium technology.
Jacobson said the company expects to produce 100,000 battery-powered vehicles in the second half of 2023 and will provide more information on production plans during a conference call with financial analysts on Tuesday.
So far, the delay in deployment has not had a negative impact on the company’s earnings. GM said Tuesday that its April-June profit was $2.6 billion, up 52% from a year earlier. Revenue increased 25% to $44.7 billion.
Jacobson said the company is benefiting from higher prices and strong sales of trucks and sport utility vehicles in North America. In the second quarter he said the average price of a vehicle sold by GM was $52,000, about $1,600 higher than in the first quarter of the year.
GM sold 833,000 cars and trucks in North America in the second quarter, up 26% from a year ago. In other countries, 147,000 vehicles were sold, down about 8,000 from the same period last year.
Strong earnings are welcome, but many investors are growing more concerned about the company’s electric vehicle strategy, as electric vehicles are the fastest-growing segment of the auto industry.
A big concern for investors is that major automakers such as GM and Ford Motor Co. could quickly lose customers as more drivers buy battery-powered vehicles. In China, Europe and California, electric vehicles have already gained a large share of new car sales, but in the past, major automakers such as Volkswagen and Toyota lost market share to Chinese automakers such as Tesla and BYD.
Two years ago, GM Chief Executive Mary T. Barra said the company aims to double annual sales to about $280 billion by 2030. Much of the growing business will come from electric vehicles, and new revenue streams are expected to come from the software and services associated with those cars and trucks. The company has also set a goal to phase out production of internal combustion models by 2035.
At the moment, GM is “way behind where it should be,” said Sam Fiorani, vice president of global vehicle forecasting at consulting firm AutoForcast Solutions. “If we have problems with the first wave of these new EVs and can’t deploy them, that’s not good for the next wave of higher volume models.”
GM currently offers only a small number of niche vehicles that use Ultium battery packs. Among them is the Cadillac Lyric SUV. The starting price for the GMC Hummer is around $90,000. and a large delivery van manufactured by a new division called BrightDrop.
This summer and fall, GM plans to add three electric Chevrolets: the Blazer and Equinox SUVs, and the Silverado electric pickup. The company previously said the Silverado would go on sale in the spring, but it’s now not expected to hit the market until the fall.
