Electric News Hubb
Advertisement
  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us
No Result
View All Result
  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us
No Result
View All Result
Electric News Hubb
No Result
View All Result
Home Electric Vehicle

Can GM electric vehicles turn a profit by 2025?

admin by admin
November 14, 2022
in Electric Vehicle



General Motors (GM) EV push will soon pay off. GM investors are gearing up for an update from CEO Mary Barra this week that includes a mention of the automaker turning a profit on its electric vehicles in 2025.

As the race to claim EV market share heats up, many automakers are taking significant losses to scale production. For example, Rivian posted a negative gross profit of nearly $1 billion in the third quarter as the young EV maker builds its manufacturing capabilities.

Meanwhile, the company made a comment in its Q3 letter to shareholders that resonates across the industry with the electric vehicle transition underway, stating:

As we produce vehicles at low volumes on production lines designed for higher volumes, we have and will continue to experience negative gross profit related to labor, depreciation, and overhead costs.

Start-ups and legacy automakers look to mirror the success Tesla is having with pure EV models. Tesla’s automotive gross profit (percent of profit of each new vehicle sale) was 27.9% in Q3.

Meanwhile, although GM’s revenue reached a record $41.9 billion in Q3, its margins were much lower, and even more so with its electric vehicles.

GM posted automotive revenue of $38.7 billion, yet the cost to make and sell these vehicles reached $35.6 billion, for a gross profit of $3.1 billion or just over 8%.

As GM scales EV production, the company expects to continue taking a loss in that segment. However, by 2025, the automaker expects this to change – this is the same year Mary Barra is confident GM will catch Tesla, when the company is set to turn a profit on its electric vehicles.

GM-electric-vehicles-profit
electric Chevy Bolt EUV (Source: Chevrolet)

GM to earn a profit on electric vehicles in 2025

According to a report from Bloomberg, sources familiar with the matter claim GM is planning to update investors on November 17 (GM Investor Day) that the company expects its electric vehicles will turn a profit in 2025.

Mary Barra will discuss the automaker’s battery investments and how it plans to build the program. However, with GM’s plans to provide an “EV for everyone” on its way to becoming one of the largest electric vehicle makers, investors are eagerly awaiting how GM will do so profitably.

Well, according to sources who did not want to be named because the presentation is not yet public, 2025 will likely be the year GM will make electric vehicles for a profit.

After several years of building its production capabilities and supporting supply chains, GM is ready to start earning a profit on its EVs. GM, together with LG, have four battery plants coming online in the US, with at least three by 2024.

With several highly anticipated EV models coming from GM next year, including the $30,000 Chevy Equinox EV and electric Silverado pickup, the automaker expects to significantly ramp production volume.

At the same time, GM still expects its electric vehicles to generate lower margins than their ICE counterparts as supply chains and production ability transitions over. David Whiston, a Morningstar analyst, commented, stating:

GM won’t sell at the prices of Teslas, so maybe they won’t match the profits. But they should be able to show good margins. If Tesla can do it, there’s no reason GM, Ford and others can’t do it. They’re just behind on product lineup and manufacturing.

Mary Barra said on the company’s Q3 earnings call this week’s investor update will “go deeper into the second phase of our EV growth strategy.” Stay tuned for updates!

Electrek’s Take

I would expect GM to start generating a profit on its electric vehicles by 2025, with the company going all in on electric. However – and this is big – it will also be costly for GM to wind down sales and operations of its ICE vehicles.

New and used gas-powered vehicles will likely continue seeing their prices drop as electric vehicles gain market share. As electric vehicles and the supporting infrastructure becomes cheaper and more accessible, ICE values will likely fall.

Many automakers, like GM, have financial divisions that rely heavily on the residual value of their vehicles. If auto prices continue slipping, GM won’t be able to sell its cars near what it valued them, which could result in substantial losses.

What does everyone think? Will GM make EVs profitably in 2025? Let us know in the comments.

FTC: We use income earning auto affiliate links. More.



Source link

Previous Post

2024 Volkswagen ID. Aero Spied Again, Shows Big Center Touchscreen

Next Post

United Rentals to acquire Ahern Rentals for $2 billion

Next Post

United Rentals to acquire Ahern Rentals for $2 billion

Recommended

Climate Driven Heat Waves Break Records In Asia & Europe

May 10, 2023

Tesla (TSLA) crushes expectations with deliveries of 466,000 EVs

July 3, 2023

Don't miss it

Electric Vehicle

Quick Charge Podcast: September 28, 2023

September 29, 2023
Electric Vehicle

Revealed With 130 Miles Of Range, Vehicle-To-Load

September 29, 2023
Electric Vehicle

EU Truck Industry Could Lose 11% Of Sales To Tesla & BYD — New Study

September 28, 2023
Electric Equipments

Maximum load weight meets minimal noise

September 28, 2023
Electric Vehicle

Quick Charge Podcast: September 27, 2023

September 28, 2023
Electric Vehicle

Simulating Torque Ripple for Motor Control System Design Free On-Demand Webinar

September 28, 2023

© Electric News Hubb All rights reserved.

Use of these names, logos, and brands does not imply endorsement unless specified. By using this site, you agree to the Privacy Policy and Terms & Conditions.

Navigate Site

  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us

Newsletter Sign Up

No Result
View All Result
  • Home
  • Electric Equipments
  • Electric Vehicle
  • Contact us

© 2022 Electric News Hubb All rights reserved.