CEO says profit margins haven’t peaked on traditional internal combustion engine powered vehicles, and its EV sales are ramping up
General Motors chief executive Mary Barra has said that the company is looking for ways to bring down the cost of its electric vehicles.General Motors CEO Mary Barra is seeking to soothe shareholders’ worries that lagging demand for electric vehicles and perceived peak demand for gasoline-powered trucks will create a rough road ahead for the auto maker.
Barra emphasized at an investor day in Spring Hill, Tennessee, that profit margins have not peaked on traditional internal combustion engine powered vehicles, and its EV sales are ramping up, something sources previously told Reuters would be outlined. “I believe before the day is done, that you'll agree that GM has plenty of upside relative to the consensus view that the auto industry has reached peak profitability,” Barra told investors. During the event, investors also expect more details on the automaker’s restructuring in China, as well as updates around its Cruise autonomous vehicle operations, which has struggled since an accident last fall where one of its self-driving cars dragged a person. The slower-than-anticipated EV transition has caused many automakers to adjust plans, including GM and cross-town rival Ford, and GM’s messaging on Tuesday is expected to focus less on aggressive growth and more on stability. That will contrast with years past as GM set ambitious targets to rival Tesla, including in 2021 when Barra said GM would double revenue to about $280 billion by 2030. While EV demand has lagged since Barra set that lofty goal, she assured investors that profits on battery-powered models are closer than they think and there is room for profit margin growth with ICE vehicles. She said GM still expects EVs to achieve variable profitability by year-end, which is revenue minus costs like labour and materials. Rory Harvey, GM’s president of global markets, told Reuters last week that the automaker’s third-quarter sales, which included strong gains on its EVs, were “a positive platform leading into investor day.” Barra has said that GM is looking for ways to bring down the cost of its EVs, and last month the carmaker and Hyundai signed a non-binding memorandum of understanding to consider ways to “leverage their complementary scale and strengths to reduce costs and bring a wider range of vehicles and technologies to customers faster.” One focus at GM’s investor day is its Ultium Cells battery technology, which investors saw during tours of the battery and EV assembly operations at the company’s Tennessee plant. The meeting is the first since 2022, after GM delayed the event last year to focus on resolving a strike by the United Auto Workers union.
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