General Motors Company said on Thursday that its electric vehicles will be “solidly profitable” by 2025, when it plans to build 1 million such vehicles a year in North America and 1.2 million batteries daily in the U.S.
GM CFO Paul Jacobson told reporters ahead of the company’s investor day in New York that the automaker will maintain a North American profit margin of 8 percent to 10 percent in the coming years and that the profitability of electric vehicles will be nearly equal to the margins of internal combustion vehicles with the advantage of additional scale. and future federal tax credits.
The company designs low- to mid-single-digit EV margins in 2025, including emissions credits and software and aftermarket revenue. GM expects to generate more than $50 billion in EV revenue and $225 billion in total revenue by 2025. Its global revenue last year was $127 billion.
“This is really just the beginning for us,” Jacobson said. “And when you think about the EV tax credit on top of that — we’re going to be talking about $3,500 to $5,500 per vehicle, or 5 to 7 basis points of margin on the EV program, which puts us in a position where we believe we will have Margin similar to ICE in the period of 2025”.
GM has committed $35 billion to developing electric and autonomous vehicles by 2025 and is looking to expand its passenger car portfolio emission-free in North America by 2035. The automaker is building four plants in the U.S. to produce its own Ultium batteries in a joint venture with LG Energy Solution, and has outlined plans to build five North American plants to assemble electric vehicles starting in 2025.
“GM’s ability to grow electric vehicle sales is the payoff for years of investment in research and development, design, engineering, manufacturing, our supply chain and a new electric vehicle customer experience designed to be the best in the industry,” said GM CEO Mary Barra. in a statement on Thursday. “Our multi-brand, multi-segment, multi-price EV strategy gives us incredible leverage to grow revenue and market share, and we believe our Ultium platform and vertical integration will enable us to continually improve battery performance and cost.”
Jacobson said GM’s annual capital spending through 2025 will range from $11 billion to $13 billion, a reflection of the automaker’s aggressive plans to add electric vehicle capacity.
“We believe that by 2025 the electric vehicle market will be even larger than the 17 percent share of the industry that many other forecasters are predicting,” he told reporters. “And we’re going to do it with great design, quality, performance and a better price than anyone else can offer. And it’s really built around the flexibility of Ultium.”
GM said U.S. battery capacity should top 160 gigawatt-hours by mid-decade. At the same time, the cost of battery cells should drop from about $87 per kilowatt-hour in 2025 to less than $70 per kilowatt-hour in the second half of this decade, Jacobson said.
The company predicts that total revenue will increase 12 percent annually through 2025, with growth coming not only from electric vehicles but also from software, its BrightDrop electric van unit, and Cruise, the self-driving car company majority owned by GM. Jacobson said.