GM is in a good position despite the economics of new electric vehicles

General Motors Company Leader and CEO Mary Barra spoke in an interview about the automaker’s future plans for electric vehicles, saying the company is well positioned to weather the economic storm. GM is launching several electric vehicle models and supporting energy products that Barry believes will be in high demand regardless of the state of the economy.

With interest rates rising at historic rates, many are wondering how this will affect the auto market.

U an interview Yahoo’s Mary Barra talked about GM’s potential as consumer preferences shift toward electric vehicles, adding that electric vehicles are an opportunity for “significant growth.” She also says that electric vehicles are more than just “getting you from A to B” as they can be used as powerful energy sources.

GM is taking its battery technology by turning it into a newly formed business called GM Energy to offer clean energy and storage solutions to residential and commercial customers.

Ultium Home, a residential energy management company, enables consumers to use vehicle-to-home (V2H) technology in their electric vehicles, creating an energy management system and microgrid. GM says it’s developing electric cars that can keep the lights on for up to 21 days.

Asked how big a business GM Energy could be, Barra says the acceleration of electric vehicle adoption and renewed interest in sustainable energy could create an opportunity for its energy business to grow.

I like it Ford and TeslaGM is focusing on services it can offer outside of making electric cars to diversify its revenue streams if the economy weakens and auto demand slows.

The past few years have been favorable for the auto industry as strong demand and limited supply have led to favorable margins and growth. Bara says that with several new electric vehicle launches in key market segments, the company will ensure that it can finance the company regardless of the economy.

How GM’s Future Electric Vehicle Releases Can Mitigate the Economic Downturn

GM already has some of the most affordable electric cars on the market with Chevy Bolt EV and Bolt EUVwho just had his own the best quarter with 15,000 shipped in the US. The automaker also offers electric cars of a higher class in GMC Hummer EV and Cadillac Lyriq.

Meanwhile, GM explained its strategy in September provide EVs everywhere, launching a model in every significant automotive segment. GM models coming to market include:

Bara notes that the Equinox EV is launching in the segment with the highest volume and already has a positive response. A big reason for the interest is the price of around $30,000, which Barra calls the “sweet spot” in the market.

Referring to the economy, Bara states:

I think we’re listening to what everybody else is saying around the world, and so we’re gearing up for next year, which is going to look more like we’re going to have a little bit of — it’s actually going to be more demand, but a little bit less than what which we think because we’re going to be conservative, make sure we set the cost structure that way. So, if things go better, we’re in a good position.

Most importantly, she adds, with so many EV launches, GM is prioritizing future financing to ensure the company’s success, regardless of the state of the economy.

GM plans to sell one million electric vehicles with an investment of more than $35 billion by 2025. According to Barry, the automaker has entered into supply agreements to achieve this goal. the second battery factory started working in Ohio last month.

Electrek’s Take

While larger and more expensive electric models are in high demand right now, when the economy slows and consumers cut back on spending, smaller and less expensive electric cars will likely lose their luster.

For example, in a similar economic scenario (high inflation, the Federal Reserve tightens monetary policy) in the early 1980s. car sales plummeted 20% y/y in 1980 as consumers cut back on spending. The fallout prompted a shift to smaller, more fuel-efficient cars. This also happened during the great financial crisis of 2008-2009.

This is a segment GM is targeting with its cost-effective, one-size-fits-all approach. If they can successfully launch and expand electric vehicle production, GM will be in a good position to weather the economy.

At the same time, with several long-awaited electric car launches to come, Barra is right to focus on creating alternative sources of income. When an economic downturn hits, GM should already know that cash is king, and this will allow them to continue to fund operations as they prepare for the next chapter in the auto industry.

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