GM Will Sit Out Tesla-Ford EV Price War, CEO Barra Says

General Motors will tighten its belt during 2023 with plans to cut costs by $2 billion, but it won’t join Ford and Tesla in cutting the prices of its electric vehicles, company executives say.

“We think we’re pricing where we need to be,” CEO Mary Barra says during a conference call with analysts following the release of GM’s financial report for the fourth quarter.

GM RenCen

GM is shoring up its ability to manufacture batteries for EVs, Barra says, citing the automaker’s equity investment in Lithium Americas this week to develop the Thacker Pass Mine in Nevada, the largest known source of lithium in the U.S. and third-largest in the world.

Under the agreement, GM will invest $650 million in Lithium Americas, which the company says is the largest-ever investment by an automaker to produce battery raw materials. 

Lithium Americas, a Canadian-based company with projects under way in Argentina and the U.S., estimates the lithium extracted and processed from the project can support production of up to 1 million EVs per year.

"Direct sourcing critical EV raw materials and components from suppliers in North America and free-trade-agreement countries helps make our supply chain more secure, helps us manage cell costs and creates jobs," Barra notes.

Under the recently signed Inflation Reduction Act, using material sourced in the U.S. has tax advantages for GM which could total $300 million annually by mid-decade, the company says.

Lithium carbonate from Thacker Pass will be used in GM's proprietary Ultium battery cells. Lithium is a key material in lithium-ion batteries and stands up well to repeated charging and discharging, delivers higher energy density, and has more usable capacity than other battery types, the company says.

Production at Thacker Pass (pictured, below) is projected to begin in the second half of 2026.

Thacker Pass lithium mine site (BLM) Picture1

GM has announced four U.S. cell plants with annual capacity of 160 gWh, including the Ultium Cells joint-venture plant with LG Energy Solution in Warren, OH, which is in production, and additional JV sites in Spring Hill, TN, and Lansing, MI, that are scheduled to open in 2023 and 2024.

GM currently is building EVs at two plants in Michigan, one in Tennessee and one in Ontario, and its suppliers are investing to create a robust North America-focused supply chain for EV raw materials, processed material and components, with major projects under way in California, Texas, Ohio and Quebec.

“By leveraging U.S.-made battery cells produced by our Ultium Cells joint venture and the scalability and flexibility of the Ultium Platform (pictured, below), we are accelerating production of the Cadillac Lyriq, GMC Hummer EV and BrightDrop Zevo 600, and we will launch exciting vehicles like the Chevrolet Silverado EV, Blazer EV and Equinox EV,” Barra says in a letter to GM shareholders.

GM ultium battery

“This keeps us on track to produce 400,000 EVs in North America from 2022 through the first half of next year.”

Paul Jacobson, GM’s chief financial officer, says the company’s financial position is strong and getting stronger “We expect incentives to increase,” he says. “But demand is very strong.”

GM expects core auto operations to perform “at a consistently strong level” in 2023, with full-year net income attributable to stockholders of $8.7 billion-$10.1 billion, EBIT-adjusted income of $10.5 billion-$12.5 billion, and EPS-diluted and EPS-diluted-adjusted earnings of $6.00-$7.00 per share, Jacobson says.

GM also expects strong cash flows from automotive operations for the calendar year, including net automotive cash provided by operating activities of $16.0 billion-$20.0 billion and adjusted automotive free cash flow of $5 billion-$7 billion.

During the fourth quarter of 2022, GM’s earnings per share of $2.12 surpassed analysts’ estimates by $0.44 per share while revenue in the quarter increased 28% to $43.1 billion.