General Motors Staying the Course on Electric Vehicles

General Motors not only has faith in its goals for electric vehicles, it also has a strategy for competing in the lower end of the market for new vehicles that have largely been abandoned by its traditional rivals from Detroit.

Chairman and CEO Mary Barra predicts during the company’s Investors’ Day program at the GM manufacturing complex in Spring Hill, TN, that the company’s EV business will be profitable in the fourth quarter. “EV profitability is arriving much faster than people thought,” she says.

 GM expects to produce about 200,000 BEVs including the Cadillac Vistiq, along with eight new or redesigned SUVs with traditional internal-combustion engines in North America in the quarter.

President Mark Reuss says the key to GM’s future is a renewed emphasis on simplicity. “As you reduce complexity of building a vehicle, you reduce the complexity of buying vehicles,” says Reuss. This emphasis on simplicity is helping GM reduce its fixed costs by $2 billion and enable it to adjust to rising labor costs brought on by the contract signed last year with the UAW.

GM is eliminating 2,700 parts numbers, which translates into a 10% reduction in parts numbers per vehicle and an 80% reduction in “buildable combinations in the Cadillac Lyriq” BEV, Reuss notes.

GM’s strategy also is simplifying the automaker’s offerings at the low end of the market with vehicles such as the Chevrolet Trax (pictured, below), which now offers only one engine choice and front-wheel drive only.

“Moving away from multiple engine transmission and drive configurations was a huge savings for us,” says Reuss. “Also, I am proud to say we are now profitable in entry-level segments or what I like to call the first-time GM customer segments. Some of our competitors have simply abandoned them because they cannot make a business case for being in the segments. We can. We are happy to have those customers on board,” he says.

Reuss adds GM is seeing about 10%-per-vehicle earnings improvement from the prior generation in new midsize CUVs such as Chevrolet Traverse, GMC Acadia and Buick Enclave.

The 2026 Chevrolet Bolt will make money for GM, says Reuss, who teased a photo of the future BEV. The price is not final yet, but the target is about $29,000 and it will be just one member of a family on the Bolt platform, including an even lower-cost option.

“EVs are proving for us to be a growth market,” he says, noting 60% of buyers are new to GM and claiming Lyriq is outselling comparable models from BMW, Mercedes and Audi in California.

Kurt Kelty, one of a trio of senior executives plucked from Silicon Valley in recent months to direct GM’s battery, manufacturing and software development, says GM is moving aggressively to make its battery-making operations more efficient by raising productivity, leveraging the company’s growing scale and capturing lower raw-materials costs.

GM plans to enhance that development by building a battery cell center at its global tech center in Warren, MI. “Because we can build our own cells, we have the potential to integrate new cell technology into full-size cells without relying on outside suppliers,” says Kelty, a former Tesla executive who is executive vice president in charge of GM’s effort to make EV batteries more affordable.

Kelty also says GM is dropping the Ultium name from its battery packs as it now makes prismatic-shaped and cylindrical cells as well as the pouch-type cells that have carried the Ultium name since 2020. The Ultium name will continue to be used by the cell manufacturing joint venture.

Dave Richardson, a former Apple executive who is responsible for GM’s software development, says the automaker’s goal is to open doors for new services such as over-the-air updates and reduced complexity in vehicles. Recent reductions in personnel have simplified team structure and brought greater focus, he says. “We had been operating with too many configurations,” he says, echoing Reuss. “By reducing complexity by 75% by standardizing features, we see a major improvement in software quality, creating more opportunity from subscription revenue.”

Jens Peter (JP) Clausen, GM’s new head of global manufacturing and sustainability, worked at Lego and Tesla before succeeding Gerald Johnson, who retired in March after a 44-year career at GM. “We are making significant strides in cell manufacturing,” he says. “Our vertically integrated approach to EV manufacturing helps us reduce costs.”

 Paul Jacobson, chief financial officer, says in 2025 progress on making batteries less expensive will produce a $2 billion to $4 billion “tailwind” that will move GM’s BEV business toward profitability. However, Jacobson says GM is not offering any comprehensive guidance on the financial future of its battery technology and he acknowledges growth in demand for BEVs is slower than GM anticipated at the start of 2023.

But with all the focus on BEVs and the development of hybrids and alternative-fuel vehicles, the internal-combustion-engine business remains a fundamental pillar of GM’s business and earnings growth. “The ICE business has a long tail,” Jacobson says.