GM’s Barra Outlines ICE-EV Synergy

General Motors signs a memorandum of understanding with Honda that increases cooperation in R&D, purchasing, connected services and battery and vehicle development. GM will be able to draw on Honda’s expertise to maintain its lineup of ICE vehicles.

Joseph Szczesny

June 4, 2021

2 Min Read
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Battery-electric GMC Hummer SUV to be built at GM’s Factory Zero in Detroit and Hamtramck, MI.General Motors

General Motors will use its working agreement with Honda to help maintain the internal-combustion-engine side of the business as it transitions to an all-electric future by the middle of the next decade, GM Chairman and CEO Mary Barra says.

Barra (pictured, below left) also says during a virtual event with analysts from Credit Suisse that GM is preparing to increase its investment in battery-electric vehicles.

The automaker is touting its plans to spend $27 billion by 2025 as it develops a broad portfolio of BEVs, but Barra says GM is looking to increase the company’s spending on EVs even as it introduces vehicles such as the Chevrolet Bolt EV and Bolt EUV, the GMC Hummer pickup and SUV and the Cadillac Lyriq CUV.

“We think we’re extremely well positioned in the EV space. So, stay tuned in the future,” Barra says without offering details of the additional spending.

GM’s EV programs are cost-effective and the automaker has gained an edge in design thanks to its Ultium battery platform, which enables development of a range of vehicles of different size and various levels of power and performance, Barra tells the analysts. 

Barra, however, says the popularity of GM’s ICE-powered fullsize pickups and SUVs is generating the cash flow the automaker needs to fund investments in EVs over the next decade.   

Through the memorandum of understanding it recently signed with Honda, GM will be able to draw on the Japanese automaker’s expertise to maintain its lineup of ICE vehicles, which GM expects to remain competitive, Barra says. 

GM and Honda have signed what is described as a non-binding memorandum of understanding that increases cooperation in a range of activities, such as R&D, purchasing and connected services as well as battery and vehicle development.  

Paul Jacobson, GM’s chief financial officer, says the automaker’s goal is to maintain the healthy margins it now enjoys on pickups and SUVs with gasoline and diesel engines as it transitions to electrification. As the cost of batteries drops, the margins on GM’s new fleet of electric vehicles will reach 10%, he predicts.  

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Jacobson also says GM expects to increase its revenue from selling subscription services to customers, particularly those purchasing or leasing EVs. 

Access to charging also will be critical for developing the EV market over the next decade, Barra says. Charging will be one of the services to which GM expects to connect customers, she adds. 

The transition to EVs will require a higher level of service at the dealership and through the purchase experience, and GM has great dealers, Barra says. “We see our dealers as a huge asset,” she says, noting the shift to EVs will require greater emphasis on customer relations.  

The good news, Barra says, is that customers surveyed by GM have a much better understanding of what an EV can do for them than they did just 18 months ago, which bodes well for the future. 

 

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