General Motors expects its electric vehicles to make a profit in North America by 2025 as the company scales EV capacity in the region to more than 1 million units annually.
“GM’s ability to grow EV sales is the payoff for many years of investment in R&D, design, engineering, manufacturing, our supply chain and a new EV customer experience that is designed to be the best in the industry,” Chairman and CEO Mary Barra says during a presentation to investors.
Growing sales of battery-electric commercial vehicles, lower distribution costs via expanded online sales, increased software revenue opportunities and new clean-energy tax credits also will enhance GM’s bottom line, she says.
EVs are expected to account for 20% of GM’s U.S. sales in 2025 with multiple entries in the pickup, SUV and luxury segments. But, as has been the case throughout the dawn of the EV era, GM’s EV growth is supported by a highly profitable portfolio of internal-combustion-engine vehicles in North America.
Paul Jacobson, GM executive vice president and chief financial officer, says the automaker will have multiple entries in the pickup, SUV and luxury segments which represent about 70% of EV industry volume, including the Cadillac Lyriq and battery-electric versions of the GMC Sierra (pictured, below) and Chevrolet Silverado, Blazer and Equinox.
“We’ve built the foundation to rapidly scale our EV portfolio, make it profitable and maintain strong margins during a period of high investment,” Jacobson says. He declines to provide an “average” transaction price for GM’s EV portfolio.
The ICE-powered ’24 Chevrolet Silverado HD and GMC Sierra HD, and the new Chevrolet Colorado and GMC Canyon midsize pickups, will be available in the first half of 2023, GM says.
The automaker expects to maintain its historical EBIT-adjusted margins of 8%-10% in North America through this growth investment period.
GM projects full-year 2022 adjusted automotive free cash flow will increase to $10 billion-$11 billion from its previous guidance of $7 billion-$9 billion. The automaker projects 2022 EBIT-adjusted for the full year will be in a range of $13.5 billion-$14.5 billion, compared to its previous guidance of $13 billion-$15 billion.
GM’s revenue is expected to grow at a 12% compound annual rate through 2025, reaching more than $225 billion as EV volumes and software revenue grow. Revenue from EVs alone is expected to exceed $50 billion in 2025.
GM expects to build 400,000 EVs in North America from 2022 through the first half of 2024 before reaching the 1-million-unit mark in 2025.