Despite challenges from the new administration, Detroit-based General Motors is going full speed ahead with its plan to manufacture more electric vehicles. Bloomberg’s David Welch discussed the strategy with Holly Quan of KCBS Radio this week, and why he thinks it’s a smart call even though obstacles loom.
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“It’s a way for them to gain market share and find a new kind of customer that they might not have reached before,” he said. “Their market share in the EV segment of the U.S. is up from 6% to 12%. There’s still sales growth there, so they're thinking, hey, if we stick with this and we lower the cost of batteries, which they’re racing to do, then it becomes a good business for them.”
Last week, Kurt Kelty, GM’s VP of battery, propulsion, and sustainability, wrote in an article that the company is already delivering full-size electric trucks with up to 492 miles of range. He also said that progress in lithium-ion battery technology is just beginning.
“At GM, we’re not just building better batteries. We’re scaling U.S. production, securing a resilient North American supply chain, and advancing technology to drive down costs and compete globally,” Kelty said.
However, Welch noted that Tesla – helmed by CEO Elon Musk, who is currently serving as an advisor to President Donald Trump – dominates the EV market. He explained that Tesla stuck to its EV model through years of not being profitable to attain the status it has today. In fact, GM pulled an early EV off the market in 2003, the year Tesla was founded.
“Now they’re the leader and they make a lot of money and the company is worth a lot,” said Welch. “Its market value is well worth more than any other major car company.”
He thinks that GM CEO Mary Barra realizes that EVs are the future, even if that future is taking its time to arrive. Some of the reasons Welch cited for the delay are policies and uncertainty on the part of U.S. consumers
“GM’s brands – Chevrolet, Cadillac, GMC, Buick – they do better in the middle of the country, in the South. They don’t do as well on the coasts,” Welch told Quan. Offering more EV vehicles at affordable prices might be a way to tap into those coastal customers.
This year, GM’s Chevy Bolt is expected to make a comeback, and Welch said it will be their most affordable EV. Assembly plants, including one in Mexico and two in the U.S., are up and running for manufacturing of the electric vehicles.
At the same time, Welch said that “It is tough to sell EVs in the [time] of Trump, if he goes through with getting rid of some of the tax credits that are out there.”
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Another potential challenge linked to the Trump administration is tariffs on international trade partners. While the only GM imports are from Mexico, those imports happen to be their most affordable vehicles – the Chevy Equinox and the Chevy Blazer.
“And they’re really looking at getting profitable,” Welch said of GM. “They’re saying they’re pretty close. So maybe this year or next, they could get to a break-even basis with their EVs. And that makes it easier for them to sell the cars, if they’re not losing money on them, of course.”
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