Source: Gasgoo
Introduction
General Motors expects electric vehicle production costs to be significantly lower in 2024 and plans to increase production of higher-margin models. The company’s EV margins will improve next year, and it expects to target an EBITDA margin of about 5% by 2025.
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According to Reuters, on November 30, General Motors said that it expects the production cost of electric vehicles to decrease significantly in 2024 and plans to increase the production of high-profit models.
Image source: GMC
On Nov. 30, GM said it expects electric vehicle production costs to be significantly lower in 2024 and plans to increase production of higher-margin models, Reuters reported.
On the same day, GM CFO Paul Jacobson told a Barclays event that the company’s EV margins will improve next year, and expects to target an EBITDA margin of about 5 percent by 2025.Jacobson said, “We don’t want to be the next Tesla, we just want to be the best GM we can be.”
Just a day earlier, GM announced a series of measures to appease investors, including a $10 billion share buyback program, a 33% dividend increase, and a “significant reduction” in spending on Cruise, its self-driving cab unit.
Reuters reported that GM had said it would stop selling gasoline-powered vehicles by 2035. Last month, however, the company said it would abandon its goal of producing 400,000 electric vehicles from 2022 through the middle of 2024. On Nov. 30, Jacobson said GM would achieve a “meaningful” increase in EV production next year and “still expects to have 1 million electric vehicles by 2025,” as well as a “significant reduction” in expenses for its self-driving taxi unit Cruise.
By 2024, GM’s fixed costs per EV will be about $20,000 lower than in 2023, according to Jacobson. It should be noted that GM’s EV profits include battery production tax credits as well as greenhouse gas reduction benefits.
GM also expects that it will produce more of its more profitable EVs, such as the Hummer and Blazer EVs, in 2024, while “production of the Bolt will be significantly reduced in 2024 as we shut down that line and then relaunch the next-generation Bolt. “This year, GM has sold Almost all of the 56,000 electric vehicles sold in the U.S. were Chevrolet Bolt.
Additionally, GM expects to see a significant drop in battery costs, including raw battery materials, and is taking steps to significantly reduce its reliance on expensive imported batteries. Currently, GM and partner LG New Energy (LG Energy Solution) are building three battery factories in the United States. In April of this year, GM said it was building a new battery plant in a joint venture with Samsung SDI. Jacobson revealed that the joint venture with Samsung “will launch lower-cost batteries in 2026 and beyond.”
