Summary
- General Motors has reached a milestone of making a profit on its electric vehicle lineup
- Electric vehicles have historically been unprofitable due to high costs but are expected to become profitable over time
- GM doubled its market share for EVs in 2024, selling about 114,000 EVs in the U.S.
- GM is focusing on both increasing sales volume and profitability for electric vehicles
- GM faces challenges in the automotive industry, including new policies, competition, and uncertain regulations
Article
General Motors’ Financial Milestone in 2024
General Motors has achieved a significant milestone in its financial results for 2024 with a focus on its growing electric vehicle lineup. The automaker announced a net income of $6 billion last year and revealed that it is now "variable profit positive" on its EVs. This means that GM is making more money on EVs than the fixed costs involved in their production. While this figure does not account for certain costs like building assembly lines, it is a major step towards the goal of making EVs profitable and scalable in the auto industry.
Challenges Faced by Automakers in Making EVs Profitable
EVs have been generally unprofitable for automakers in their early stages due to high battery costs, which are the most expensive component of an EV. Additionally, there are high R&D costs involved in the development of EVs. However, as automakers ramp up production scale and work on reducing battery costs, EVs are expected to become profitable over time. Tesla, for example, did not turn a full-year profit until 2020, showcasing the challenges faced by automakers in the EV space.
GM’s Success in EV Sales and Market Share Increase
GM has seen success on the sales front in 2024, with CEO Mary Barra highlighting a doubling of their EV market share as production scaled up. The company sold about 114,000 EVs in the U.S. last year and now holds approximately 13% of the U.S. EV market. GM’s focus on increasing sales volumes while maintaining profitability seems to be paying off, with new EV options set to launch in 2025, particularly in Cadillac’s lineup.
Challenges and Headwinds Faced by GM
Despite its successes, GM faces challenges in 2025, especially as policies from the new White House administration impact the automotive industry. The company’s profits predominantly come from gas-powered trucks and SUVs, and it continues to face competition and restructuring challenges in China. There is also concern over potential changes to EV tax credits and tariffs on goods made in Mexico and Canada, which could directly impact GM’s bottom line.
GM’s Strategic Approach to EV Production
GM’s CFO Paul Jacobson indicated that the company produced around 189,000 EVs in 2024 and aims to increase that number to 300,000 in 2025. However, the company is cautious about overproduction and ensuring a disciplined approach to meet demand without resorting to heavy incentives or discounts. GM is proactive in engaging with Congress and the administration to navigate uncertainties in trade, tax, and environmental regulations that could impact its operations.
Conclusion
General Motors’ financial results for 2024 showcase the company’s progress in making its EV lineup profitable and increasing market share. Despite challenges in the form of policy changes and competitive pressures, GM remains focused on enhancing EV profitability and scaling production. The company’s strategic approach to EV production, combined with proactive engagement with policymakers, positions GM for continued success in the evolving automotive landscape.
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