We are aware that some manufacturers, such as Lucid and Ford, are losing several thousand dollars for each electric vehicle. Even General Motors, which has been heavily involved in electrification for some time, is currently facing difficulties.
Paul Jacobson, the company’s Chief Financial Officer, acknowledges that the current range of electric vehicles across all brands of the group is operating at a loss. However, he remains optimistic and asserts that “the tide will change” by the second half of 2024 when battery-powered vehicles are expected to generate profits exceeding production costs.
Why GM is optimistic
Jacobson spoke at a Barclays investor conference, where he delved into the matter outlining prospects for a “significant improvement” in electric vehicle margins in 2024 compared to the previous year. This improvement is expected to be driven by increased production volume, more compelling range, and reduced battery costs.
According to Jacobson, all these factors are poised to push the American giant into positive variable profit territory, excluding fixed costs, by the latter part of 2024. Looking further into the future, GM aims to increase EV margins to an “average and stable figure” by 2025, a benefit that includes the advantages of federal tax credits from the Inflation Reduction Act.
This projection surpasses the company’s previous forecast and is also attributed to investments made in battery cell facilities and infrastructure, seen as “essential” for increased production—critical efforts for “GM’s future success.” Jacobson did not disclose specific volume targets for 2024, but he believes production will take a “significant step forward” compared to 2022. Overall, the group remains committed to achieving a production capacity of 1 million electric vehicles in North America by the end of 2025.
