General Motors CEO Mary Barra sought to soothe shareholder worries that lagging demand for electric vehicles and perceived peak demand for combustion-powered trucks will create a rough road ahead for the carmaker.
Barra emphasised at an investor day on Tuesday in Spring Hill, Tennessee, that profit margins have not peaked on traditional internal combustion engine (ICE) powered vehicles, and its EV sales are ramping up, something sources previously told Reuters would be outlined. That includes 2025 profits in the same range as 2024, she said.
"I believe before the day is done you'll agree that GM has plenty of upside relative to the consensus view that the auto industry has reached peak profitability,” Barra told investors.
Shareholders were eager for more details on the carmaker's restructuring in China, as well as updates around its Cruise autonomous vehicle operations, which have struggled since an accident when one of its self-driving cars dragged a person.
Barra said it is reducing inventories in China and improving sales, but didn't give additional details on the restructuring efforts there. Cruise has resumed supervised driving in select cities, she said. Pressed for more details about Cruise, GM CFO Paul Jacobson said the business is expected to lose no more than $2bn (about R35,109,600,000) in 2025.
The slower-than-anticipated EV transition has caused many carmakers to adjust plans, including GM and rival Ford, and GM's messaging on Tuesday focused less on aggressive growth and more on stability.
GM president Mark Reuss took a jab at Ford, which has established a specialised unit to bring down the cost of its EVs, when he called its team "skunkworks".
“We don’t need to create a skunkworks to create affordable electric vehicles," Reuss said, highlighting how GM has brought down costs on its EVs through reducing the number of parts per vehicle, among other measures.
Last month, GM and Hyundai signed a non-binding memorandum of understanding to consider ways to "leverage their complementary scale and strengths to reduce costs and bring a wider range of vehicles and technologies to customers faster".
While EV demand has lagged since Barra set lofty production and profitability goals three years ago, she said GM expects EVs by year-end to achieve positive variable profitability, which is revenue minus costs such as labour and materials.
Jacobson said GM expects softer pricing in 2025, and operating losses on EVs to narrow by $2bn (about R35,109,600,000) to $4bn (about R70,219,200,000). GM received about $800m (about R14,043,840,000) in manufacturing credits from the Inflation Reduction Act this year and it should grow from there, he said.
GM shares closed up slightly at $46.01.
“A lot of the presentation was focused on reducing complexity, and that leads to lower cost and greater profits, so that's all favorable," said Tim Piechowski, portfolio manager at ACR Alpine Capital Research, a GM investor.
Reuss said GM isn't missing out by forgoing hybrids in the near-term, unlike Ford and Toyota. Demand for combustion-engine vehicles is strong, and emissions requirements don't ramp up until 2027, when GM will introduce plug-in hybrids, he said.
One focus at GM's event is its Ultium Cells battery technology, which investors saw during tours of the battery and EV assembly operations at the company's Tennessee plant.
The carmaker will no longer use the Ultium name on its batteries, Kurt Kelty, head of battery cells, said. Moving forward, GM will be more flexible with battery chemistry and configuration, he said. Moving away from the Ultium name is significant for GM's branding of EVs, specially after the company highlighted it in Super Bowl advertisements.
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