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Reducing the price of electric cars, GM’s long-term strategy that can only win

In the first quarter of 2021, General Motors has only managed to sell 500 electric cars in the U.S. Battery problems forced him to suspend production of the Chevrolet Bolt, while the promise of the electric variant of the Chevrolet Silverado remains anchored in an uncertain future. Meanwhile, its great competitor, Ford claims to accumulate more than 200,000 reserves of the F-150 Lightning and Tesla continues to dominate the electric vehicle market with more than 310,000 units sold in the first quarter of this year. Despite this very negative scenario, Mary Barra, CEO of General Motors, ensures that your long-term strategy can only be the winner.

Mary T. Barra, the daughter of a die maker, became CEO of General Motors in 2014, the first woman to head a major automaker. In an interview with the New York TimesBarra is convinced that once the company catches up, it will be able to beat your competitors on price thus gaining the favor of buyers. As EV sales grow, GM hopes to reap cost advantages and catch up with Tesla before the decade is out. “That’s the long game we’re playing,” Barra told the Times, “and I’m here to win.”

At the heart of GM’s strategy is its Ultium battery pack, which is based on a modular design and allows its implementation in any GM vehicle, from a small compact to a large pick-up. GM estimates that the Ultium design could reduce battery costs by 30%.

General Motors Hummer EV Ultium Technology
Modular Ultium batteries can be implemented in any GM vehicle, from a small compact to a large pickup, reducing battery cost by 30%.

The company is working on the launch of seven battery plants. The first of these, managed by a joint venture with LG, will be located in Lordstown, Ohio and will begin producing Ultium packages later this year. All seven will be operational in 2025 and GM expects to produce one million electric vehicles per year each year from 2026.

Barra noted that most electric vehicles sold in the US are luxury models they are usually bought by people who own at least two vehicles. In fact, GM’s current offering is also based on its high-end models: the Cadillac Lyriq, a luxury SUV, and the mammoth electric GMC Hummer. “In order for electric vehicles to reach a predominant market share, the offer must include a large number of affordable models,” says Barra. “You have to provide input models in that space.”

Guidehouse Insights analyst Sam Abuelsamid told the Times that GM’s strategy should “in theory” offer cost advantages, but questioned whether GM’s advantage is really that significant. Ford is working on its own modular battery design and starting up its manufacturing plants, and Tesla has achieved significant economies of scale by assembling its own packs for years.

But Mary Barra assured the Times that she is confident GM is on the right track and understands the need to add speed to the strategy “Wish the launch of the electric Silverado came sooner?” she pondered. “Of course. I constantly urge the organization to overcome challenges to speed up the process.”

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