Can GM electric vehicles turn a profit by 2025? Mary Barra is betting on it
General Motors (GM) EV push will soon pay off. GM investors are gearing up for an update from CEO Mary Barra this week that includes a mention of the automaker turning a profit on its electric vehicles in 2025.
As the race to claim EV market share heats up, many automakers are taking significant losses to scale production. For example, Rivian posted a negative gross profit of nearly $1 billion in the third quarter as the young EV maker builds its manufacturing capabilities.
Meanwhile, the company made a comment in its Q3 letter to shareholders that resonates across the industry with the electric vehicle transition underway, stating:
As we produce vehicles at low volumes on production lines designed for higher volumes, we have and will continue to experience negative gross profit related to labor, depreciation, and overhead costs.
Start-ups and legacy automakers look to mirror the success Tesla is having with pure EV models. Tesla’s automotive gross profit (percent of profit of each new vehicle sale) was 27.9% in Q3.
Meanwhile, although GM’s revenue reached a record $41.9 billion in Q3, its margins were much lower, and even more so with its electric vehicles.
GM posted automotive revenue of $38.7 billion, yet the cost to make and sell these vehicles reached $35.6 billion, for a gross profit of $3.1 billion or just over 8%.
As GM scales EV production, the company expects to continue taking a loss in that segment. However, by 2025, the automaker expects this to change – this is the same year Mary Barra is confident GM will catch Tesla, when the company is set to turn a profit on its electric vehicles.
GM to earn a profit on electric vehicles in 2025
According to a report from Bloomberg, sources familiar with the matter claim GM is planning to update investors on November 17 (GM Investor Day) that the company expects its electric vehicles will turn a profit in 2025.
Mary Barra will discuss the automaker’s battery investments and how it plans to build the program. However, with GM’s plans to provide an “EV for everyone” on its way to becoming one of the largest electric vehicle makers, investors are eagerly awaiting how GM will do so profitably.
Well, according to sources who did not want to be named because the presentation is not yet public, 2025 will likely be the year GM will make electric vehicles for a profit.
After several years of building its production capabilities and supporting supply chains, GM is ready to start earning a profit on its EVs. GM, together with LG, have four battery plants coming online in the US, with at least three by 2024.
With several highly anticipated EV models coming from GM next year, including the $30,000 Chevy Equinox EV and electric Silverado pickup, the automaker expects to significantly ramp production volume.
At the same time, GM still expects its electric vehicles to generate lower margins than their ICE counterparts as supply chains and production ability transitions over. David Whiston, a Morningstar analyst, commented, stating:
GM won’t sell at the prices of Teslas, so maybe they won’t match the profits. But they should be able to show good margins. If Tesla can do it, there’s no reason GM, Ford and others can’t do it. They’re just behind on product lineup and manufacturing.
Mary Barra said on the company’s Q3 earnings call this week’s investor update will “go deeper into the second phase of our EV growth strategy.” Stay tuned for updates!
Electrek’s Take
I would expect GM to start generating a profit on its electric vehicles by 2025, with the company going all in on electric. However – and this is big – it will also be costly for GM to wind down sales and operations of its ICE vehicles.
New and used gas-powered vehicles will likely continue seeing their prices drop as electric vehicles gain market share. As electric vehicles and the supporting infrastructure becomes cheaper and more accessible, ICE values will likely fall.
Many automakers, like GM, have financial divisions that rely heavily on the residual value of their vehicles. If auto prices continue slipping, GM won’t be able to sell its cars near what it valued them, which could result in substantial losses.
What does everyone think? Will GM make EVs profitably in 2025? Let us know in the comments.
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Tesla has started to offer discounted financing on Cybertruck as the electric pickup truck undoubtedly turns out to be a flop.
Tesla claimed over 1 million reservations for the Cybertruck, and CEO Elon Musk said he could see Tesla producing 500,000 units per year.
However, that was before Tesla announced that the production version would be much more expensive and have a shorter range than what was initially announced.
The Cybertruck has now been in production for a year and a half, and it looks like Tesla would be lucky to sell about 10% of Musk’s goal of 500,000 units.
The automaker doesn’t report Cybertruck sales, but it is estimated that Tesla delivered roughly 40,000 Cybertrucks in 2024, and it is expected to have even more issues selling the truck this year.
Tesla has taken several steps to help sales.
We reported that Tesla launched Cybertruck leases to help move vehicles. The company is even still tucked with “Foundations Series” Cybertrucks, and we found out that Tesla buffed “Foundations Series” badges out of some trucks to sell them as cheaper regular Cybertrucks.
For the remaining “Foundations Series,” which there still are despite Tesla switching to regular Cybertruck production in October, Tesla has even offered free Supercharging for life.
Now, Tesla is stepping up its game, and it is offering discounted financing on new Cybertruck orders:
Tesla announced 1.99% APR for a limited time:
1.99% APR available for a limited time for well-qualified buyers
WIthout the “promotion”, the rate for excellent credit is 5.84%.
While Tesla is discounting the rates, it is not discounting them as much as for new Model 3 orders.
We reported earlier this week that Tesla offers 0% and 0.99% with $0 down on new Model 3 orders in the US until the end of the quarter.
Electrek’s Take
It is very possible that Tesla can’t sell more than 10,000 Cybertrucks this quarter, which would extrapolate to 40,000 units per year or less than 10% of what Elon said he would see Tesla delivering.
Now, the cheaper single motor Cybertruck should help, but by how much? It could bring Tesla to 20-30% of the volume Elon saw possible?
I think it’s fairly clear that the Cybertruck is a flop.
Tesla launched a single new vehicle in the last 5 years and it is a flop.
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Environment
Toyota launched its cheapest EV in China and it crashed the server starting at just $15,000
Toyota looks to grab a bigger share of the world’s largest EV market as it takes aim at BYD and other low-cost leaders. On Thursday, Toyota launched its cheapest EV in China, the bZ3X, starting at roughly $15,000. The new electric SUV crashed the server with over 10,000 orders in an hour.
Meet Toyota’s cheapest EV in China, the bZ3X
The bz3X is Toyota’s “first 100,000 yuan-level pure electric SUV” in China and its cheapest EV to hit the market so far.
Toyota’s Chinese joint venture, GAC-Toyota officially launched the “Bozhi 3X,” or bZ3X for short, in China on March 6. Shortly after, the company said orders for its new electric SUV were “so popular that the server crashed” after revealing prices start at just over $15,000 (109,800 yuan).
After securing over 10,000 orders in just one hour, Toyota boasted again that “the server is overwhelmed.” The launch comes after blind pre-orders opened in December, starting at just under $14,000 (100,000 yuan).
The bZ3X is available in two versions, with or without its full-scenario smart driving tech. The non-smart tech model starts at 109,800 yuan ($15,000) with five trim options while the smart driving model starts at 149,800 yuan ($20,500).
For 159,800 yuan ($22,000), the range-topping “610 Max” trim provides up to 610 km (379 miles) CLTC range from a 67.92 kWh LFP battery. The base “430 Air” gets up to 430 km (267 miles) from a 50.03 kWh LFP battery pack.
Toyota said the interior provides “a mobile space that is comfortable as home,” with front and rear seats that can fold down to provide nearly 10 feet (3 meters) of space.
Inside, the electric SUV has a 14.6″ infotainment screen with voice recognition and an 8.8″ driver display. It also includes a two-spoke multi-function steering wheel.
Toyota’s new bZ3X is its first vehicle with the Momenta 5.0 Intelligent Driving System. Powered by NVIDIA Drive AGX Orin X, it comes with 25 ADAS features, such as parallel parking, remote control parking, high-speed pilot, light traffic assist, and blind spot monitoring.
GAC-Toyota claimed it will be “one of the first automakers in the world to realize a one-stage end-to-end intelligent driving model.” With human-like intelligence, the vehicle “gets smarter and better with use.”
At 4,600 mm long, 1,875 mm wide, and 1,645 mm tall, Toyota’s cheapest EV in China is about the size of BYD’s Yuan Plus (Atto 3) at 4,455 mm long, 1,875 mm wide, and 1,615 mm tall. Starting at 115,800 yuan ($16,000), Toyota’s new bZ3X slightly undercuts BYD’s electric SUV.
What do you think of Toyota’s new electric SUV? Would you buy one for around $15,000? We’ll keep dreaming.
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