Yahoo Autos China’s BYD Is Set To Overtake Telsa
Good morning! It’s Friday, December 1, 2023, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: BYD Is Coming For Tesla
BYD’s electric and plug-in hybrid vehicle sales, aided by price cuts, hit a record pace in November as the Chinese company attempts to meet its annual sales target and beat Tesla in worldwide quarterly deliveries. From Bloomberg:
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2nd Gear: GM Says EVs Will Be Profitable Soon
General Motors’ electric vehicles may be losing the automaker money right now, but by the second half of 2024, they should actually be profitable-ish. By 2025, those profit margins could reach mid-single-digits, according to a GM finance executive. From Automotive News:
The automaker expects its pretax EV margins to improve at least six-tenths of a point in 2024 from this year, CFO Paul Jacobson said at a Barclays investor conference. That’s mostly expected to stem from greater production volume, in addition to a more favorable vehicle mix and battery cost reductions, Jacobson said. That should get GM to a positive variable profit, which excludes fixed costs, on its EVs in the second half of 2024, he said.
GM expects to have mid-single-digit EV margins in 2025, including the benefit of federal Inflation Reduction Act tax credits, he said. The company previously had projected low- to mid-single-digit EV margins before factoring in the tax credits.
“It’s no secret that at the end of the day, our EBIT [EV] margins are substantially negative,” Jacobson said, adding that GM is investing in battery cell plants and other infrastructure to scale production. “We’re building for the future. So as we continue to ramp up, we’re going to see pretty significant benefits going forward.”
So, we’ve got all this new profitability information for 2024, but we still don’t know what GM’s EV volume target is for 2024. However, Jacobson did say it would be “a meaningful step up” from this year. Here’s hoping, because the rollout of Ultium cars has been, well, bad. GM will apparently have the capacity to build 1 million EVs in North America by the end of 2025.
GM has said it will delay three upcoming models — the Chevrolet Equinox EV, the Chevrolet Silverado EV’s first retail-oriented trim and the GMC Sierra EV Denali — by a few months. That followed a decision to defer at least $1.5 billion in spending by pushing back production of electric Silverados and Sierras at a second plant — Orion Assembly north of Detroit — until late 2025.
An automation equipment supplier issue also has slowed battery module assembly this year, and GM is working to add module capacity at more plants.
“While our execution has been somewhat challenged to date, we believe we’ve identified those challenges and we’ve got a portfolio of really, really strong vehicles coming forward that meet the range and charging characteristics that customers are looking for,” Jacobson said.
The automaker expects to build more Ultium-based EVs with higher variable profits next year, such as the GMC Hummer EV and Chevrolet Blazer EV, while making fewer Chevrolet Bolts, Jacobson said. GM is retiring the current Bolt, which accounts for most of the company’s EV sales and is built on an older battery platform, and launching an Ultium-based version that will cost less to make, though GM has not yet disclosed details or timing.
GM expects to reduce raw material costs by more than $4,000 per vehicle from this year to next. Jacobson says that’ll be done by scaling up GM’s joint-venture battery plants. Doing that will decrease the automaker’s reliance on more expensive imported battery cells.
Overall EV profitability includes parts and accessories, digital and software-enabled services, its BrightDrop commercial electric vehicle, GM Energy business and benefits from greenhouse gas credits and federal tax credits, according to the company.
