GM Says Its EVs Are Priced Right, Won’t Chase Tesla, Ford MSRP Cuts
GM says it is on track to sell 400,000 EVs in North America from last year through 2024 and says it has secured sufficient raw materials to produce 1 million in calendar 2025.
The Chevrolet Silverado EV work truck is set to launch in the first half of this year, with the Chevy Blazer and Equinox EVs launching this summer.
Overall, GM reports a record $14.5 billion in adjusted earnings before income tax from $156.7 billion in gross revenues for 2022. US market share reached 16.8% at year’s end.
As Ford and Tesla slash prices on their electric vehicles after steep increases last year, General Motors considers its quickly growing line of EVs to be priced right at the outset, CEO Mary Barra says in the automaker’s fourth quarter/fiscal year 2022 earnings call with Wall Street investment analysts Tuesday.
The Chevrolet Equinox EV, for example, which is scheduled to launch this summer along with the Chevy Blazer EV, will have a base price in the low $30,000s. GM says it expects to cut EV cell costs to $87 per kilowatt-hour by 2025, which could be a stretch target, even two years from now.
Similarly, as GM quickly builds up its EV portfolio, the automaker says it won’t get into a price war with competitors. Upcoming and current models already are priced competitively, Barra says, and the company estimates it will get a $300 million earnings “tailwind” from tax incentives associated with the Inflation Reduction Act.
“Many GM vehicles we’re launching this year are below the (price) caps” for the incentives, Barra says. The Act caps tax incentives for eligible vehicles priced at $55,000 for passenger cars and $80,000 for SUVs and trucks.
The Treasury Department, which determines eligibility for the tax credit, counts the $61,000 Cadillac Lyriq crossover as a “car,” and therefore ineligible, though a GM spokeswoman says via email: “We hope that Treasury will move quickly to align with existing US government definitions and practices as applied in consumer-facing resources like fueleconomy.gov.”
GM is on track to sell 400,000 EVs in North America from last year through 2024 and says it has secured sufficient raw materials to produce 1 million in calendar 2025. The Chevrolet Silverado EV work truck is set to launch in the first half of this year, with the Chevy Blazer and Equinox EVs launching this summer—about the same time GMC Hummer SUV volume should start picking up.
Ultium Cell joint venture plants with LG Energy Solution open in Warren, Ohio, and Spring Hill, Tennessee, by midyear, with the Lansing, Michigan, JV plant opening by late 2024.
GM has announced a fourth Ultium Cell plant to be constructed later, and last week TheElec reported GM may switch to 4680 cell production for that plant. That has caused a delay in the plant, the South Korean outlet reports, citing unnamed sources, because the switch may not bring erstwhile cell partner LG Energy Solution along with it.
Tesla began a switch to 4680 cells in late 2021, as they are easier and cheaper to produce and are considered safer than “pouch” cells but are less energy-dense because of more space between the cells.
“I’m not going to comment on speculation,” Barra says, in response to an analyst’s question about the switch in battery form factor. GM’s Ultium team has been “looking at form factors all along.”
A company spokesman says GM “didn’t suggest we’d go it alone (at the fourth plant). We did suggest there’s likely to be more cell plants beyond number-four in the future.”
Overall, GM reports a record $14.5 billion in adjusted earnings before income tax (EBIT) from $156.7 billion in gross revenues for 2022. Last year’s EBIT is $179 million higher than 2021 net income as the automaker continues to rack up higher earnings on fewer unit sales thanks to skyrocketing new vehicle prices and a better mix of luxury and well-equipped premium models.
GM’s US market share reached 16.8% at the end of 2022, up 3.8 points over Q4 of 2021. GM’s chip supply chain problems knocked the automaker down to second place in sales for 2021, behind Toyota Motors North America, but it was back on top again last year.
The average transaction price for all GM models was $51,000 in calendar 2022, a substantial premium over the industry ATP of $49,507 last year, according to Cox Automotive. GM projects US auto sales of 15 million units in 2023, and no recession. Higher sales of volume models will result in slightly lower ATPs this year, GM says.
Before the pandemic, GM was known for heavy sticker price discounting and incentives, especially in its battle with Ford and Ram for truck primacy in the US. Those incentives largely disappeared during the pandemic and resulting computer chip shortage.
Supply of cars and trucks at GM dealerships was about 60-70 days by the end of 2022, or roughly 20-30 days lower than normal, Chief Financial Officer Paul Jacobson says Tuesday. GM will continue to manage supply and demand, he says, so don’t expect substantially higher incentives this year.
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