Mary Barra, the CEO of General Motors, has hit the headlines this week, as she attempted to allay investor concerns that the American automaker would face difficult times ahead due to the perceived peak demand for gasoline-powered trucks and the equally lagging figures for electric vehicles.
During an investor day in Spring Hill, Tennessee, Barra stressed that while sales of electric vehicles (EVs) are increasing, profit margins on conventional ICE-powered vehicles have not peaked, as sources had previously told Reuters. That includes 2025 profits in the same range as 2024, she said.
“I believe before the day is done, that 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.
The automaker’s restructuring in China and updates regarding its Cruise autonomous vehicle operations, which have been troubled since an incident in which one of its self-driving cars dragged a person, piqued the interest of investors.
Barra did not provide further information on the restructuring efforts in China, other than to say that it is improving sales and cutting inventories there. She stated that Cruise has gone back to supervised driving in a few cities.
Paul Jacobson, the chief financial officer of GM, responded that the company would not lose more than USD 2 billion in 2025 when pressed for further information regarding Cruise.
The slower-than-anticipated EV transition has caused many automakers to adjust plans, including GM and rival Ford, and GM’s recent messaging focused less on aggressive growth and more on stability.
Barra stated that the automaker still anticipates the electric vehicle segment to reach positive variable profitability by year’s end, which is defined as revenueless expenses like labour and materials.
She acknowledged that EV demand has fallen since the company set ambitious production and profitability goals three years ago.
According to Jacobson, GM anticipates lower prices in 2025 and a USD 2– USD 4 billion decrease in operating losses from EVs.
He also noted that GM should receive an additional USD 800 million in manufacturing credits from the Inflation Reduction Act this year. GM shares closed slightly at USD 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 favourable,” said Tim Piechowski, portfolio manager at ACR Alpine Capital Research, a GM investor.
In contrast to Ford and Toyota, Reuss stated that GM is not losing out by forgoing hybrids shortly.
“There is a high demand for gas-powered cars, and emissions regulations won’t increase until 2027, when GM plans to launch plug-in hybrids,” he said.
During tours of the battery and electric vehicle assembly operations at GM’s Tennessee plant, investors witnessed the company’s Ultium Cells battery technology, which is one of the main topics of discussion at the event.
Kurt Kelty, head of battery cells, announced that the company will no longer use the Ultium name on its batteries.
He stated that going forward, GM will have greater options regarding battery chemistry and configuration. It is important for GM’s EV branding to abandon the Ultium name, particularly after the company emphasised it in Super Bowl commercials.
Meet Mary Barra: The Visionary
Mary Barra’s vision for GM includes an aspiration for a world devoid of accidents to protect lives, emissions-free to pass on a more healthful planet to future generations, and traffic-free to restore to customers their most valuable possession-time.
“Her main objective is to create superior customer experiences and bolster GM’s core automotive and service business, while simultaneously working on groundbreaking technologies such as electrification, autonomous driving, and software development,” Reported CBS News back in September 2024.
Barra held the positions of senior vice president, global product development, and executive vice president, purchasing and supply chain, at General Motors before taking on the role of CEO. In these capacities, Barra and her groups oversaw the worldwide design, engineering, and quality of GM vehicle launches.
Her past roles included plant manager at Detroit-Hamtramck Assembly, vice president of global manufacturing engineering, vice president of global human resources, and various executive engineering and staff roles.
In 1980, Barra started working for GM as a co-op student at the Pontiac Motor Division of the General Motors Institute (Kettering University).
Before earning a Master of Business Administration from the Stanford Graduate School of Business in 1990, she earned a Bachelor of Science degree in electrical engineering in 1985.
Barra is a member of the Detroit Economic Club, the Duke University Board of Trustees, and the Walt Disney Company Board of Directors.
GM Charts The Road Ahead
During her ten years as CEO of General Motors, Mary Barra has made big investments in software and driverless cars.
At a 2021 trade show, Barra said, “At General Motors our vision for the future is a world with zero crashes, zero emissions, and zero congestion. The key to unlocking that vision is electrification.”
But it was her promise three years ago to stop selling gas-powered vehicles by 2035, and GM’s ability to live up to it, that will likely define her legacy.
Asked if she anticipates GM will be all-electric by 2035, Barra replied, “For our light-duty vehicles, yes. We’ll be guided by the consumer, but the plans that we have in place will get us there.”
Nonetheless, in the face of slowing EV sales, Barra said, “I don’t think we ever thought it was gonna be linear.”
Tesla still dominates the market with nearly half of the electric vehicles on the road in the United States. But their market share is shrinking. And with nine all-electric cars and trucks currently available, and four more on the way, GM wants to catch up as soon as possible.
As of October 2024, GM has remained bullish on its electrification efforts despite weakening EV demand, but the automaker is rebranding its Ultium battery cell technology. Two GM-LG Energy Solution joint-venture plants manufacturing the lithium-ion battery packs that are assembled into fuel cells for EVs will continue to operate as Ultium Cells LLC.
Reportedly, GM reevaluated its strategies surrounding batteries, including a USD 3-billion investment in an alternative EV battery technology via a partnership with Samsung SDI.
“As GM continues to expand its EV business, the company is no longer branding its electric vehicle architecture, battery and cells, or EV components with the Ultium name, starting in North America,” the automaker stated.
CEO Mary Barra has further told the media that GM will produce 200,000 EVs in North America in 2024, and arrive at some modest profitability on EV sales during Q4.
GM’s internal combustion engine offerings have remained the basis for its current profitability, and like Ford and Stellantis, GM too is signalling to buyers that those models will continue to be available.
The transition away from the internal-combustion-powered vehicle models will include more hybrid vehicle options, rather than solely depending on the electric options.
The Ultium platform is in place for all of GM’s current electric vehicles, and it is also supplied to Honda for some of its United States-based EV offerings. There are joint-venture Ultium Cells plants operating at Warren, Ohio, and Spring Hill. Construction has been delayed on a third Ultium plant in Lansing, Michigun.
Ultium is a low-cost battery technology, based on a fuel-cell design that allows higher energy density and uses less non-active material, meaning there is more room for the part of the battery that produces energy.
However, one issue for the company has been it reporting USD 104 million loss in China recently. Barra said the company is working with joint venture partner SAIC to restructure and return the business to profitability.
China was once GM’s largest retail market. However, deliveries fell by nearly half over six years, from just over 4.04 million vehicles to 2.1 million units in 2023.
To offset this, apart from launching new energy vehicles, GM is “aggressively” pursuing structural cost reductions to aid in the return to profitability. It is reportedly laying off staff in the world’s second-largest economy.
“I think when we look at the strength of the Buick brand and the China brand, there’s a path forward in this market that we do believe, over the course of the midterm, is going to resume to growth,” Barra said, while reassuring the investors about the prospects of GM returning to the growth path in China.