GM predicts rosy financial future thanks to EV growth

GM announced last Thursday it expects its EV profits to match sales of gas-powered vehicles by 2025, five years earlier than initially projected.

Speaking to investors at GM’s Investor Day, CEO Mary Barra discussed the reasons behind their new projections and what the automaker is doing to ensure they meet their goals.

Chief among the reasons cited was the Biden administration’s Inflation Reduction Act, which provides tax incentives for EV manufacturers and consumers. While the auto industry has struggled with low demand due to ongoing interest rate hikes, the new credits are expected to increase consumer spending on zero-emission vehicles.

To keep pace with the expected demand, GM announced it would release new EVs and redesigned gas-powered vehicles to fund its endeavors. While the exact number of new zero-emission vehicles has yet to be verified, the company has discussed plans to develop up to 30 new electric products by 2025.

GM has another reason for focusing on EVs. Lithium batteries are expensive and in short supply, and only early adopters of the technology, such as Tesla, have access to competitive pricing. However, GM revealed they would soon be manufacturing their own batteries in partnership with Ultium and LG, allowing the automaker to lower the typically high price EV price tag.

These announcements are an encouraging update from last year’s GM Investor Day. In 2021, the company told its shareholders it expects an 8-10% profit margin by 2030. This year, this was updated to 12-14%. Although it remains to be seen if shareholders share the positive outlook, the news does coincide with the industry’s newfound interest in electric vehicles. How the market will react may depend entirely on sustained consumer demand.

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