By TOM KRISHER – AP Auto Writer
NEW YORK (AP) — The economy is a little wobbly, but General Motors CEO Mary Barra isn’t backing down from a bold prediction: By the middle of this decade, her company will sell more electric vehicles in the states United as Tesla, the global sales leader.
To fulfill this commitment in as little as 2½ years, it faces long odds against immense economic forces working against auto sales. Inflation has soared, interest rates are rising, material costs have skyrocketed, and a global shortage of computer chips is still holding back the assembly lines of GM and other companies.
But in an interview with The Associated Press, Barra said she was confident GM could topple Tesla with more expensive specialty vehicles, and that it would beat Elon Musk on premium electric vehicles at affordable prices.
Last year, GM sold just 25,000 electric vehicles in the United States, less than a tenth of the estimated 352,000 sold by Tesla. Although electric vehicle sales are growing significantly, they still only account for about 5% of the US new vehicle market, and many Americans are still hesitant to switch.
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“To really sell 30, 40, 50 percent EVs, you need to have people in that $30,000 to $35,000 price range,” Barra said.
Already, the company has pledged to reduce the starting price of the small Chevrolet Bolt SUV to around $26,000 later this year. GM plans to roll out a small Chevy Equinox SUV with a 300-mile range for around $30,000 in fall 2023. And on Monday night in California, it will unveil a larger (and more expensive) Chevy Blazer SUV that will go on sale next summer.
They will join a few gargantuan Hummer electric vehicles, an upcoming Silverado electric pickup and a Cadillac luxury SUV to take on Tesla. And Barra said there was more to come on the way to delivering 30 battery-powered vehicles globally by 2025. “What we have to come is the core of the market,” she said, without giving details.
The consumer vehicle is something that Tesla has yet to master. The Model 3 sedan, its least expensive vehicle, starts at nearly $60,000.
Barra hopes to keep prices relatively low, leveraging breakthroughs in chemistry to lower battery costs, offsetting huge price increases for lithium and other key elements that make batteries work.
Part of the strategy is to convince buyers that an electric vehicle can meet all of their transportation needs. Many electric vehicle owners, she said, also have a gas-powered car for long trips.
That’s why the company announced a partnership to place 2,000 charging stations at up to 500 Pilot Travel Centers, spaced 50 miles apart along interstate travel corridors. “If the only vehicle you own is an electric vehicle, you have to feel confident about charging,” Barra said.
GM aims to manufacture only electric passenger vehicles by 2035.
The shift to electric vehicles alone would be monumental for GM, a company that has lived largely off the internal combustion engine for more than 113 years.
But Barra also has to manage finances, keeping profits from gas-powered vehicles to pay for battery development — even though GM can’t currently run its factories at full capacity due to chip shortages. And at some point the money for gas-powered vehicles will shrink, so electric vehicles have to be profitable almost from the start.
In addition, auto prices rose an average of about $45,000, which boosted earnings for automakers but put new vehicles out of reach for the middle class. Economists predict the Federal Reserve could add up to a full point to interest rates, raising the cost of auto loans. And we are talking about the United States returning to recession.
“It’s quite volatile right now,” Barra conceded. “We are looking at many different scenarios, as any prudent business leader would, to make sure we are ready for anything no matter how the situation develops.”
She said she expects parts and chip shortages to last into next year as coronavirus outbreaks continue to curb the flow.
To deal with the shortage of semiconductors, GM is abandoning its old model of letting parts suppliers acquire the chips, GM knowing little about them. Instead, by 2025 it will shift to three families of chips that Barra said the company will buy and control itself. They will be able to multitask, eliminating the need for dozens of chips in each vehicle.
This standardization will give GM the scale to buy in bulk and ensure supplies are not disrupted in the future, Barra said, “We are also working with a select group of strategic companies to supply them in volumes. . We will have much better control and stable supply.
Barra said new car prices are skewed right now because automakers are allocating rare chips to higher-margin vehicles, and prices are expected to drop as more chips become available.
Still, she knows affordability will be an issue. With that in mind, she said GM offers the Chevrolet Trail Blazer starting at just under $20,000. The company also connects used vehicle buyers to dealer inventory nationwide. And GM’s Cruise self-driving vehicle unit is launching a driverless ride service in San Francisco that will expand to more cities, providing an affordable alternative mode of transportation, she said.
GM left Europe in 2017 selling its Opel brand after years of losses, but Barra said plans were underway to re-enter the huge electric vehicle market. “All I can tell you is that I think this is a huge growth opportunity for the business, and we’re thrilled to be back,” Barra said.
She has no plans to change GM’s joint venture in China with state-owned automaker SAIC, even though Beijing has stopped requiring foreign automakers to enter into such partnerships with Chinese companies. But Barra said there could be a chance for GM to bring in iconic, luxury vehicles.
GM’s transition to electric vehicles comes amid growing calls for companies to take a stand on political and social issues such as race relations and abortion. Yet the opportunities for missteps are plentiful, as companies like GM manage to do so without alienating sectors of a customer base that spans the political spectrum.
Most EVs, for example, are sold on the coasts, where people tend to hold more liberal views. But most of GM’s revenue comes from pickup truck and SUV sales in the country’s more conservative midsection.
Regarding abortion, Barra said she didn’t want to speak broadly about the Supreme Court’s decision to overturn Roe v. Wade, but she did note that GM pays employees to travel for medical services. .
“We’re going to continue with this practice, really not much change in what we’re doing from what we’ve done in the past, other than we’ll make sure to follow all state laws,” he said. she stated.
In 2020, after George Floyd was killed by a Minneapolis police officer, Barra issued a strong public statement and committed to several changes at the company, including the creation of an internal inclusion council and the evaluation of employees on inclusion actions.
Throughout his career, Barra, who was GM’s chief product planner before becoming CEO in January 2014, has had to make tough decisions. To manage the complexity of her work, she will have to draw on this experience.
“I’m an engineer, so I’m a problem solver,” she said.
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