GM shares in gasoline models as a hedge against sales. Transition

DETROIT — General Motors has entered a long and uncertain period of transition after making bold public promises to electrification.

Soon, the century-old automaker will start selling electric cars it championed in the last two years.

If all goes to plan, GM will launch three electric pickups by the middle of next decade, as well as at least two more electric SUVs. Although the automaker may lose market share and sales as it seeks an all-electric light vehicle lineup by 2035 it plans to keep its most profitable segments, full-size pickups or SUVs. The GMC Sierra and Chevrolet Silverado will be launched in electric versions in 2023. A Cadillac Escalade with an electric engine is expected to follow in 2024.

Stephanie Brinley (principal analyst, IHS Markit) stated that although they are aggressive on this road, there is still a lot of gas-powered cars to be used. I don’t think GM can make the transition with out seeing a drop in volume that could be made up by EVs being stronger.

GM reserves US$35Billion — the bulk of its investment in new products — to fund electric and autonomous vehicle development until 2025.

The automaker currently has two EVs in North America — the Bolt hatchback, and the crossover — compared to nearly 30 internal combustion namesplates.

GM expects to have at least 20 EVs within North America in five years. There will also be about 20 gasoline-powered namesplates.

Certain vehicles like the Chevy Malibu or Camaro won’t follow the same pattern of redesigns and facelifts as new models. They’ll continue to ride the current generation, before moving on to EVs.

GM will transform its manufacturing capabilities to meet its goal of electrifying its whole light-vehicle range by 2035. Automaker GM has revealed plans to produce Ultium-powered vehicles at Factory Zero, Detroit, Spring Hill Assembly, Tennessee, Ramos Arizpe Assembly, Mexico, and CAMI, Ingersoll.

The futures of Fairfax Assembly, Kansas and Orion Assembly, Michigan may be at risk. Due to the shortage of microchips worldwide, Fairfax has been inactive since February 8. The production of the Malibu XT4 and XT4 will cease by 2025.

Orion is currently the sole GM plant producing EVs. However, production of Bolt EVs and Bolt EUVs, which are based on the previous-generation electric architecture used by the automaker, will cease in 2024.

One forecaster stated that neither plant had products beyond 2025. The next UAW labor contract set for negotiation in 2023 will likely determine their fate.

GM is not the only company making a strong commitment to electrification. The automaker will be competing with other manufacturers who are launching similar vehicles in different segments as it introduces EVs. For example, the Ford F-150 Lightning could go on sale a year earlier than forecasters believe the electric Silverado will.

Paul Waatti from AutoPacific, an industry analyst said that “everyone is on track for being at similar stages in terms of range and the vehicle sizes they offer.” Although [GM] has a strong position, I believe there will be a lot more competition that is very similar.”

Analysts say that GM could lose some volume initially by electrifying parts of its range — Cadillac’s cross-country vehicles, for instance — while keeping a gasoline powered alternative for those who do not want an EV.

Jeff Schuster of LMC Automotive, President of Global Forecasting, stated that it all depends on their aggressiveness. “It appears at minimum to some degree that they are willing sacrifice the near term [volume] in order to gain the long-term gains.”

Steve Carlisle, President of GM North America, has said that the automaker will not risk losing share in important segments like full-size pickups or SUVs. He stated in May that he wanted to hold the top position in each of the segment he’s competing in. So what is that number, and at what cost and with what margin stock? All of that has to be viewed together.

Although the automaker has more time than 10 years before most internal combustion engines will be phased out of production, Carlisle insists that it is still a goal and not a guarantee to achieve zero emissions by 2020.

For example, heavy-duty pickups will likely continue to be powered by diesel until at least fuel cells are a viable replacement.

Brinley stated, “As aggressive and determined as they may be, they are not fools. They are building in transition periods.” There’s an art to it. It’s possible to move to electric vehicles while still maintaining the ability to drive what you need.

Publited at Mon 26 July 2021, 12:06:07 +10000

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