GM’s one million EV production target annually from 2025-end maybe ambitious

American auto giant General Motors (GM) has lined up plans to manufacture one million electric vehicles (EVs) annually from 2025-end but looking at the sales of EVs in the US, this may seem rather ambitious.

As per GM’s Sustainability Report of 2020, the auto giant sold 202,488 electric vehicles during the year. Majority of these EV sales were in China and not the US.  

GM had sold a total of over 200,000 EVs in 2020.

This (sales) is because of China’s burgeoning EV charging infrastructure, good government support for EVs and relatively strong consumer sentiment. 

So, even if we assume a five-fold rise in sales by 2026, that is two million (all of which not coming from the US), setting such a high production target for the US may be ambitious because if the cars don't sell, there would be a pile up of the stock, and hence, it may result in losses for the company.

Comparing the per cent of EVs sold in the US to internal combustion engine (ICE) cars (in 2018, for which data is available), we can see that Tesla was the only automaker with 100 per cent EV sales (both battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) in the US. 

Only three other brands could log electric vehicle sales of over 5 per cent compared to gasoline and diesel vehicles. 

They are Fiat (14.5 per cent), BMW (7.37 per cent) and Porsche (5.17 per cent). There were 14 brands that had seen 0 per cent sales from electric vehicles.

Meanwhile, GM has signed multi-year pacts with LG Chem, a South Korean chemical company, as well as Livent, a lithium technology company, for securing key raw materials that would be used for manufacturing batteries of electric vehicles.

With the deals done, GM said it would have assured supplies for battery raw materials like lithium, nickel, cobalt and cathode active material.

The automaker hopes this will help it achieve its one million electric vehicles a year target in the North American market by the end of 2025.

With the blessings of the US government, automakers are opting for deals to source crucial inputs for batteries. With this, they aim to localise the supply of batteries and other parts at some point.

 

LG Chem is planning to supply General Motors with 968,000 tonnes of cathode material from the second half of 2022. This would continue till 2030 and cater to about five million electric vehicles, according to GM.

Cathode material made from processed nickel, lithium and other materials comprises nearly 40 per cent of the total cost of a battery cell, the company revealed.

GM is set to receive battery-grade lithium hydroxide from Livent. This will be for a six-year period beginning 2025. However, the company has remained mum on the quantity that would be supplied.

GM’s announcement is just about a week after Ford inked a deal with China’s CATL for importing lower-cost lithium-ion batteries. 

General Motors, along with its suppliers, aim to move towards localising production.

“We will be building a strong, sustainable, scalable and secure supply chain. This would give a fillip to our fast-growing EV production requirements,” said Jeff Morrison, vice-president of global purchasing and supply chain, General Motors. 

On the other hand, Ford had said its numerous pacts will cover about 70 per cent of the material it needs to produce electric vehicles. In fact, Ford has set an even higher target compared to GM — two million EVs a year from 2026. 

So, GM’s one million electric vehicle output target annually from 2025-end in the US would require the company to fast track every activity in the EV ecosystem and this could be an uphill task.