It is no secret that electric vehicles remain more expensive to build than traditional ICE models but General Motors believes its EVs will become profitable by the second half of 2024.
The carmaker cites a handful of reasons as to why it will soon stop losing money on each and every EV that it builds. According to chief financial officer Paul Jacobson, this includes increased production volume, a more favorable vehicle mix, and the reduction in battery costs. The latter will prove particularly crucial.
Jacobson told attendees at a recent Barclays investor conference that the scaling of the firm’s joint-venture battery plants is going to decrease its reliance on imported battery cells which are costlier. Additionally, the company will be able to reduce its raw material costs by over $4,000 per vehicle from this year to 2024. Aiding in GM’s path to EV profitability will be greenhouse gas credits, federal tax credits, its BrightDrop and GM Energy businesses, and digital and software-enabled services, Auto News reports.
With this in mind, Jacobson believes GM’s pretax EV margins will improve by a minimum of six-tenths of a point in 2024 from this year. This will get the firm to a positive variable profit on its EVs in the second half of 2024 before rising to mid-single-digit margins the following year with the benefit of tax credits, Auto News reports.
Read: All Ultium-Based GM EVs Will Be Able To Power Your Home By 2026
“It’s no secret that at the end of the day, our EBIT [EV] margins are substantially negative,” Jacobson said. “We’re building for the future. So as we continue to ramp up, we’re going to see pretty significant benefits going forward.”
While GM is confident that its EVs will soon become profitable, it’s not all good news for customers. In October, chief executive Mary Barra revealed that the launches of the Chevrolet Equinox EV, Chevrolet Silverado EV RST, and GMC Sierra EV Denali have all been pushed back by a few months. This news came shortly after GM revealed that production of the more affordable Silverado and Sierra EVs variants had been pushed back from 2024 to late 2025 in part due to “evolving EV demand.”
