Electric vehicles are becoming more common on American roads, and Detroit's Big Three is having a tough time transitioning from manufacturing and marketing gas-guzzling vehicles to helping consumers embrace the plug.
Last quarter, Ford's electric vehicle division lost $1.1 billion in EBIT and recently announced a paradigm shift in its electric vehicle strategy that includes hybrid-electric vehicles in the mix.
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Its rival Stellantis is not doing much better. Dodge dealers are worried they won't be able to convince buyers to buy electric vehicles. Jeep's best-selling plug-in hybrid is the subject of a major recall and is struggling to sell acres of unsold cars.
Following an announced shift toward plug-in hybrid technology in January, General Motors (G.M.) outlined its idea of addressing profitability with its electric vehicles at its Investor Day on October 8. There, a GM executive criticized Ford and its plan to crack the electric vehicle formula.
The random shooting of a GM executive in the dark
At his investor day on October 8, General Motors Chairman Mark Reuss attacked Ford, specifically a relatively young California-based team that its CEO, Jim Farley, calls “skunkworks,” after the team. of special projects of the same name at Lockheed Martin.
Speaking during his presentation to investors and shareholders, Reuss boasted that GM was able to reduce the costs of electric vehicles by reducing the number of parts in its vehicles, among other cost-cutting measures.
A vehicle that reflects the mantra is the 2026 Chevrolet Bolt. Although the images did not appear in the webcast, Reuss assured that the newest version of his small electric vehicle will have “the latest technology” and “will be a source of income” for GM .
“We don't need to create a factory to create affordable electric vehicles,” Reuss said. “We know how to do it.”
What are Ford “skunkworks”?
Ford's “Skunkworks” team has been a key talking point for CEO Jim Farley since late 2023. According to Farley, the California-based team is made up of former Tesla and Apple employees and was created to create a new line of “affordable” electric vehicles.
The Blue Oval CEO feels that this team, which is physically separated from the Dearborn bureaucracy, can make an electric vehicle that can outperform not only Tesla, but also what he considers the new “real enemy”: the automakers Chinese like BYD and Geely.
“We recruited the most creative and technically skilled professionals from inside and outside Ford to drive a radical change in the way we develop an electric vehicle,” Farley said in August 2024.
“The work of this highly talented team has become a critical element of our electric vehicle strategy. These electric vehicles will have lower costs and will not be compromised in any way.”
The first vehicle developed by the Skunkworks team will be a mid-size pickup truck with a new, smaller platform, arriving in 2027. Farley said this new truck is for “customers who want more for their money: more range, more utility , more usability”. “
More electric vehicle deals:
- Ridiculous Tesla Supercharging Flaw Is Making EV Owners Hostile
- Study: EV Charging Stations Have a Secret Business Benefit Built In
- Mercedes' latest technology is ahead of Tesla in a key area
A reality check for GM from analysts
Although GM executives like Reuss and CEO Mary Barra adopted an optimistic attitude during their investor presentations on October 8, the reality is that, like Ford, GM is losing money on electric vehicles and anticipates losing more money.
GM Chief Financial Officer Paul Jacobson said he anticipates electric vehicle operating losses will shrink by $2 billion to $4 billion, but Bank of America analyst John Murphy suggested the automaker “did a bigger hole” compared to Ford; approximately $5 billion in EV losses from investments in EV and battery technology.
Analysts, in general, came out optimistic about the event. Wedbush's Dan Ives maintained his 'Outperform' rating on GM stock and his $55 price target, citing that the automaker is “focused on its strategy.”
“Importantly, GM believes EV losses have peaked this year, while it focuses on significantly increasing profitability in 2025, as GM grows its EV sales faster than the market, moving to #2 position in the US,” Ives said in his note.
Bank of America analyst John Murphy reiterated a Buy rating on GM shares and $85 price target, noting the event was “constructive,” but didn't provide much comment on other money siphons like his Robotaxi firm. Cruise nor information on strategy in an important key market that the United States Automakers are having difficulty.
“Contrary to expectations, GM did not provide detailed comments on future strategic steps in China, other than to reiterate the message that GM is serious about competing and winning in this market,” Murphy wrote in his note. “Remember that GM, like other global OEMs, has been under significant pressure in China due to local competition.”
General Motors shares trade under the name GM on the New York Stock Exchange. As of this writing, GM shares are up 3.88% since the inception, to $47.79 per share.
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