Automakers are looking for new ways to make their electric vehicles cheaper. Companies like Tesla have been slowly dropping the prices of their EVs, creating more competition with the other big brands in that space. Chinese EVs are also being developed at a pretty rapid pace at affordable prices with more features than American-made EVs. EV sales from GM have been growing steadily and have overtaken Ford to become the second-best-selling EV manufacturer in North America.
Seeing the progress made, GM has decided to focus a lot more on improving its electric cars and making them cheaper at the same time. This strategy is sure to put GM ahead of the game compared to other traditional automakers. During the 2024 General Motors Investor Day held on October 8, various executives and shareholders were present to discuss the strategies needed to achieve this goal.
GM Plans To Develop Its Battery In-House
The biggest cost-cutting strategy would be the production of batteries. GM plans to build its battery packs in-house, this will drastically cut the cost of outsourcing to other outlets. GM also plans to switch from the Nickel Cobalt Manganese (NCM) cells it uses across all vehicles today to the lower-cost Lithium Iron Phosphate (LFP) for its proposed affordable models. The LFP batteries aren’t as good as the current NCM ones, but for their application, they provide more than enough range needed for daily use. This move is meant to cater to new buyers who want an EV on a budget, while those who can afford the premium vehicles still get the current battery.
Saving Costs In Other Areas
Beyond battery production, GM also plans to get rid of over 2,700 unique parts across its vehicle lineup. This simplifies production and represents a 24 percent reduction in parts needed to build vehicles. This creates a ripple effect not just for its ICE cars and EVs alike, GM projects an average savings of $2,000 saved on each vehicle.
Several cost-cutting tactics are being employed by GM to simplify its overall production process and, in turn, increase battery production to 10X by the end of 2024. Employing all these strategies is expected to save GM an estimated $2 billion in production costs. On the EV side, this may mean a price reduction of $6,000 on the MSRP of each.
Cheaper EVs But Only For A While
Making these changes, especially on the EV side with batteries, will help GM save costs, but only at the initial stage. Tesla recently got rid of the LFP batteries since cars with those batteries don’t qualify for the $7,500 government tax credit. However, GM is currently taking advantage of the Inflation Reduction Act’s 45X, which favors domestic production. However, GM knows it has limited time to take advantage of this Act, so it is currently working on up to five battery options to further take advantage of future tax incentives and advancement in technology.
GM is quite confident about its plans and even took a jab at Ford, saying “It doesn’t need a skunkworks team to create affordable EVs.” This refers to the fact that Ford has a lot of ex-employees from Rivian, Apple, and Tesla working on their team to develop new battery technology. This is a funny one, since GM’s current Vice President used to be a former executive at Tesla, fulfilling a similar role as the expert on battery technology. GM has already started implementing changes, as it just released the lower-priced Chevrolet Silverado EV LT with more range.
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