The Detroit giant wants to produce 1 million electric vehicles in North America by 2025, despite disruptions affecting supply chains.
General Motors (GM) – Get General Motors Company Report gets the least love in the rivalry with Tesla (TSLA) – Get Tesla Inc. Report and Ford (F) – Get Ford Motor Company Report for winning over consumers looking for an electric vehicle.
Investors also seem to place the Detroit giant behind its two rivals if we stick to market capitalizations which now value Ford at more than $53 billion at the time of writing and GM at $51 billion. Tesla is far, far ahead with a market cap of over $861 billion.
These figures indicate how the three companies are perceived by the business community and it is clear that they are almost unanimous in thinking that Tesla will dominate its rivals by far. But GM has not given up.
The group led by Mary Barra has just made an announcement, confirming its ultra-ambitious objective of producing 1 million vehicles per year by 2025. To put that in perspective, GM delivered less than 25,000 electric vehicles in 2021.
Supply of Raw Materials Secured
GM has reached an agreement with South Korean battery maker LG Chem for a supply of cathode active materials (CAM), the company said in a press release on July 26. CAM is a key battery material consisting of components like processed nickel, lithium and other materials representing about 40% of the cost of a battery cell, the legacy carmaker explained. Basically, CAM is the centerpiece of the battery.
The terms of the agreement between the two parties stipulates that LG Chem will supply 950,000 tons of CAM to GM over an 8-year period. Supplies should start in the second half of 2022 running through 2030, coinciding with the timing of electric vehicle production targets announced by GM.
This is “enough for approximately 5 million units of EV production,” the two companies said.
“This agreement builds on GM’s commitment to create a strong, sustainable battery raw material supply chain to support our fast-growing EV production needs,” Jeff Morrison, GM vice president, Global Purchasing and Supply Chain, outlined.
“Importantly, GM now has contractual commitments secured with strategic partners for all battery raw material to support our goal of 1 million units of EV capacity by the end of 2025.”
GM has already announced that it will spend $30 billion by 2025 to develop numerous electric models in order to dethrone Tesla, the current leader in the electric vehicle market. To achieve this goal, GM, which has had to temporarily suspend assembly of certain models due to parts and chip shortages, is determined to securing agreements with suppliers to avoid new hiccups.
In addition to LG Chem, GM has also sealed a “binding” agreement with Livent Corp., for lithium, another key raw material for the battery.
“Going forward, we will continue to mitigate risk and drive down costs to help us deliver $90 billion of annual EV revenue by 2030,” Chief Executive Officer Mary Barra wrote in her recent letter to shareholders.
Less Cobalt
GM currently produces the Chevrolet Bolt, which comes as a sedan (Bolt EV) and SUV (Bolt EUV). The GMC brand has been manufacturing the electric version of the iconic Hummer since December, it’s a pickup/truck. Cadillac, the premium brand, recently started production of the Lyriq, its very first electric model. It also introduced a high-end luxury sedan, the Celestiq, on July 22.
2023 will be an important year product-wise as GM has promised to produce three new Chevrolet models: the Chevrolet Blazer EV which will be available in the summer of 2023, the Chevrolet Equinox EV which will hit the market in the fall of 2023, and last but not least the long-awaited Chevrolet Silverado pickup/truck EV.
The Silverado has already had around 150,000 reservations and will be available in the spring of 2024, Barra told shareholders. This vehicle is GM’s answer to Ford’s F-150 Lightning, Rivian’s R1T and Tesla’s long-awaited Cybertruck.
In all, GM, which currently has 80,000 reservations for Hummer EVs, plans to produce 400,000 electric vehicles between 2022 and 2023 in North America, Barra said.
To return to the agreement with LG Chem, GM explains that it will reduce by 70% the share of cobalt contained in its batteries. The company plans to add aluminum to the mix.
Cobalt is the most important element of raw materials going into batteries but it is mined under conditions that don’t respect human rights, according to nonprofits like Amnesty International.
The CAM secured by GM will be used by Ultium Cells LLC, a joint venture between GM and LG Energy Solutions, at its battery cell plants in Warren, Ohio, Spring Hill, Tennessee and Lansing, Michigan.
GM and LG Chem will also explore the localization of a production facility in North America by the end of 2025, they said.
