GM CEO assures investors of profitable future amid EV transition challenges

GM CEO assures investors of profitable future amid EV transition challenges

Despite the lag in EV demand right now, Barra is confident that GM will see positive variable profits for its EVs by the end of the year.

General Motors (GM) CEO Mary Barra was trying to sooth shareholders concerned that demand for electric vehicles (EVs) is declining and gasoline-powered truck sales may peak, at an investor day in Spring Hill, Tennessee. To quiet investor fears, Barra said the company has not yet hit peak profits for traditional internal combustion engine (ICE) vehicles and predicted steady ramp up in EV sales so profits in 2025 will mirror those of 2024.

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Barra says by the end of the day, you’ll realize GM has a lot of upside to its valuations relative to what the auto industry thinks is peak profitability. Investors wanted to hear about a GM's restructuring plans in China and the success of its Cruise autonomous vehicle program, which has experienced setbacks following a fatal crash involving one of its self-driving cars. GM is actively reducing its inventories in China and improving sales, Barra said, but wouldn't detail how. But she said Cruise is still allowing supervised driving in a small handful of cities.

'We are projecting that losses will be no more than USD 2 billion in 2025, [Chief Financial Officer] Paul Jacobson said at a Monday press conference. The slower than expected conversion of cars to electric means GM and other automakers have adjusted their strategy away from breakneck growth towards stability, GM chief executive Mary Barra told Reuters.

Despite the lag in EV demand right now, Barra is confident that GM will see positive variable profits for its EVs by the end of the year. Jacobson also forecasted that in 2025 pricing would weaken as losses from EV operations begin to narrow.

GM shares rose slightly to close at USD 46.01. Portfolio manager at ACR Alpine Capital Research Tim Piechowksi said the push to curb complexity will allow for both lower costs and higher profits.

GM is not missing development opportunities by delaying hybrid models, Barra said, adding that strong gasoline demand will continue until 2027 regulations tighten up at which point GM will introduce plug-in hybrids.

GM's Ultium Cells battery technology was a major theme of the event. After all the Super Bowl hype into Ultium, it is an important branding move away from it when head of battery cells Kurt Kelty announced a shift to a more flexible approach to battery chemistry and configuration.