In what one analyst called the "best GM conference call in years," General Motors CEO Mary Barra outlined for Wall Street on Tuesday the automaker's plans, including the news that it will reintroduce plug-in hybrid technology to select vehicles in North America.
Some GM dealers have reportedly asked for GM to consider plug-in hybrids — which are propelled by both an electric motor and a gasoline engine for backup — arguing the vehicles would alleviate range anxiety and charging challenges that holds back some car buyers from purchasing a battery-electric vehicle. GM last sold a hybrid in the United States — the Chevrolet Volt — from 2010 to 2019.
“They’re listening to dealers,” Dan Ives, managing director of Wedbush Securities, told the Detroit Free Press. “This was a long time coming and they needed to go down this path to appease the dealers and it’s what consumers want. They’re hedging their bets. By not going hybrid, GM would be shooting themselves in the foot.”
GM Vice Chairman Bob Lutz introduces the Chevrolet Volt electric concept at the North American International Auto Show in January 2007 in Detroit.
During the detailed call with analysts, Barra outlined the steps GM has taken to fix its EV battery module production, how GM is working to fix software glitches on the Chevrolet Blazer EV that is in stop-sale status and GM's plan to relaunch its self-driving car subsidiary, Cruise, after it halted operations following an accident between the autonomous vehicle and a pedestrian last October.
Barra also said GM is moving its annual Investor Day a second time from March to "later in the year" due to the changes that are underway at GM and Cruise. She said GM will be able to show investors "more tangible proof points" of its business model at that time. GM first postponed its Investor Day last fall, moving it to March, due to the UAW strike.
"This was the best GM conference call in years because it was realistic and they took ownership," Ives said. "It’s a big step forward. There’s been some white-knuckle periods in the last few months and it feels like we’ve gone past that.”
Barra was clear that GM remains committed to EVs and eliminating tailpipe emissions from its light-duty vehicles by 2035.
"But in the interim, deploying (hybrid) plug-in technology in strategic segments will deliver some of the environmental benefits of EVs as the nation continues to build its charging infrastructure," she said.
General Motors CEO Mary Barra speaks to a crowd of journalists during a fireside chat with APA president Mike Wayland at the Gem Theatre in Detroit on Monday, Dec. 4, 2023.
Barra said GM is timing the hybrid launches to help it comply with the "more stringent fuel economy and tailpipe emissions standards that are being proposed." GM can add the technology to vehicles cost efficiently because GM already has hybrid vehicles for sale in other markets, she said.
She declined to share details on the timing or which vehicles will get the hybrid technology.
"I’ll have more to share on the hybrid capacity," Barra said. "We’ll adjust the capacity because we have the technology, we know the targeted segments we’re going to apply it to, so we’ll have the ability to flex and do what we need to from a hybrid perspective. For calendar year 2024, EV is our focus."
Is it a good idea to offer hybrids?
Jeff Windau, senior equity analyst with Edward Jones, said GM has "gone all in with EVs and now we’re seeing softening in the EV market."
"But there is demand for hybrids," Windau told the Detroit Free Press. "The challenge is when (GM) might look to launch something. Any type of hybrid launch would require additional expenses. That wasn’t outlined in the discussion today. It seems like it’s a thought, but that they’re not fully committed to it yet. We’ll have to see how it plays out."
David Whiston, auto analyst at Morningstar, told the Free Press that, "The hybrid comment is GM reacting to actual demand versus ambitious (zero electric vehicle) goals of GM, the overall industry, and regulators. EVs aren’t affordable for many now and there needs to be more public and residential charging setup. That takes a lot of time. The base level Equinox starting at around $35,000 in midyear is a key test for how much mass market EV demand there is, especially if it’s not Tesla making the affordable EV."
How's GM doing on its EVs?
GM has more than 100,000 reservations for its EV pickups, which GM expects to fulfill in 2024 and 2025, Barra said. She said GM's joint-venture battery cell manufacturing facility, Ultium Cells LLC, in Ohio is "at full production" and a new Ultium Cells plant in Spring Hill, Tennessee, will began shipping battery cells this quarter.
"In addition, our supply chain team has moved very quickly to resource two minor cell components that the U.S. Treasury published in its updated IRA guidelines in December," Barra said. "This change means new production going forward of the Chevrolet Blazer EV and the Cadillac Lyriq will qualify for the full $7,500 consumer credit."
Earlier this month, GM said it would offer the $7,500 credit on those EVs that no longer qualified for the tax credit. Barra said GM estimates that will amount to about 25,000 EVs for which GM is paying the discount.
The 2024 Chevrolet Blazer EV RS in Iridescent Pearl Tricoat. GM has started shipping this trim, built in Mexico, on July 31, 2023.
GM has improved the automated equipment at its battery assembly plants used to build the battery modules and GM will install new high-capacity assembly lines by midyear, both helping speed up EV assembly, she said.
Finally, GM is in the process of resolving software problems on the new Chevrolet Blazer EV that affected some owners' display screens and charging ability, resulting in a stop-sale on the vehicle earlier this month.
"They’re working with a huge sense of urgency to lift the stop sale soon," Barra said. "We disappointed these customers and we know it. We are determined to get the software right and we will. We have made several organizational and process improvements that will help us deliver the best possible customer experience going forward.”
Cruise: Building better relationships
GM CFO Paul Jacobson said GM will slash its investment in Cruise this year by $1 billion. The subsidiary is mired in a crisis as the U.S. Department of Justice and the Securities and Exchange Commission opened investigations into Cruise following the accident in San Francisco with the pedestrian.
Barra said GM has begun to implement the changes necessary to build “a better Cruise” after reviewing the results of a third-party study released last week. GM remains committed to Cruise and believes autonomous vehicle technology is safer than a human driver, she said. But when introducing "transformative technology," it has to be done working with regulators and first responders, Barra said.
“So as we roll out anywhere, we’re going to make sure we build the right relationships, they understand the technology and they understand the benefit of the technology," Barra said.
In the next few weeks, GM will develop a plan to relaunch Cruise operations and GM will share that timetable for returning the robotaxis to the roads "soon."
GM is considering whether future funding for Cruise will come from it or from outside investors, Barra said.
