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General Motors Ramps Up Electric Horizon Amidst Industry Hurdles


Michael Chen

March 19, 2024 - 10:23 am


General Motors Faces Uphill Battle in Electric Vehicle Revolution

A Chevrolet Ultium EV charger at the Detroit auto show in 2023. Photographer: Nic Antaya/Bloomberg

General Motors Co. is in a dash against the clock as it endeavors to course-correct its electric vehicle (EV) division, striving to fulfill the daring pledges made by CEO Mary Barra five years prior. Despite its ambitious visions for a new era of transportation, GM wrestles with a challenging reality riddled with setbacks and underdeliverances.

In the spring of 2019, as GM withdrew from substantial markets such as Europe and India, Barra declared to the company staff that there would be a strategic shift. The focus would be set heavily on EVs and autonomous vehicles. For Barra, it wasn't enough for GM to merely adapt and persist through the technological advancements; the company was expected to set the standard and lead the charge.

However, the path towards this electrified future has been speckled with unforeseen hindrances. Difficulties in automation and recurring software glitches have significantly hampered the car manufacturer, causing it to fall short of its EV delivery targets consecutively over the last two years. Barra now grapples with the critical task of transitioning GM from its foundations as a traditional automaker into a front-runner of twenty-first-century mobility.

GM's leadership indicates a potential emergence from these tumultuous times, reminiscent of the robotics obstacles Tesla Inc. faced seven years prior with its Model 3. There is an operational goal of manufacturing between 200,000 to 300,000 EVs in the current year, equipped with the much acclaimed Ultium battery packs—a significant increase from the previous year's production but still trailing the company's initial aspirations.

Chief Financial Officer Paul Jacobson, in a recent industry event in Washington, acknowledged the tribulations faced with the Ultium battery technology. "We’ve had some challenges scaling it," he said. However, Jacobson also signaled optimism, suggesting that the majority of these setbacks were in the company's rearview mirror.

The urgency for GM to manifest its potential is palpable among investors. The previous year witnessed less than 14,000 Ultium-powered EVs sold—a figure that startup Rivian Automotive Inc. managed to match just in the fourth quarter. GM has reported doubled battery production at its Factory Zero plant in Detroit, but the pace must accelerate to fulfill the set milestones.

Factory Zero represents an ambitious industry effort to upscale a fully automated assembly line that utilizes novel pouch-shaped battery cells. President Joe Biden, acknowledging the importance of American-built electric vehicles, commended Barra's vision during a tour in November 2021, which included a test drive of an electric Hummer prototype.

In a rush to expedite battery pack production, GM bypassed its typical best practices. GM historically has tested new assembly-line equipment in supplier warehouses to remedy any issues before introducing them into the production setting. Ultium's fully automated battery assembly lines, according to Mike Anderson, VP of global electrification and battery systems, bypassed this protocol and went straight to manufacturing.

Within Factory Zero, behind fenced perimeters, robots meticulously assemble battery cell pouches six at a time—compressing and arranging them with the precision reminiscent of crafting a panini. Four of these tightly-packed modules are then secured in a container equipped with a cooling apparatus below. The alignment of the weld tabs for connections is critical—if improperly placed, they will misalign or bend, leading to failures in quality inspections.

Every instance a tab misaligns, engineering teams have to delve within the robotic enclosures, diagnose, and rectify the issue, which is both time-intensive and costly. Anderson admits, "That’s more fires than anyone would want to see," referencing the literal and figurative fires GM has had to extinguish amidst these growing pains. The Detroit Fire Department has had multiple callouts to Factory Zero, including an incident where an accumulation of EV batteries ignited following a forklift accident.

In response to these complications, GM has rallied a task force of battery specialists, consultants, and experienced manufacturing executives. Notably, Kurt Kelty, a former Tesla battery executive, and JP Clausen, who was instrumental in escalating EV propulsion systems at Tesla's Nevada facility, have joined GM's management team to steer the battery operations and manufacturing, respectively.

Anderson is confident that GM is now on the cusp of overcoming these challenges at Factory Zero and is poised to boost production to meet the company's revised production targets. The lessons learned will be vital for the additional battery plant in Tennessee, slated to commence operations later this year, as well as for other future sites.

But the challenges for GM extend beyond hardware and into the digital realm. The launch of the Chevy Blazer EV hit a substantial snag due to complications with GM's proprietary infotainment software, which aims to replace familiar interfaces like Apple CarPlay and Google Android Auto. GM is steadfast in its approach to craft all vehicle software in-house, allowing for seamless integration with the cars' hardware. After extensive vehicle testing and mileage runs, GM declared on March 8 that the software has been amended, and with it, the Blazer EV's sales, along with a price reduction, are set to recommence.

Sam Abuelsamid, the analyst at Guidehouse Insights, casts a skeptical eye, "They should be able to eventually solve the battery production problems, but GM is struggling to build the right organization to develop software." This sentiment underlines the prevailing mistrust surrounding GM's Ultium EVs, "At this point, you can’t take GM at their word with Ultium EVs.”

GM's predicament is not isolated within the auto industry. Other major automakers such as Volkswagen AG have grappled with software glitches, Toyota Motor Corp. has experienced safety recalls with wheels detaching from its bZ4X model, and Ford Motor Co. momentarily halted production of its F-150 Lightning electric pickup due to quality concerns.

These challenges emerge at a pivotal time when the EV sector's sales momentum slows on a global scale; deterred by steep price points and apprehensions over charging facilities, coupled with manufacturing delays, these factors compound to present a considerable reputational risk, particularly amongst first-time EV buyers.

Interestingly, amidst its drive towards electrification, GM is simultaneously resurrecting its model of plug-in hybrids in North America—a return to a segment it abandoned five years ago with the discontinuation of the Chevy Volt—in a strategic gambit.

"This is the Wild West," comments Sam Fiorani, VP of global vehicle forecasting at AutoForecast Solutions. "Everyone is having a tough time."

The stakes are colossal for GM's venture into EVs. Barra's strategy involved contracting GM's global footprint—conceding market space to giants like Toyota and Volkswagen—to channel resources into the development of EVs and autonomous vehicles. Akin to setting the stage for a technological transformation, the plan was bold: to double GM's revenue to $280 billion by the decade's close, redefining GM as a technology powerhouse.

Even GM's Cruise robotaxi venture is currently navigating rough waters, following an accident involving a pedestrian and subsequent allegations of a coverup in California, leading to the temporary grounding of the entire robotaxi fleet.

There are also stakes tied to federal subsidies. The Inflation Reduction Act offers financial incentives to automakers that meet specific production prerequisites for EVs. GM is in line to benefit from tax credits ranging from $3,500 to $5,500 for each EV under the Biden administration's policies, potentially netting the company up to $1.65 billion should it achieve the 300,000 EV milestone. These subsidies stand to increase manifold as GM aims to scale up production capacity to 1 million EVs by 2026.

GM's shortfall in achieving its target to produce 150,000 EVs last year remains a shadow over its projections. The company's EV ventures have yet to hit velocity, largely padded by the discontinued Chevy Bolt sales. AutoForecast Solutions projects that GM will sell only around 112,000 battery-powered vehicles by 2024. Fiorani crystallizes the situation, "Buyers just aren’t lining up for these vehicles. If GM could make as many as they want, they might just end up competing on price with themselves."

Within these pages of automotive evolution, GM's march towards an electrified horizon is a narrative replete with innovation, ambition, and an unyielding desire to succeed amidst the industry's collective struggle to redefine mobility.

For more information: Bloomberg - Original Article