Why Is GM's Commitment to EVs Risky?
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By now, it’s clear that electric vehicles (EVs) will be part of the future of the automotive industry. However, this shift comes with risks, and automakers have a lot to figure out before they make big commitments to electrification.
CNBC reported that GM has an ambitious strategy to phase out gas-powered vehicles by 2035. This plan would benefit the environment, but analysts worry that GM’s profits would plunge with a pure EV lineup.
GM is one of the major manufacturers that’s betting on EVs.
GM needs a sales boost from electric vehicles
Electric vehicles have steadily grown in popularity and are predicted to become crucial in slowing climate change in the next few years. But there are still a lot of obstacles for consumers who want to switch to EVs including range anxiety and lack of charging infrastructure.
The hesitancy from consumers and higher starting price of EVs compared to gas-powered cars makes it difficult for manufacturers to make the initial shift.
If GM moves to a fully electric fleet, the brand will have to dramatically boost sales or risk losing a big part of its overall market share. GM will become extremely reliant on EV sales, especially since they’re not planning to build hybrids.
According to CNBC, this push is going to start very soon, with GM planning to release up to 30 new electric models as soon as 2025. The absence of a sales buffer between traditional gas-powered vehicles and new EV models makes this switch even more risky.
Is the world ready for mass EV production?
EV infrastructure needs to be improved to increase consumer demand for electric cars. Some surveys have shown that many Americans are still concerned about their access to charging stations and their EV mileage.
The new infrastructure bill proposed by President Joe Biden should help address some of the challenges to EV adoption. But it’ll take time to build chargers and improve EV technology so that more consumers are comfortable with driving electric cars.
Manufacturers will also be racing to lower production costs for their EVs to stay competitive in the market.
What is GM’s strategy for overcoming EV challenges?
There are several advantages to GM’s approach to the market that could help draw new customers and boost EV sales.
The brand is releasing electric versions of popular vehicles it already produces, such as SUVs and full-size trucks, which can make it easier for consumers to switch. This helps GM retain its current business and can potentially draw in new customers who want to drive greener GM models.
GM has also been focusing on developing its Ultium battery technology with the help of LG Chem. The battery is made to work for a range of different vehicles and is much cheaper to produce than other types of batteries.
According to GM, this battery uses less cobalt and other materials, which lowers manufacturing costs and makes electric cars more profitable.
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