General Motors Chief Executive Mary Barra told investors on Wednesday that the automaker plans to double revenue by 2030, expanding profits from combustion vehicles as it tries to catch up with Tesla with new electric vehicles and new digital technologies. Rolls out operated services.
If GM is successful, its annual revenue will be about $244 billion by 2030, and the automaker will be the leader in electric vehicle sales in the United States. At GM’s current pre-tax profit margin of 12%, that means annual profit before tax would be as high as $29 billion. Sources previously told Reuters that GM will report impressive revenue growth and margin expansion.
Barra’s ambitious financial goals for 2030 are the latest push in his campaign to convince investors that General Motors, not Tesla, can be the leader in both technology development and profitability as the auto industry’s largest production since the mass-produced Ford model. Navigates the profound technology revolution. Tea.
Barra and other GM executives began a two-day series of presentations to investors at the automaker’s tech center in Warren, Michigan, making a case that GM could transform itself from “automaker to platform innovator” — a Silicon Valley digital platform. A reference to companies such as Apple Inc. which have far higher stock valuations than GM and other current auto makers.
Barra, who took over in 2014, has seen the company’s share price nearly double at one point from a narrow band around its 2010 initial public offering price of $33. On Wednesday, the shares were trading at around $54.
But with a market capitalization of about $78 billion, GM lags far behind Tesla’s $773 billion market cap, prompting investor skepticism that GM can match Tesla’s battery and software prowess.
Barra and GM President Mark Rees outlined a plan for the transition to an all-electric fleet by 2035, which begins gradually, then will accelerate between 2030 and 2035. By 2030, more than half of GM’s factories in China and North America will be “capable”. of EV production. “
How long before GM starts making electric-only cars?
GM has said that it aspires to build nothing but electric vehicles by 2035. Rees said increasing capacity to meet the 2035 target will depend on the “agility” of the company’s factories, which will be capable of making both combustion and electric vehicles.
GM’s current workforce and factories are assets, not liabilities, Barra and Rees said. Electric vehicle startups are building new factories at great cost. Barra said GM has the plants and the people who can repurpose it quickly and at a low cost.
“We want to take the entire workforce with us,” Barra said.
Among the new vehicles, GM said Wednesday will be an electric version of the company’s best-selling North American model, the Chevrolet Silverado pickup truck. Barra will reveal the electric Silverado at the CES technology show on Jan. 5, GM said. The suppliers have said that the vehicle will be launched in late 2022.
“No one will touch us in the electric truck space,” Rees said.
Electric pickups will be a hotly competitive segment in North America, where petroleum-fueled pickups are Detroit Three Automakers’ main source of profits.
Ford Motor Co. is on track to beat GM in the market with the battery-electric Ford F-150 Lightning early next year, and Ford recently said it will double the Lightning’s capacity at its Dearborn, Michigan, factory. Will do it Ford is planning to produce even more electric F-150s at a campus planned for Tennessee. Startup Rivian started production of its electric pickup last month.
Tesla has delayed the launch of its futuristic cybertruck.
GM executives have been careful not to make a drastic commitment to abandon internal combustion vehicles by 2035, saying it will depend on market demand and government policy.
Impact of climate change on investors
Still, GM’s embrace of electrification has won over some in an investment community increasingly concerned about climate change. Hedge fund Engine No. 1, which successfully challenged Exxon Mobil Corp earlier this year, said on Monday that GM has made itself a leadership position on battery technology and that there is much growth ahead.
The goal of doubling revenue by 2030 will depend on expanded profits from internal combustion vehicles, such as the Chevrolet Silverado pickup truck line and the automaker’s successful large SUVs such as the Cadillac Escalade.
The revenue target also reflects Barra’s belief that GM can build profitable software-driven services around the internal combustion core, and capture new customers with electric vehicles, such as the $30,000 electric Chevrolet crossover wagon.
Cruise, the autonomous vehicle services company owned by GM, is a central part of GM’s strategy. Cruise last week obtained a license to begin offering rides to passengers in California, though it may not yet charge for those rides.
GM is also investing in new operations, such as the BrightDrop e-commerce delivery unit and offering insurance through its OnStar Telematics brand. In total, GM said it is managing 20 startups to develop new lines of business.
Tesla’s influence on GM was evident throughout the presentations. The company said that by 2023 it will introduce a new version of its hands-free driving system, called Ultra Cruise, that will use a LiDAR sensor behind the windshield and other sensors “hands-on in 95% of all driving scenarios”. Will enable free driving.” “
Tesla Chief Executive Elon Musk has made similar claims for future versions of the electric automaker’s Autopilot technology.