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GM’s CEO says electric vehicles will be profitable by 2025

General Motors says it expects its portfolio of electric vehicles to turn a profit in North America by 2025 as it boosts battery and assembly plant capacity to build over 1 million EVs per year.

CEO Mary Barra used the pledge to kick off the company’s investor day event on Nov. 17 in New York.

The profit figure includes vehicle sales revenue, benefits from emissions tax credits, and revenue from software and parts sales, she said.

Barra said the company’s EV portfolio appeals to a broader range of customers than the competition, in a lineup that includes a small SUV for around $30,000, plus a luxury SUV, pickup trucks, and Hummer SUVs in the next two years.

The Detroit automaker has a goal of selling only electric passenger vehicles by 2035.

GM is sticking by a pledge made by Barra to sell more EVs in the U.S. than market leader Tesla by the middle of the decade.

“Our commitment is to lead the industry,” Chief Financial Officer Paul Jacobson told reporters ahead on the investor day event. “We believe that with the infrastructure that we put in place and the vehicles that you’ll see today, we’ll be able to get there.”

The 2025 profit prediction is on a pretax basis that includes the capital costs of building battery factories and converting internal combustion plants to electric vehicles.

Jacobson said it will take time for individual electric vehicles to get to “low- to mid-single digit” profit margins in 2025 as costs are spread over more vehicles. EV profit margins will go higher once clean energy tax credits from the federal Inflation Reduction Act are applied, Jacobson said.

GM customers, he said, should be able to get half the $7,500 federal EV tax credit next year, reaching the full credit by mid-decade. To get the credits, EVs and batteries must be built in North America, with battery minerals sourced on the continent.

Despite economic volatility and the possibility of a downturn, GM appeared more confident in this year’s financial results, saying Thursday it expects full-year pretax income to be $13.5 billion to $14.5 billion. That’s within the previous guidance range of $13 billion to $15 billion.

GM also said its Brightdrop commercial vehicle unit, which is making electric vans and carts, will contribute over $1 billion of revenue next year.

For electric vehicles next year, GM will revive the Buick Electra name for a new SUV that will go on sale first in China, then in the U.S. Then comes the Cruise Origin, a multi-passenger vehicle built for the company’s ride-hailing service, and a Cadillac compact SUV.

Among the 2024 EVs is the GMC Sierra full-size pickup., a full-size Cadillac SUV, and full-size Buick and Chevrolet electric cars mainly for China.

Reuss also said GM is revamping the way customers buy electric vehicles, giving them the option of fully purchasing online or at the dealership and saving the company $2,000 per vehicle.

Rather than dealers holding huge inventories, they would keep fewer vehicles on lots. When a customer orders an EV, it would come from three U.S. distribution centers, two in California and one in George. They would stock vehicles with popular equipment combinations and allow deliveries in as little as four days, Reuss said.