Why GM’s Mary Barra Still Believes in EVs, Despite Slow Sales

Mary Barra, G.M.’s chief executive, said that the company had fixed battery-manufacturing problems and that its electric vehicles would soon be profitable.

Electric vehicles have had a hard year. Sales have been disappointing. Former President Donald J. Trump has regularly disparaged them. And even many environmentally conscious car buyers have been choosing hybrids instead.

Yet the chief executive of General Motors, Mary T. Barra, says the company is still committed to doing away with combustion engine cars in the United States by 2035 — and she may have good reason for her optimism.

G.M. says it will start making money on battery-powered models by the end of the year — becoming the only U.S. automaker aside from Tesla to achieve that feat. Sales of G.M.’s electric vehicles are starting to take off. And the company just introduced a model that sells for less than $30,000 after a federal tax credit.

G.M. and other manufacturers have delayed investment in electric vehicle projects. But in an interview, Ms. Barra rebuffed the notion that the transition from internal combustion has run out of juice. She said G.M. was determined to uphold its 2021 pledge to phase out sales of gasoline cars by 2035 in the United States.

“That is the plan we’re still executing,” she said.

Her expression of resolve comes at a critical moment. Without G.M., the largest U.S. carmaker, it is unlikely that the country can move away from internal combustion engines and the greenhouse gases they emit.

Tesla has largely driven the growth of electric vehicles. But lately the company’s sales have slowed and its chief executive, Elon Musk, has sought to focus the company on long-shot plans to build autonomous taxis and humanoid robots while saying little about new consumer models.

Ms. Barra went to Spring Hill, Tenn., south of Nashville, this month to show that G.M. was serious about electric vehicles and to reassure investors that they could make money on them.

G.M. has retooled a plant in Spring Hill to produce electric Cadillacs and has built an enormous battery factory nearby. It has invested more than $4 billion as part of a plan to build electric vehicles in numbers that will drive down sticker prices while increasing profit margins.

The latest G.M. electric cars and trucks can travel more than 300 miles on a charge and one, the Chevrolet Equinox, lists at $35,000 before a $7,500 federal tax break.

In 2022, two years into the pandemic, new electric vehicles were quickly snapped up. That is no longer true but U.S. sales of such cars and trucks still grew about 11 percent in the third quarter from a year earlier. Electric vehicles now account for 9 percent of the new car market, according to Kelley Blue Book, and some analysts expect them to hit 10 percent by the end of the year, up from 8 percent in 2023, as the Equinox and other affordable models reach showrooms.

G.M. did especially well during the third quarter, registering a 60 percent increase in electric vehicle sales largely because of new models like the Equinox and an electric Chevrolet Blazer. One in five Cadillacs sold in the United States from July through September was electric.

Tesla still sells five times as many electric vehicles as G.M. does. But given the early stage of this new technology, analysts said, Ms. Barra’s main competition is Ford, Hyundai and other established automakers that are competing for the same customers as G.M.

“They don’t have to beat Tesla,” said Tom Narayan, an analyst at RBC Capital Markets who follows the auto industry. “They just have to beat everybody else.”

Ms. Barra’s personal commitment to electric vehicles was on display late last year when problems manufacturing a key battery component stalled production.

Earlier in her career, all of it spent at G.M., Ms. Barra oversaw all the company’s production machinery. She drew on that expertise, spending “many days,” she said, alongside engineers in a Detroit factory who were trying to fix an assembly line critical to battery manufacturing. Ms. Barra said she wanted to “understand the situation — ask questions and then get them the support they needed.”

Once that problem, which involved packaging battery cells into modules, was solved, G.M. swiftly increased production at battery factories in Spring Hill and in Warren, Ohio. Both those factories, and a third under construction in Lansing, Mich., are part of a joint venture with LG Energy Solution of South Korea. G.M. is planning a fourth battery factory, in New Carlisle, Ind., with Samsung, another Korean manufacturer.

G.M. has recruited several senior executives from Silicon Valley for technology expertise. In June the company hired David Richardson from Apple to lead software development, an area where most carmakers have struggled. Kurt Kelty, a former high-ranking executive at Tesla and Panasonic, a big battery supplier to Tesla, joined G.M. in February as vice president in charge of batteries.

G.M. has also locked in a steady domestic supply of lithium, a metal critical to batteries, by investing in a Nevada lithium mine called Thacker Pass.

Big car companies like G.M. have struggled to move as quickly as Tesla and some industry observers remain skeptical.

The United States, where G.M. is strongest, accounts for only 11 percent of global sales of electric vehicles. China, where G.M. has struggled, accounts for 69 percent. Even if G.M. makes gains in E.V.s in the United States, “they are going to be leading sales in a market that is still moving slowly,” said Karl Brauer, executive analyst at iSeeCars, a used car website.

But as the market for electric vehicles expands, G.M.’s ability to churn out millions of cars — everything from Cadillac Escalades that can sell for more than $150,000 to the Chevrolet Trax, which retails for around $25,000 — may give it an advantage.

G.M. offers nine electric vehicles from its Cadillac, Chevrolet and GMC and delivery van divisions, including the Cadillac Lyriq, made in Spring Hill. That’s roughly twice as many models as Tesla, which gets most of its sales from two products. G.M. has plans to introduce several more models in the coming months.

Strong sales of gasoline and diesel vehicles have helped G.M. ride out fluctuations in electric vehicle demand, Mr. Kelty noted. “Maybe I shouldn’t say that,” he said, “but it’s bringing in a lot of profits that enable us to do some really creative things and really invest in the future.”

The Spring Hill battery plant, with automated assembly lines overseen by workers dressed in gray full-body suits to protect the sensitive machines from contamination, has allowed G.M. and LG to become one of the biggest makers of batteries in the United States. That puts the company in a position to reap cost savings that come with mass production.

The cells are two feet long and encased in silvery pouches. Twenty-four cells are packed into a module, which in turn are tethered together in battery packs. The number of modules varies based on the size of the vehicle and their driving range. Using the same battery modules for many different vehicles cuts costs.

By building batteries in the United States, G.M. can take advantage of federal subsidies that will be worth $800 million to the company this year. The incentives were included in the Inflation Reduction Act, part of the Biden administration’s effort to create a battery industry that is not dependent on China.

Those subsidies are at risk. Mr. Trump has vowed to repeal or undermine President Biden’s auto and energy policies. That will present a conundrum for the Republicans who dominate politics in Tennessee, Georgia and other Southern states that have benefited the most from the I.R.A.

G.M.’s investment in Spring Hill, which once produced Saturn cars, has turned the small city, set amid rolling green farmland, into a boom town. The 2020 census put the population at 50,000, but Jim Hagaman, the mayor, said the town may now have as many as 65,000 residents.

Mr. Hagaman, who is not affiliated with a political party, said he was confident that G.M.’s investment in Spring Hill was not dependent on politics. “They’ll still build cars,” he said.

Ms. Barra agreed. “Long before we knew what the I.R.A. was or that it was going to actually pass, we had set this strategy,” she said.

Representative Andy Ogles, a Republican and a Trump supporter whose district includes Spring Hill, did not reply to a request for comment.

Political pressure is also coming from car dealers, who tend to support Republicans.

Mickey Anderson, president of Baxter Auto Group, a chain of dealerships in Nebraska, Kansas and Colorado, said dealers like him generally agreed with Ms. Barra that electric vehicles “are the future.” But, he added, Mr. Biden’s clean air standards “are completely out of alignment with today’s consumer demand.”

Mr. Anderson leads a group of 5,000 dealers, including many who sell Chevrolet, GMC and Cadillac vehicles, that has pushed policymakers to ease penalties on carmakers that do not ramp up production of electric vehicles and hybrids over time.

Ms. Barra argues that electric vehicles will be popular regardless of who is in office. The electric Equinox will be cheaper to own than its gasoline-powered equivalent, taking into account savings on fuel and maintenance. And as the U.S. charging network grows, owners will be less afraid about running out of power on a lonely road.

Even the least expensive Equinox has the lively acceleration typical of electric vehicles. And next year, G.M. will revive the Chevrolet Bolt, which will be even more affordable than the Equinox.

“The consumer,” Ms. Barra said, “will choose an E.V. because there’s a robust charging infrastructure, because it’s affordable” and, she added, because “they love it.”