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GM relies on cheap battery and all new vehicle platform to bring profitable EVs

The CEO of General Motors, Mary Barra has given a statement that the company is planning to launch a new family of electric vehicles in 2021 that will cost less to build and make the profit for the automaker. GM is looking to develop an all-new electric vehicle platform that will accommodate multiple sizes and segments, to be sold by different GM brands in the United States and China, according to a report by Reuters.

The company will launch 20 new electric vehicles by 2023 and aims to sell 1 million electric vehicles a year by 2026. GM sees China as its main market for electric vehicles which is witnessing rising demand for electric vehicles with a push from the government.

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GM relies on cheap battery and all new electric vehicle platform to bring profitability in EVs

Along with developing all new electric vehicle platform GM is relying on a new battery system for the cost reduction which it claims will be 30% cheaper than the ones being used in Chevrolet Bolt now. At present, the lithium-ion batteries cost around $145 per kilowatt-hour and the company is working to bring it down to less than $100 per kilowatt-hour by 2021. If GM is successful in this endeavor it would bring the overall cost of electric vehicles much closer to comparable ICE models.

Range anxiety is another impediment for the adoption of electric vehicles, to tackle this GM is working to boost electric vehicle range to more than 300 miles (483 km) with the new batteries from 238 miles offered by Bolt models at present. The manufacturing plants for the new batteries will be set up in the United States and China.

Electric vehicles have huge disruption capability and are witnessing a recent increase in demand but profitability still remains a concern. The automakers are still struggling to develop business models that can bring returns for the company in proportion to that of ICE engine cars. Recently, electric cars focussed company Tesla reported highest ever quarterly loss after the launch of its latest car Model 3.

Daimler another automaker trying to foray into electric vehicles had stated that the electric vehicles can earn only half the margin of equivalent vehicles with combustion engines, therefore, the company is saving 4 billion euros ($4.8 billion) by 2025 to help offset the lower profitability of electric cars.

The challenges faced by the electric cars in its wide-scale adoption is the cost of the battery, although the price of the battery has come down by 70% since 2012 still is an impediment. The range is also a concern along with lack of charging infrastructure and high investment requirement other emerging technologies like autonomous vehicles, connected vehicles also act as a constraint.

To tackle this the automakers need to understand the preferences of the potential customers and design cars to match that. There is also need to develop new business models revolving around other emerging trends like shared mobility etc.

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