GM CEO Mary Barra promised investors that the automaker based in Detroit would be making money manufacturing and selling electric cars as soon as 2021.
What the CEO did not explain in detail was how GM is intending to accomplish something no other major automaker has been able to.
The answer rests in a bet on the combination of proprietary battery technology, a flexible low cost vehicle design as well as production that is high-volume with most of it in China, say current as well as former suppliers and GM executives and six experts in the industry.
If GM is able to meet the ambitious target of profitability set by Barra, then it would become two different businesses at some point during the mid-2020s. First traditional focus across North America on SUVs, trucks, and cars powered by fossil fuels, and a worldwide maker of electric cars with a center in China, and branching out into service of pay-per-use like autonomous taxis.
The promise by Barra to reach a profit is bold for a market segment that has been pushed more by policies made by governments that by demand from consumers, and where the largest maker of electric vehicles Tesla Inc. is eating up over $1 billion of its cash every quarter selling vehicles that are premium priced.
GM and Barra have invested a great deal in electrification strategy, and worked over the last year persuading investors that GM could compete with the likes of Tesla by building upon the success of the latest electric vehicle of the automaker, its Chevrolet Bolt EV, while cutting costs during the journey.
A key part of this plan, according to people who are familiar with company strategy, is cutting the cobalt in GM’s EMC 1.0 battery system. Cobalt, the most costly ingredient in lithium-ion battery cells, has soared in price the last two years due to expectations of a huge increase in demand from carmakers.
Cobalt prices reached a new record high at the start of 2018 on London’s Metal Exchange.
The new design of the battery for GM increases the nickel content. Nickel enables batteries to store as well as produce more energy.
Engineers at GM are working as well on other designs and technological advances said executives and patent filings by the company, including packaging of the batteries that is more efficient and improved systems for the management of energy flow, as well as for cooling battery cells.