- Once-bankrupt U.S. carmaker eyes foreign markets as bottom line improves
According to Nikkei Asia’s article published on October 19, 2022, U.S. automaker General Motors plans to release electric vehicles overseas, including in Europe, a market from which it had almost completely withdrawn.
The company has downsized most of its overseas operations -- except for China and Latin America -- since it went under in 2009. But as its bottom line improves, it will attempt comebacks in markets it had once left.
In a recent interview with Nikkei, GM Senior Vice President and President of GM International Shilpan Amin elaborated on the company's future strategy. GM International oversees operations in more than 60 countries outside of North America and China.
"By 2035, the U.S. will be all electric. Our light duty vehicles will be all electric. And what we're doing is defining the timeline for the rest of the world to also adapt," Amin said. He added the company considered the possibility of launching EVs in all of the countries managed by GM International.
GM plans to release the Lyriq, an EV made by its luxury brand Cadillac, in Japan next year and may also roll out Chevrolet's EV there. Currently, the combined sales of Cadillac and Chevrolet in Japan are limited to around 1,500 units a year.
Lyriq is a sport utility vehicle powered by the Ultium battery, which GM developed as a core of its EV rollout. The company says it can run for more than 400 km on a single charge.
GM plans to launch an EV offensive in markets such as the Middle East, Latin America and South Korea. The company plans to debut 10 models in South Korea by 2025, where it has development and production facilities.
GM also plans to roll out EVs in Europe in the middle of next year, though it did not specify which brands and models would be involved. The company almost completely withdrew from the European market when it sold German automaker Opel to France's PSA Group, now Stellantis, in 2017.
GM aims to stop selling gasoline-powered cars by 2035, and plans to roll out new EV models in the U.S. in 2023 and 2024, including electric versions of the Chevrolet Silverado pickup truck and the Chevrolet Equinox SUV.
The company plans to release 30 EV models globally by 2025, with plans to produce 1 million units a year in North America.
GM went bankrupt and was nationalized in 2009, and has continued to streamline its nonperforming businesses, mostly operations overseas, even after it emerged from government control in 2013. It also withdrew from Europe and India, and cut back its operations in Australia and Thailand. The company had sold more than 9 million units globally until 2017, but numbers fell to around 6 million units now that it has reviewed its overseas operations.
Thanks to the streamlining of its businesses, GM's financial performance has improved. The company's profit margin before interest payments and taxes jumped to 11.3% in 2021, reaching double digits for the first time in around a decade. The company is looking to expand its overseas operations focusing on EVs.
Cost cuts will be key to making EVs more affordable. Costs will fall if more cars are sold and economies of scale are achieved, but until then, automakers will have to cut costs through technical development and improved supply chains.
Amin said that the company was spending a lot of time on finding ways to build a better value chain.
Costlier production in the U.S. could weigh on GM's EV push. The government has limited the recipients of incentives for EV buyers to vehicles made in North America. While this could encourage more domestic production, it would also push up labor and logistics costs.
For GM, an upcoming partnership with Honda Motor will be an important strategy in seeking economies of scale. The two companies have agreed to jointly develop EVs, among other things.
"I think they have an exciting thing with the partnership and that gives us more scale," Amin said. "And when you can get scale, it brings affordability and drives down the cost, which allows you to be more affordable to the customers."
He added that the scope of the partnership that GM has announced Honda is "limited," but may be just the beginning. "I think there are other opportunities with Honda," Amin said.
