Analysts debate whether GM could surpass Tesla as top-selling EV maker in US

Jamie L. LaReau
Detroit Free Press

General Motors CEO Mary Barra has teed it up to take on Tesla and some auto analysts are watching closely, viewing the next year or so as a "renaissance" period for GM's electric vehicle transition.

Earlier this month, Barra told Wall Street that 2023 will be a breakout year for GM to prove it can roll out a series of new EVs and achieve industry-leading profit margins on them.

But what of the next five to 10 years? GM has its sights set on overtaking the current leader in U.S. EV sales, Tesla, which has a solid foothold in the United States and a wide-reaching and reliable charging network like no other. The latter gives it a competitive advantage over all EV makers, especially with consumers who have range anxiety.

Chief Executive Officer of General Motors  Mary Barra speaks at the grand opening of General Motor Co.Õs Detroit-Hamtramck EV Factory Zero on Wednesday, Nov. 17, 2021.  The president added $7.5 billion to create new electric vehicle charging stations as part of his infrastructure package recently passed by Congress and signed into law on Monday.

But Wall Street analysts say GM is well-positioned for growth, in part because of a strategic supplier strategy that secures GM's ability to get the raw materials needed to make batteries. Also, GM has a good head start in building its own battery plants to secure battery production.

But a lot can go wrong for GM as it starts executing its plan to bring 30 new EVs to global markets by the end of 2025, which could keep Tesla on top, they said. Still, of the Detroit Three and other automakers, GM is in pole position to at least surpass Ford Motor Co. to become the second largest EV manufacturer in the United States by the end of the decade, possibly even topping Tesla by that time, some analysts said. In 2022, Tesla sold 522,388 EVs in the U.S., Ford sold 61,575 EVs and GM sold a little more than 39,000 EVs.

"GM is in a massive position of strength to accelerate its EV vision, and battery and lithium supply is locked into 2025 and beyond," Dan Ives, managing director and senior equity analyst at Wedbush Securities, told the Free Press. "In our opinion, Barra and company are about to see a major renaissance of growth on its EV prospects for the Detroit stalwart. Tesla remains the clear EV leader, but GM will be a force in EVs for the next decade."

The Chevy Equinox EV will be the test

Ives believes that GM can be "a clear No. 2 player in EVs by 2030."

"Tesla owns the EV market and was years ahead of Detroit with Musk’s strategic vision," Ives wrote in an email. "In the EV landscape right now, it’s Tesla’s world and everyone else is paying rent."

GM has said it expects global revenue from EV sales to be about $90 billion in 2030. It has not given a unit-sales target. GM said it plans to build 400,000 EVs in North America through the first half of 2024 and it is installing capacity to build more than 1 million EVs annually in North America and another 1 million in China in 2025.

As GM works toward its targets, Tesla reported it delivered a record 1.3 million vehicles globally in 2022, up 40% from 2021. GM spokesman David Caldwell said GM sold 542,332 EVs worldwide last year.

Of Tesla's sales, 1.25 million were of the less pricey Model 3 and Model Y cars, according to a report by CNN. According to Tesla's website, the 2023 Model 3 starts at $42,990 and qualifies for a $7,500 federal tax credit for certain buyers.

More:What to know about the 2023 tax credit for clean vehicles if you're car shopping

More:Tesla starts an EV price war with GM and Ford, analysts say

GM presently offers the Chevrolet Bolt and Bolt EUV; both start at under $30,000. This summer, GM will bring the Chevy Blazer EV to market starting at $44,995 and the Equinox later in the year is expected to start at $30,000. Barra has said the Equinox EV's price tag will be key to mass EV adoption, and analysts will be watching to see whether she's right.

Driver’s side view of 2024 Chevrolet Equinox EV 1LT in Galaxy Gray Metallic driving down a road. Preproduction model shown. Actual production model may vary. 2024 Chevrolet Equinox EV available Fall 2023.

"The $30,000 Equinox (battery electric vehicle) coming soon is an interesting test to see if mass market consumers want EVs in high volume," David Whiston, auto analyst at Morningstar, told the Detroit Free Press in an email. "I think it’ll succeed."

Whiston stops short of saying GM will eventually take the EV sales lead from Tesla, though.

"Even if it’s true, it can always change," Whiston said. "I like the moves GM has made as it’s making them more vertically integrated and I do think they are very well-positioned because they moved faster than basically every legacy automaker to transition to (battery electric vehicles)."

Can Tesla change the game?

But, Whiston warns, in time, Ford could close the battery production gap as it builds its own battery plants in Michigan, Kentucky and Tennessee. As to Tesla, Whiston is skeptical Tesla can hit its goal to manufacture 20 million EVs a year by 2030.

"I don’t cover Tesla anymore but our analyst who does has them annually selling 5.2 million vehicles by 2030, which would not make them larger than GM," Whiston said. "That all comes down to do you believe something practical — that Tesla cannot reach its 20 million annual unit goal, as that’s two times Toyota’s size, or do you believe they can do something truly game changing and dominate the industry long term?"

Michelle Krebs, executive analyst at Cox Automotive,  is pictured here at the LA Auto Show in November 2018.

The winner of the EV sales race will also come down to who best delivers flawless execution of new EV production, because getting that right will help the manufacturer capture new sales and build customer loyalty, said Michelle Krebs, executive analyst at Cox Automotive.

"GM has had some fits and starts like with the Chevrolet Bolt battery recall and slow start to the Cadillac Lyriq launch. Execution is critical," Krebs said, noting that GM came in behind Ford in EV sales last year and Hyundai and Kia are making significant inroads in EV sales.

The outlier analyst who puts GM at No. 1

There is at least one analyst who believes GM will capture the EV sales crown within five years. On Feb. 22, Seeking Alpha published an investment note called Green Growth Giants. Seeking Alpha is a crowdsourced platform for investment analysis, said Richard Lalich, managing editor of Seeking Alpha.

The note, which was written under the pseudonym Long Term Tips, said with EV raw materials expected to be in a "prolonged period" of short supply, GM's various partnerships with producers of materials needed for EV batteries such as cobalt, nickel and lithium, gives it a big edge.

For example, last month, GM said it will jointly invest with Lithium Americas Corp. to develop the Thacker Pass mine in Nevada, the largest known source of lithium in the United States and the third largest in the world. Last fall, GM made a strategic investment in Queensland Pacific Metals of Australia to secure a supply of nickel and cobalt, both crucial to making batteries. Earlier last year, GM announced it made three supplier agreements to secure access to lithium, nickel, cobalt and Cathode Active Material (CAM) used in EV batteries. In December 2021, GM announced a joint venture with POSCO Chemical, which supplies CAM.

GMC will be the only brand to offer three all-electric trucks, with the Sierra EV joining the popular GMC HUMMER EV Pickup and SUV2. Underpinning these three trucks is GM’s groundbreaking Ultium Platform, which enables incredible versatility and optimal performance in an all-electric truck.

"While General Motors certainly isn’t immune from the potential of higher prices moving forward, it is the best-equipped automaker to navigate potential shortages," the research note said. That's because by securing production of critical materials, GM's supply chain should be protected against delays or extreme price volatility, the note said.

Battery production offers control of production

GM has also secured its battery production by partnering with LG Energy Solution in the Ultium Cells LLC joint venture. GM is spending about $7 billion to build three Ultium plants. The first, already operating, is in northeast Ohio. A plant in Spring Hill, Tennessee, will open later this year and one being built in Lansing will open late next year. The move has put GM ahead of its Detroit rivals in terms of locking in production of the important EV batteries.

"Only GM controls their own destiny in the 313 area code," Ives said.

It is for that reason, along with GM's strong partnerships with suppliers, that GM "will likely be able to overtake Tesla to become the best-selling EV brand in the United States within the next five years," the note on Seeking Alpha said.

Lalich declined to name the author of the Feb. 22 note, saying only, "Long Term Tips has a Marketplace service on Seeking Alpha, which is a separate service for readers who subscribe to that author's articles. That service is called Green Growth Giants."

Tesla's biggest advantage is its charging network

One of the biggest barriers to EV adoption has been a lack of a reliable and fast-charging network across the United States. That's where Tesla has the advantage over everyone: Its proprietary Supercharger network is vast, fast and reliable. And, right now, only Tesla vehicles can use all of it.

Tesla has about 17,000 Supercharger stations in the U.S., according to a USA Today report. It has 40,000 worldwide, according to Tesla's website.

Tesla Model S electric sedans are recharged at the first Michigan Supercharger station in St. Joseph, Mich, in December 2013. The state's second charging station officially opened  Monday in Grand Rapids

Recently, Tesla CEO Elon Musk agreed to provide 7,500 open-access chargers in the U.S. to non-Tesla brands by the end of next year. The conversion of those existing chargers or construction of new ones to serve EVs made by Ford, GM, Hyundai, Kia, Volvo, Volkswagen and other electric automakers will be paid for by tax dollars as part of the Biden administration’s $7.5-billion plan to fund 500,000 EV chargers throughout the U.S. There are about 130,000 chargers in the U.S. now, but many drivers complain they are often not working or are slow to charge.

Opening its charging network to outsiders will likely lead to bigger profit margins for Tesla.

GM is working to compete. It launched the Ultium Charge 360 network in 2021 to help EV drivers find access to some 60,000 charging stations across the U.S. and Canada. GM is investing $750 million in the charging infrastructure through Ultium Charge 360 to encourage EV adoption.

"Clearly on a macro level, the EV charging infrastructure is critical to proliferation of EVs," Krebs said. "That’s not just a GM challenge. That is every automaker’s challenge."

More:Here's how many GM dealers have signed up to build public EV chargers so far

Contact Jamie L. LaReau: Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.