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General Motors aims to cut Tesla’s lead with lower cost batteries even though the EV industry will suffer if Donald Trump ends consumer tax breaks as promised, said the carmaker’s battery guru Kurt Kelty.
The former Tesla executive told the Financial Times that the Detroit carmaker was still committed to chief executive Mary Barra’s vision of “an all-electric future”, despite the cloud hanging over the industry following Trump’s election.
“We’ve got to have a business case without the incentives. And so those are just taken out from the beginning,” Kelty said.
The climate for EVs in the US has chilled. Trump issued an executive order in January signalling his intention to cut consumer subsidies for EVs. The industry is concerned he could also do away with tax breaks for green energy manufacturers contained in former president Joe Biden’s signature Inflation Reduction Act.
Kelty said that GM did not factor in the incentives in the IRA when it calculated that it could reduce the cost of a battery by $30 per kilowatt-hour this year. But he said he expected the auto industry as a whole to suffer if Trump rolls back subsidies.
“I’d be lying if I said it’s not going to have an impact,” he said. “If you remove the incentives, generally costs are going to go up overall for the industry. And so the adoption rate I would expect would not be as great.”
GM’s share of EV sales in the US rose from 6 per cent to 9 per cent last year, according to Kelley Blue Book, while Tesla’s fell to 49 per cent in the face of increased competition.
GM leapfrogged Ford to claim the number two spot in North American EV sales with the launch of the all-electric Chevrolet Equinox — its most affordable offering with a starting price of $27,500 with tax credits.
Barra said in 2020 that the company planned to claim Tesla’s slot as the number one seller of EV vehicles in North America.
Asked if GM could outdo Tesla in sales and battery-making capability, Kelty noted its rival’s market share had fallen. “They’ve dropped down,” he said. “They’re going to be in the the 30s next year in market share. We’re doubling as of last year, and we’re going to just keep going.”
GM says it went from 6.5 per cent of the US EV market in the first quarter of 2024 to 12.5 per cent in the fourth.
A self-described “battery geek”, Kelty joined the Detroit carmaker a year ago and has revamped its strategy for powering EVs. The company told investors in October that it would pivot from using its branded Ultium battery platform in favour of a greater variety of battery cell packs, including lithium iron phosphate batteries.
So far, GM has a line-up of nine EVs and plans to launch the Cadillac Vistiq this spring and the next-generation Chevrolet Bolt late this year.
Kelty also said in October that he believed conditions were ripe “for North America to seize EV battery leadership from China”.
Over the past 15 years China has come to dominate battery manufacturing, accounting for 83 per cent of global production, as well as making much of the world’s cathodes and anodes, and processing critical minerals. Europe and the US together account for 13 per cent of global battery production.
China’s CATL is the world’s foremost supplier of LFP batteries, a lower-cost alternative to nickel-rich batteries that more carmakers have embraced as their range has improved. Tesla imports batteries from China, and Ford is building a factory in Michigan that will manufacture them using CATL’s technology.
With a larger population, China sells more cars each year than the US, and 40 per cent of them are battery-powered. While the US is unlikely to make more batteries a year than China, it “could certainly be self-sufficient in terms of battery production and not rely on the Chinese”, said Sam Abuelsamid, vice-president of market research at content creation agency Telemetry. “It’s just a matter of will.”
GM now leads in US battery cell production and cost, Kelty said.
The company has plants running in Ohio and Tennessee churning out nickel-rich batteries and has nearly completed a third in Michigan, which it is selling to joint venture partner LG Energy Solution. It chose Samsung SDI for a joint venture to build a plant in Indiana. GM has also worked in recent years to build out its domestic supply chain.
“Historically, the battery innovations have always occurred in the US,” Kelty said.
“The Chinese have been very good at commercialising. What we’re doing now is we’re taking those inventions like we’ve always done here, and we’re going to try to commercialise them as fast as we can in North America.”
