In case of success, the automaker, which is far behind Tesla in market cap today, would be the leader in electric vehicle sales in the United States by 2030.

The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, US, on March 16, 2021.
The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, US, on March 16, 2021. (Rebecca Cook / Reuters)

General Motors Co Chief Executive Mary Barra HAS told investors that the automaker plans to double revenue by 2030, expanding profits from combustion vehicles as it rolls out new electric vehicles and new digitally-powered services in a bid to catch up with Tesla Inc.

If GM succeeds, its annual revenue by 2030 would be about $244 billion, and the automaker would be the leader in electric vehicle sales in the United States. At GM's current pre-tax profit margin of 12 percent, that would imply annual pre-tax profits of as much as $29 billion. Sources told Reuters previously that GM would report impressive revenue growth and margin expansion.

Barra's ambitious financial targets for 2030 are the latest push in her campaign to convince investors that General Motors, not Tesla, can be the leader in both technology development and profitability as the auto industry navigates the most profound technology revolution since the mass-produced Ford Model T.

Barra and other GM executives began a two-day series of presentations to investors at the automaker's Technical Center in Warren, Michigan, making a case that GM can transform itself "from automaker to platform innovator" - a reference to Silicon Valley digital platform companies such as Apple Inc that have far higher stock valuations that GM and other incumbent auto manufacturers.

Barra, who took the helm in 2014, has lifted the company's share price from a narrow band around its 2010 initial public offering price of $33 to almost double that at one point. The shares were trading at around $54 on Wednesday.

But with a market capitalization of about $78 billion, GM remains far behind Tesla's $773 billion market cap, reflecting investor skepticism that GM can match Tesla's battery and software prowess.

Barra and GM President Mark Reuss outlined a plan for a transition to an all-electric fleet by 2035 that starts gradually, then would accelerate between 2030 and 2035. By 2030, more than half of GM's factories in China and North America will be "capable of EV production."

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Agile factories

GM has said it aspires to produce nothing but electric vehicles by 2035. Reuss said ramping up capacity to meet that 2035 target will depend on the "agility" of the company's factories, which will be able to build both combustion and electric vehicles.

GM's current workforce and factories are assets, not liabilities, Barra and Reuss said. Electric vehicle startups are building new factories at great expense. GM has plants and people it can repurpose quickly and at lower cost, Barra said.

"We want to take the entire workforce along with us,” Barra said.

Among the new vehicles, GM said Wednesday will be an electric version of the company's best-selling North American model, the Chevrolet Silverado pickup truck. Barra will reveal the electric Silverado at the CES technology show on Jan. 5, GM said. Suppliers have said that vehicle will be launched in late 2022.

“No one will be able to touch us in the electric truck space,” Reuss said.

Electric pickups will be a hotly competitive segment in North America, where petroleum-fueled pickups are the main source of profits for the Detroit Three automakers.

Ford Motor Co is on track to beat GM to market with the battery-electric Ford F-150 Lightning early next year, and Ford recently said it will double capacity for the Lightning at its Dearborn, Michigan, factory. Ford plans even more electric F-150 production at a complex planned for Tennessee. Startup Rivian began production of its electric pickup last month.

Tesla has delayed the launch of its futuristic Cybertruck.

GM executives have been careful not to make a hard commitment to abandon internal combustion vehicles by 2035, saying that will depend on market demand and government policy.

Eelectric dreams

Still, GM's embrace of electrification has won over some in an investment community increasingly concerned about climate change. Hedge fund Engine No. 1, which successfully challenged Exxon Mobil Corp earlier this year, on Monday said GM had carved itself a leadership position on battery technology and had a lot of growth ahead.

The target to double revenue by 2030 will depend in part on expanded profits from internal combustion vehicles, such as the Chevrolet Silverado pickup truck line and the automaker's successful large SUVs such as the Cadillac Escalade.

The revenue target also reflects Barra's confidence that GM can build profitable software-driven services around the internal combustion core, and capture new customers with electric vehicles, such as a $30,000 electric Chevrolet crossover wagon.

Cruise, the autonomous vehicle services company majority-owned by GM, is a central piece of the GM strategy. Cruise last week received licenses in California to begin offering rides to passengers, though it cannot yet charge for those rides.

GM is also investing in new operations, such as the BrightDrop e-commerce delivery unit and insurance offered through its Onstar telematics brand. In all, GM said it is managing 20 startups to develop new lines of business.

Tesla's impact on GM was evident throughout the presentations. The company said that by 2023 it will offer a new version of its hands-free driving system, called Ultra Cruise, that will use a LiDAR sensor behind the windshield and other sensors to enable hands-free driving in "95 percent of all driving scenarios."

Tesla Chief Executive Elon Musk has made similar claims for future versions of the electric automaker's Autopilot technology.

READ MORE: Tesla in 'Autopilot' mode hits parked police car

Source: Reuters