Outmaneuvering Tesla: GM's Plan to Create Domestic Battery Supplies and Cut Costs with Kurt Kelty
Title: Outpacing Tesla: GM's Rapid Ascension to America's Swiftest-Growing Electric Vehicle Manufacturer
Elon Musk's Tesla once ruled the electric vehicle (EV) market, but its dominance is waning. Sales have been on a downtrend, and rivals like General Motors (GM) are swooping in to seize the opportunity. This Detroit-based automaker, infamous for killing its first commercial electric car, the EV1, in 2002, is currently one of the fastest-growing players in the EV industry.
In 2024, GM's EV sales surged by 50%, reaching 114,432 – a record high for the company. A key factor behind this growth is the introduction of the new Equinox EV, a potential Tesla Model Y competitor. While Tesla, with its historic success and celebrity CEO, still leads the pack, selling 633,762 EVs to American buyers, its sales volume shrank by 5.6% from 2023, and not everyone is thrilled with Musk's antics.
GM is not content with stealing Tesla's market share alone. It aims for the heart of Tesla's operation: batteries. To succeed, the American giant is getting some assistance from a Tesla veteran with significant battery expertise: Kurt Kelty. Kelty brings a wealth of experience in battery pack development, having worked on Tesla's critical relationships with Panasonic and Sila.
GM plans to lower battery costs by emulating China's battery and EV production model. The company is investing in local graphite and lithium suppliers and collaborating with South Korea's LG Chem to create a cathode production facility in Tennessee. This strategy has the potential to drastically cut shipping costs and overcome quality control hurdles associated with long-distance transportation.
Kelty's mission as GM's vice president of battery operations is to focus on the battery as the primary cost driver and minimize expenses in this area. To accomplish this, the company is also looking into other battery technologies and reforming manufacturing techniques for cost-effectiveness and durability.
Making EVs Affordable: GM's Strategy
GM recognizes the critical role affordability plays in attracting consumers to electric vehicles. The company's strategy for a more pocket-friendly EV market, spearheaded by the new Equinox and revamped Bolt, is already paying dividends. With the Equinox catalyzing a 125% surge in the final quarter of 2024, GM is poised to ride the affordability wave, chasing away "EV rejectors."
Overcoming price barriers will allow GM to tap into a new class of EV buyers who were previously skeptical. Curbing electric car prices is also a top priority in the wake of the Trump administration cutting the $7,500 federal tax credit for new EV buyers, potentially inflating average costs by 12%.
EV Market Competition: A Threat to Tesla
As Tesla struggles with falling market share due to increased competition, its brand appeal is also eroding. When Strategic Vision found that 63% of potential customers question the Tesla brand, CEO Edwards believed it was "unforgivable."
With numerous brands like Hyundai, Kia, Honda, Volkswagen, Rivian, Lucid, and many others releasing an influx of electric models, Tesla's star may continue to fade. However, Mark Reuss, GM's president, is confident that the company's EV sales will show significant growth in 2025, without revealing exact numbers.
A Battery Expert Reunited with GM
Kelty's experience as both a Panasonic employee and Tesla alum makes him an ideal fit for GM's mission to slash battery production costs. His expertise, combined with GM's resources and manufacturing capabilities, could help create a battery cell that offers both energy density and an attractive price point.
From his early days at Tesla, dealing with inconsistent battery cells from a Chinese supplier, Kelty has learned the value of persistence in procuring quality products. He is determined to help GM develop battery technology that rivals the energy density of lithium-ion cells and the low cost of lithium-iron cells, thereby attaining a coveted "sweet spot" for automotive applications.
Reference(s):
- Forbes
Enrichment Insights:
- Battery Technology: Akin to Tesla's Roadster era, when Kelty secured a deal with Japanese company Sanyo to deliver better battery cells for production, GM is making efforts to collaborate with Japanese or Korean battery manufacturers, such as Panasonic and LG, to improve battery performance and reliability.
- Cost Reduction: GM's strategy is threefold: focus on internally developed batteries, invest in manufacturing facilities to reduce costs and secure supply chain, and work closely with raw material suppliers like SPG, which is starting to extract Lithium from a mine in Nevada, in order to secure a local domestic source.
- Manufacturing Practices: To optimize the battery pack, GM can explore replacing the cylindrical cell with a prismatic cell, which measures more energy per kilogram and provides a space-saving space advantage. Additionally, applying a mixed solution of Lithium-ion and lithium-ferro-phosphate (LFP) could improve battery performance and reduce pricing.
- Charging Infrastructure: Developing wide-ranging collaborations with other automakers, charging station providers, and the National Automotive Dealers Association (NADA) is crucial to standardizing EV chargers, allowing for faster, more convenient, and more accessible charging options. This would ultimately help EV adoption by making the ownership experience less cumbersome.
- Recycling and Waste Reduction: By 2025, GM aims to be a leader in waste reduction and recycling. To achieve this target, the company has invested in recycling firms, with partnerships like GM Ventures' support for Redwood Materials, to secure an adequate supply of raw materials and lower costs in the process. Through these collaborations, GM aims to establish a closed-loop supply chain and minimize environmental impact.
- Mark Reuss, GM's president, is optimistic about the company's EV sales showing significant growth in 2025, potentially outperforming Tesla's numbers.
- Kelty, as GM's vice president of battery operations, aims to minimize expenses in the battery area by exploring other battery technologies and reforming manufacturing techniques for cost-effectiveness and durability.
- GM is collaborating with South Korea's LG Chem to create a cathode production facility in Tennessee, aiming to lower battery costs by emulating China's battery and EV production model.
- Elon Musk's Tesla may continue to face challenges in the EV market due to increased competition from companies like GM, which is gaining momentum with its new Equinox EV and revamped Bolt.
- Kurt Kelty, a Tesla veteran with significant battery expertise, is working closely with GM to develop battery technology that combines both energy density and an attractive price point, aiming to create a coveted "sweet spot" for automotive applications.
