GM Crab Walks Toward Its EV Future

General Motors would like investors to focus on its electric-vehicle future. The Detroit automaker plans to sell one million EVs annually in North America by 2025, with numerous new all-electric models coming in the next few years.

But for now, Wall Street has focused on the present challenges facing GM and the auto industry. Those are related to macro factors: inflation, rising interest rates, and a potential recession on the horizon.

Each can hit profit margins and weigh on consumer demand for new cars. GM stock is down roughly 35% year to date, versus a 13% drop for the S&P 500.

Barron's Al Root recently traveled to Detroit, Mich. to tour GM's Factory Zero, its first plant dedicated to producing nothing but EVs. Al also got to test drive the GMC Hummer EV. (I'm jealous, it's a $110,000 tank that weighs 9,000 pounds but goes from 0 to 60 miles per hour in about 3 seconds thanks to its 1,000 horsepower all-electric powertrain. It can also crab walk.)

While in Michigan, Al sat down with GM's CEO Mary Barra at the company's landmarked Global Technical Center.

Here are a few highlights from their conversation:

When did the EV light go on for you? 

We never stopped working on electric vehicles from EV1 [in the late 1990s]. We were way ahead of our time. The Volt we launched in 2010 was a proof point of that. EVs have always been a part of our R&D, but in the latter part of ’14 and into ’15, with a relatively new leadership team, I said, look, this business is going through transformation and there’s four major trends. There’s propulsion system, whether it’s EVs or hydrogen fuel cells, autonomous [driving], connectivity, and sharing. Those are going to transform this industry. So we can either sit around and be disrupted or we can lead this transformation.

Are U.S. car buyers ready for EVs? 

We believe that by 2030, we’re gonna see [EV penetration of new car sales] between 40% and 50% of the market. It is single digits right now.

To get to 40% or 50% by 2030, you have to win that customer who only owns one vehicle. That’s why we’re doing a full range of vehicles because the sweet spot of the market is between $30,000 and $35,000.

What convinces you GM will win in EVs? 

When you look at how many vehicles Tesla has or how many vehicles the competitor down the street has versus what we have a year from now, it will dwarf what they have. That’s why I say we’ll be the leader by mid-decade in the U.S. because we’re just going to have a broader portfolio.

Read the rest of Al's Q&A with Mary Barra here.