Widespread usage of technology and rapid digitization are resulting in fundamental restructuring of the automotive market. With rising awareness about greenhouse gases and their effect on the global climate, prospects of the electric vehicle (EV) market are shining brighter than ever. A shift toward electric future has made it necessary for industry players to reorient their business model and accelerate the EV game. In this regard, General Motors (GM - Free Report) is leaving no stone unturned to demonstrate its EV prowess.
GM’s Next Level Electrification Plans With Ultium Drive
The U.S. auto giant recently unveiled the ‘Ultium Drive’ system, which will aid the company in transitioning to a fully-electric lineup down the road. The auto biggie is set to put into production ‘a set of five interchangeable drive units and three electric motors’, collectively referred to as Ultium Drive. So basically, rather than outsourcing for EV parts, the company looks to develop and produce the components in-house. By choosing to design its own e-axles, General Motors will be able to better integrate those with an electric car’s battery and the rest of the EV. Further, by the way of consolidation of wiring and other reductions, Ultium Drive is expected to be cost efficient. It is expected to drive battery cell cost below the $100/kWh level and the firm will be able to forge ahead even faster as it scales up EV production capabilities.
The company’s next-generation EVs (from small electric cars to electric pickup trucks) will be powered by Ultium Drive, which will not only boost General Motors’ manufacturing efficiencies but will also enhance the performance and range of its future vehicles. The Ultium Drive system will provide the foundation for General Motors’ upcoming green vehicles including the luxury Cadillac Lyric, Hummer pickup and SUV, an electric van, along with two EVs that the firm is making in collaboration with Honda Motor (HMC - Free Report) .
It should be noted that while General Motors will continue to develop and manufacture Ultium Drive units, it will still consider purchasing drive units and components from suppliers in some cases.
On a Spree to Revolutionize the EV space
General Motors seems to be going all out to embrace an electric future and gain a strong foothold in the fast-growing market. It aims to spend more than $20 billion through 2025 to launch gen-next EVs powered by new-low cost batteries. General Motors plans to roll out 11 new EVs as part of its ambitious plans through 2025, including at least 20 new models by 2023.The key element of the automaker’s strategy is the new battery system ‘Ultium’. With the launch of the Ultium Drive system, General Motors has taken the electrification game a few notches higher. Recent tie ups with Honda, Nikola and Uber display the automaker's ability to aggressively compete with established EV players and showcase its commitment toward an electric future.
In fact, last month, there was a lot of speculation around General Motors’ possible EV spinoff. Per CNBC, pressure on General Motors to spin off the electric vehicle unit as a separate business to unleash value is mounting, which would better position the company. If General Motors would spin off the EV business and create a standalone green vehicle company, the firm’s robust EV technology and upcoming vehicle lineup would surely grab more eyeballs, in addition to unlocking significant shareholder value. General Motors currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Should Tesla & Others Worry?
With General Motors revving up stakes in the EV landscape, it is giving tough competition to the market leader, Tesla (TSLA - Free Report) . With the Ultium Drive system, General Motors seeks to build a vertically integrated electric car business, much like Tesla. Moreover, with the Ultium battery, General Motors is targeting up to 400 miles of range or more, which is much better than average and almost on par with the EV behemoth Tesla.
Well, Tesla stands tall among rivals in the EV space on the back of its range and performance due to the company’s cutting edge battery tech. Last year, Musk said that it is working on new battery packs that will last for 1 million miles. He said “The new battery pack that is probably going to production next year is designed explicitly for 1 million miles of operation.” Industry watchers are keenly waiting for Tesla’s Battery Day, which will be hosted on Sep 22, wherein the company is likely to make several announcements about its efforts to minimize cost and enhance the range of batteries.
The Ultium platform is intended to be flexible and multifaceted, with the goal of undergirding a variety of vehicle types and shapes,much similar to Volkswagen’s (VWAGY - Free Report) modular electric drive matrix, known as MEB platform.
For years, it seemed that Tesla was the only automaker that was playing at the forefront of the EV phenomenon. However, things are changing with various major automakers including Ford (F - Free Report) , Volkswagen, Daimler AG (DDAIF - Free Report) , BMW AG (BAMXF - Free Report) , Toyota and Honda betting big on the EV market. General Motors’ big plans to capture the EV market are indeed intensifying competition for all major auto players and especially Tesla, which has attained the reputation of the gold standard over the years when it comes to electric cars.
Race to EV Supremacy Will Only Get Fiercer
The e-mobility industry is expected to witness massive growth in the coming years. Automakers are also fast changing their gears to electric as they are realizing the strong potential of green vehicles. The number of EV model launches is rapidly increasing. The 2020 decade will be the one wherein EV market share may grow exponentially, with prices of green vehicles reaching parity with their fossil fuel-powered counterparts.
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