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GM's 3-Step Strategy To Significantly Lower Bolt Price

How can General Motors lower the price of the Chevy Bolt and make electric car sales profitable. Apparently it has a 3-step strategy.

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Apparently no one is making serious money selling EVs. And GM knows that. Look at how much money Tesla is losing while selling EVs. Can this be turned around? GM's CEO Mary Barra has made a bold statement to GM's investors that by 2021 the company will make electric car sales profitable. This obviously, refers to Chevy Bolt.

How is GM going to make Bolt sales profitable? The company hasn't given out any specifics, but Reuters found out 3 main steps.

Reuters interviewed 6 current and former General Motors and supplier execs as well as 6 industry experts who revealed the following 3 steps, which they say is GM's main formula for success. It's very telling. Obviously, GM has got something going on in terms of product development that will bring the cost down.

GM's 3-Step Formual for EV Profitability

  1. Proprietory Battery Technology
  2. Low-Cost, Flexible Vehicle Design
  3. High-Volume Production

Several weeks ago when I was test driving a Chevy Bolt at a local Chevy dealership I asked the salesmen whey they are not pushing the Chevy Bolt in sales. It's a beautiful car with great specs. He said they are not making any money off of Chevy Bolt. They would rather sell ten Corvettes rather than Bolts. GM knows this and probably everyone in the industry know about this.

GM's New EMC 1.0 Battery is Key

According to Reuter's sources GM is working on a new EMC 1.0 battery System. It will help to significantly bring the cost down.

Here is how they plan to do it.

GM wants to slash the amount of cobalt used in this new battery system. Cobalt is the single most costly ingredient used in current lithium-ion battery cells. But the price of cobalt has skyrocketed in the past two years because of the expected huge demand of electric cars in the upcoming decade. Thus, GM wants to slash the amount of cobalt used in its new battery cells. The engineers also increase the amount of nickel in the battery design to enable the EMC 1.0 batteries to store and produce more energy.

The full cost of a GM Battery pack, used in today's Chevy Bolts, is $10-12K, or nearly 1/3 of the car's $36,000 MSRP. The development of the EMC 1.0 battery could drop this cost to $6,000 dollars by 2021, according to Jon Bereisa (mentioned in the Reuter's article), who directly helped to develop the Chevy Volt hybrid.

Therefore, with improvements in batteries, low-cost and flexible vehicle design as well as mass production in China GM should be able to significantly lower the price of the Chevy Bolt in 2021 and make its EV sales profitable.

I am sure all the other EV makers have similar strategies as well. Thus, I have two questions.

1. What do you think is the main challenge in this 3-step strategy?
2. Do you think we should expect a significant price drop and huge improvement in range of EVs by 2021?

Please, let us hear your opinions in the comments section below. If you liked this article and think it may help your friends, consider sharing or tweeting it to your followers.

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Michael (not verified)    January 9, 2018 - 10:49PM

It's easy to say 'make a cheaper battery with better capacity'. But the truth is, improvements will come incrementally and the real benefit will be in the scale of production rather than the capacity of the battery. So I think the price will drop, but range will stay about the same (perhaps the battery will shrink a little as well).

James Stricker (not verified)    January 11, 2018 - 2:42AM

GM has very poor track record designing/producing/selling electric vehicles. They will have to get it right this time or not survive - it's that simple.