GM Is About To Hit A Huge Milestone In Electrification

General Motors beat expectations in the third quarter as it made a little more money on its current products. The company also hinted that it would finally meet the most critical milestone in its journey to become an EV leader.

Today’s installment of the Morning Dump is going electric like Dylan, though hopefully with better results. GM is doing better than expected and Tesla, likely, will report that sales were up at the cost of lower margins. What do investors want to know? When the non-robotaxi cheap car is happening.

Lucid has continued to report higher sales and continued to lose money. It’s going to do another raise to see if it can keep going long enough to produce the Gravity and a smaller CUV. This month is the 20th anniversary of Jalopnik and the site has been sold. This wasn’t a shock, but it’s important.

EV Variable Profitability Comes This Quarter

GM’s stated goal this year was to reach profitability in 2024. When that was announced the assumption was that GM’s EV sales would be way higher than they are now, but it sounds like GM is going to pull it off at some point in Q4.

This is a big deal. General Motors has been making electric cars for years and has invested in a platform, Ultium, that can be produced at a large enough scale that the company can start to squeeze out some sort of profit.

With the exception of Tesla, no large non-Chinese automaker I can think of is truly profitable when it comes to electric cars. The investments are too high, the market too competitive, and the scale just isn’t there yet. By doing everything on one platform GM has gotten a little closer.

Here’s GM CFO Paul Jacobson explaining this in more detail, as reported by the Detroit Free Press from the company’s earnings call:

Jacobson told reporters during the earnings call that the reason it is so important to reach variable profitability on EVs is because, “Variable profit is a really important step on the journey towards profitability because what it means is you’ve reached an inflection point where the profits you produce on a per unit vehicle start to go to make up for some of the fixed costs that you’ve already put in. We’ve made substantial investments in our EV business over the last several years so getting to variable profit positive means that we scale, our (pretax) losses start to come down.”

Jacobson said GM is running its battery cell plant, a joint venture called Ultium Cells LLC, in Warren, Ohio, at 80% capacity and its plant in Spring Hill, Tennessee, is running at 40% capacity.

“Every cell that it produces is cheaper under our joint venture arrangement because we’re absorbing the cost of the facility,” Jacobson said.

Technology is important, and GM’s Ultium isn’t particularly groundbreaking, but having the most efficient platform in the world in terms of range is less important for a company than having one that’s efficient in terms of production. After a lot of work, GM is getting there, helped in large part by its sub-$30k (after incentives) Chevy Equinox EV.

Will GM be net profitable from the year on EVs? Nope. But it’s going in the right direction and if it can be net profitable on EVs next year while also being profitable on everything else that’s a good sign for the company.

Tesla’s Investors Don’t Seem Swayed By The Cybercab

We have many thoughts about the Tesla Cybercab around here and we’re not alone. Tesla is going to have its quarterly earnings call tomorrow afternoon, and investors are already starting to post their questions on Say, which is a platform that the company uses that allows people to vote on which questions get answered.

A lot of concerns seem to revolve around the affordable Tesla, including the top two questions:

We’ve been over this, but the theory is that Elon Musk is bored with making cars and killed the $25,000 Model 2 in order to make it the Cybercab, which is way sexier.

The problem with this strategy is that the Cybercab is a long-term project, and retail investors want to keep seeing the line go up-and-to-the-right, and many of them, based on voting behavior, seem to think that a sub-$25k Tesla is key to that plan.

That’s maybe true, although Tesla’s sales rebound in the third quarter was likely due to discounting, so the company may report lower margins tomorrow. How selling a lower-cost car could contribute to higher margins is an open question, unless Tesla thinks it can do so while also getting a $7,500 tax credit (thus making it theoretically a $17k car) or it can produce the car more efficiently.

Other questions revolve around wait times at service centers, the Tesla Roadster, and how the Cybercab service might actually work.

Lucid Is Raising More Money

Every few months the government of Saudi Arabia, via the Public Investment Fund, dumps more money into electric automaker Lucid. This is the main reason why the company, which only makes one very good car, is still in business while others are struggling.

Lucid needs to make more vehicles that’ll appeal to a larger swath of the population, and in order to do that it needs cash. A lot of cash. So much cash. Last week it was reported that the company was trying to raise about $1.67 billion from a public offering:

“While the offering helps boost liquidity, the fact it resorted to issuing equity after such a precipitous decline for the stock over the past several quarters is a major red flag,” said Garrett Nelson, vice president and senior equity analyst at CFRA Research.

If there’s any good news for Lucid it’s that the company did manage to get a bit more than expected, somewhere around $1.75 billion. That money will go towards the expansion of its Arizona plant, building a new plant in Saudi Arabia, building out a sales service network abroad, and getting ready for the launch of the Lucid Gravity.

Jalopnik Sold To Static Media

I’m also out at Jalopnik FYI. Because it got sold though, not because of RFK Jr. https://t.co/QFvX7vKceF

— Rory Carroll (@Rory_Carroll) October 21, 2024

The site that gave many of us our first job in automotive media has been sold. Jalopnik will now be a part of Static Media, which also owns SlashGear and The Takeout.

It’s been common knowledge in the industry that the site has been for sale for about a year, though potential suitors I’ve spoken with couldn’t see a path forward that didn’t involve massive staff reductions. The bright spot here is that almost all of the staff has kept their jobs, although EIC and pal Rory Carroll is not one of them.

It’s the 20th anniversary of Jalopnik this month and we wish everyone there the best of luck.

What I’m Listening To While Writing TMD

Here’s Bob Dylan making everyone at the Newport Folk Festival mad by playing “Like A Rolling Stone” with an electric guitar. The ’60s were wild, man.

The Big Question

What milestone does a company need to hit in order to be a “successful” electric carmaker?