NOTE: A version of this article was first published on or about Feb. 5, 2020, on my Seeking Alpha Marketplace site.
General Motors (NYSE:GM) detailed important new information about its electric vehicle strategy in its Feb. 5, 2020, analyst meeting in New York City. Let’s start with two new calendar items, which were announced at this event:
GM will host an electric vehicle day on March 4, 2020, at its technical development center in Warren, Mich.
GM will show its first all-new generation battery-electric vehicle (BEV) - which it had previously revealed will be a Cadillac midsize SUV in a similar size to the current XT5 - in April 2020. This is the “Tesla Model Y” competitor, although it probably doesn’t reach U.S. dealerships in volume until the second half of 2021.
Last week saw the first teaser about the GMC Hummer, which will be completely unveiled on May 20, 2020, and enter production in the second half of 2021 for a first delivery by December 2021. In the investor presentation on Feb. 5, GM’s second-in-command Mark Reuss provided further details about the GMC Hummer:
It will come in one, two and three motor configurations. This seems identical in principle to Tesla’s (TSLA) Cybertruck announcement from last November.
It will come in versions optimized for, among other things, towing and off-road performance. This is different from other electric trucks, insofar as we have not seen any such detail from those brands at this point.
Speaking of competitors - not only Tesla’s Cybertruck concept, but also Rivian, Bollinger and Ford (F) - GM said that it might just be first to market with the GMC Hummer.
As it stands, Rivian and Bollinger are set to start U.S. consumer deliveries approximately one year from now. That would seem to be at least six months ahead of the GMC Hummer.
Ford and Tesla have a similar official all-electric pickup truck timeline as GM: Late 2021.
Therefore, what GM seemed to imply is that it's confident in its own timeline for the GMC Hummer, whereas it thinks that some of the competitors may experience delays in the production of fully quality-tested electric pickup trucks. I say “fully quality tested” because there's at least one automaker who's famous for starting to sell early production cars, that normal automakers such as Ford and GM consider to be pre-production test vehicles. Usually, proper field testing before consumer units are delivered should be at least one year.
GM provided one interesting new detail about its all-new battery architecture, which could enter production in late 2021 and provide the basis for double-digit new BEV nameplates in the several years that follow. This detail is the wide span of battery sizes (capacities) that it will support.
Specifically, GM said that the smallest car could have as few as six or eight (I'm not sure what I heard correctly) modules, and the largest vehicle would have 24 such modules. Why is this so important?
Assuming each module consists of 6 kWh or 8 kWh of battery capacity, the smallest version GM contemplates making would be either 36 kWh or 48 kWh. That would be for a very small car, perhaps for some international markets including China. Those types of cars are lighter and are sold in areas where less than 200 miles could be perfectly acceptable for a meaningful share of the electric car market.
It would scale up from there, with 10, 12, 14, 16 etc, modules depending on vehicle size, aerodynamics, intended capability (towing, off-road etc) and targeted range. Larger trucks in the U.S. market would naturally have the highest need for capacity and range.
At a maximum of 24 modules, the capacity would look like this:
24 x 6 kWh = 144 kWh
24 x 8 kWh = 192 kWh
The largest Tesla today has an approximate 100 kWh battery capacity. So think about that: GM is looking to increase the size of the battery pack by as much as an estimated 44% to 92% above where the largest Tesla is today.
If you think about it, a GMC Hummer will almost certainly be an insanely heavy vehicle, with a brick-like aerodynamic profile, and perhaps not the most optimal rolling resistance either. In order to get at least 200 miles of EPA-certified range from such a product, you would need a huge battery -- well above 100 kWh.
It seems that GM agrees with me on this assessment. GM’s announcement today implies that at least some versions of the GMC Hummer could be outfitted with a battery capacity of somewhere in the 144 to 192 kWh range.
Light vehicles such as cars and pickup trucks take 4-5 years to develop. These development programs started well over three years ago. Along the way, there have been some delays, as requirements and strategies have mutated, including the impact of the strike and negotiations with the union. Strategies also are impacted by legislative changes.
All that said, the fruits of this development will start to enter production in 2021 and unleash with full force in 2022 and 2023. Barring things outside of GM’s control, such as legislation and other macro-political changes, the production outcome of these developments are cast in stone. They will happen.
It's like a ketchup bottle, where you keep hitting the “57” spot on the Heinz glass bottle: It takes a while, but then everything suddenly rushes out. This is GM right now. The new generation of electric cars are years in the making, and the fruits will be visible in 2020 with initial production in late 2021. 2022 and 2023 will scale those production numbers to industry-leading levels, at least as far as selling cars without huge losses are concerned (you can always sell more if you lower the price).
Tesla may be all the rage in the stock market right now. But in terms of actual product, GM will smother it with a vast array of diverse BEV nameplates starting in about 18-24 months from now: A long list of vehicles to eventually exceed the Tesla Model S, X, 3, Y and potentially a pickup truck. Just like the ketchup that smothered my juicy cheeseburger a moment ago, after I kept hitting that Heinz glass bottle for what seemed like forever.
PS. GM provided an endless number of additional, somewhat unrelated, nuggets in this presentation. One of them was that its manufacturing partner in Uzbekistan sells approximately 250,000 vehicles per year, yielding GM an astonishing 96% market share in that country.
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Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: At the time of submitting this article for publication, the author was short TSLA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.