General Motors (GM) is making significant strides in its pursuit of Tesla’s electric vehicle (EV) sales dominance by adopting a similar supply chain strategy. With the opening of a fourth battery plant in the heartland of the US, GM aims to bolster its position in the EV market. By following Tesla’s path of vertical integration and securing the necessary raw materials, GM has seen positive results in its quest to become a leader in the North American EV market.
The Power of Vertical Integration:
Tesla’s success with the Model 3, which became the country’s top-selling EV, can be attributed in part to its strategy of vertical integration. Recognizing the benefits, GM embarked on a journey of expanding its North American EV supply base several years ago. This involved building factories and establishing contracts to ensure a consistent and reliable supply of raw materials necessary for its electric vehicles.
GM’s Progress and Challenges:
GM’s strategic plan is showing promise, as it recently surpassed Ford in North American EV sales during the first quarter of the year. Notably, GM boasts six models eligible for the full $7,500 tax credit, more than its competitors Ford, Volkswagen, Rivian, and even Tesla. The company’s focus on vertical integration has been crucial in achieving this milestone.
However, despite these achievements, GM still faces significant hurdles on its path to becoming a true rival to Tesla. While it has managed to outpace Ford in EV sales, GM is yet to catch up with Tesla, which remains the leader in the market.
GM’s Aggressive Vertical Integration Strategy:
Industry analysts, including Sam Abuelsamid from Guidehouse Insights, acknowledge that GM has been exceptionally aggressive in adopting vertical integration, second only to Tesla. This strategy, which focuses on controlling various stages of the supply chain, gives GM greater control over quality, production efficiency, and cost management.
GM’s Success Hinges on Mass Production:
To solidify its position and achieve its goal of becoming a major player in the EV market, GM must demonstrate its ability to mass-produce electric vehicles reliably. Although GM faces some production challenges, such as the discontinuation of its popular first-generation electric vehicle, the Chevrolet Bolt, and the slow start-up phase of the Cadillac Lyriq, CEO Mary Barra remains determined. Barra has set an ambitious target of producing 1 million electric vehicles annually by 2025, showcasing GM’s commitment to the electric future.
General Motors’ pursuit of Tesla’s dominance in the electric vehicle market through a vertical integration strategy highlights its dedication to becoming a leader in the field. By replicating Tesla’s playbook, GM has made significant progress, overtaking Ford in North American EV sales and offering a range of eligible models for tax credits. As GM continues to invest in its supply chain and overcome production challenges, it is poised to be a formidable contender in the EV market, inching closer to its goal of catching up with Tesla’s pioneering position.