Saturday, November 26, 2022

GM’s new business, an old car factory: Helping Tesla repair electric cars and make steady profits

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Barron’s pointed out that General Motors (GM)investAt the people’s meeting, it was revealed that this 114-year-old car factory is springing up with a booming new business: repairsTeslaofElectric Car, GM said on the same occasion that its electric vehicle business would be “solidly profitable” by 2025.

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GM President Mark Reiss said on the 17th that through 2021, GM has repaired more than 11,000 Tesla electric vehicles. “It’s a growing business. I must say it’s a new business.”

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Barron pointed out that this surprised everyone, especially Tesla’s investors, but GM has actually established a long-term distribution and service network. GM says that every American lives within 10 miles of a GM location.

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Of course, Tesla also has its own service network, but it has no traditional distribution base, so the rapid growth makes it difficult for the company’s service network to keep up. Tesla does not have a traditional distribution base, which increases the profit on each car sold, which is also Tesla’s advantage over traditional car manufacturers.

GM’s strongholds in the United States are all independent franchises, not dealers. For traditional automakers, having a distribution network also has its advantages. The first is GM’s service business, and GM is also building charging piles in its strongholds to build its own electric vehicle charging networks.

In addition, GM CEO Barra also promised investors that GM’s electric vehicle business in North America would be zero by 2025, as the company ramps up battery and assembly plant capacity to produce more than 1 million electric vehicles per year. Increases.

GM’s US electric car business is still burning cash, not making money. For example, the GMC Hummer has an asking price of over US$100,000 for each top configuration, but as of the end of September, only 782 vehicles have been delivered.

The cars are produced at GM’s Michigan assembly plant, Factory Zero, which produces only a handful of Hummer EVs. No matter how expensive it is, the plant, which produces fewer than 1,000 vehicles, is unlikely to make GM’s electric-vehicle division profitable. Tesla’s full-year operating profit just turned positive in 2020, and Tesla’s delivery volume that year was approaching 500,000 vehicles.

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