GM drops Ultium name, says it will build a new battery center and EVs will be profitable

General Motors said Tuesday that it is dropping the name “Ultium” for its electric vehicle batteries and the technology that propels its EVs despite spending years and millions of dollars to promote the brand. The company said the batteries and technologies will remain, but the name “Ultium” will go.

GM also announced it will start building a battery cell development center at the company's Global Technical Center in Warren. It did not provide a date for when it will break ground, but said the center will be a new building with a target of early 2027 to start building battery cells.

Kurt Kelty, vice president of GM's battery cell and pack, said the new battery cell center will give GM an “increased capability” to close the learning gap between cell development and mass production while reducing development times by up to a year from concept to launch of new battery technology.

“The battery cell development center will enable us to prove out new GM concepts ... which can then be shared with our manufacturing partners to accelerate their ability to provide production cells to us,” Kelty said.

Those announcements were part of GM's investor day in which GM's leaders presented a picture of stability for the year ahead to investors, highlighting the carmaker's robust sales of gasoline-powered vehicles, recent growth in the sales of its electric vehicles and its cost-competitive advantage in making its own battery cells as reasons behind the company's confidence that it will deliver ongoing strong earnings results.

Most importantly, GM leaders assured investors that EVs will not remain a bottomless pit of profit losses.

"We believe our EV losses have peaked this year and we’re focused on significantly improving profitability next year," GM CEO Mary Barra said, adding that GM is on track to produce 200,000 EVs in North America this year and the EV portfolio will reach positive variable profit this quarter.

GM's financial projection ahead

Variable profit is when the revenue GM earns from selling the vehicle exceeds the direct cost of producing it. The calculation excludes corporate or “fixed” costs, measuring only the costs that go into the car and the revenue earned from the car directly.

GM CFO Paul Jacobson told investors he expects $2 billion to $4 billion profit improvement from EVs next year.

It is a promise the company has been making to investors for many months as Wall Street has worried about continued losses in profits on EVs, sales of gasoline-powered vehicles plateauing and the future threat from Chinese EV-makers such as BYD.

But Barra reassured investors that GM is on the right path, noting that GM will exit 2024 with a fixed cost structure that is $2 billion lower than it was two years ago and expects GM to deliver similar financial results in 2025 as it has this year. She said GM is in the process of launching eight new or redesigned gasoline-powered SUVs in North America going forward into next year.

Also, GM is working with its partners in China to take "bold steps" to ensure GM's business in China is profitable and sustainable. Barra has said in recent months that operations in China, which used to be a moneymaker for the company, are "unsustainable" without a restructuring. GM recorded a $104 million loss in the region during the second quarter.

"In China you’ll begin to see evidence of a turnaround yet this year with a significant reduction in dealer inventory and modest improvement in sales and share," Barra said. "The combination of these factors will allow GM to continue to generate and return signicant cash to shareholders after we reinvest in the business."

The presentation came during GM's investor day, which is typically an annual event, but GM skipped it last year when the automaker was in the midst of a targeted strike by the UAW and needed to focus on negotiating a new contract. At that time, GM pushed the day to the first quarter of this year only to delay it again. GM's leaders cited significant changes underway at GM and its self-driving subsidiary Cruise, which meant it made sense to host the event later in the year.

The new Bolt price is hinted at

GM held this year's investor day at Spring Hill, Tennessee, so that it could showcase the factory where it builds its all-electric Cadillac Lyriq. It could also take investors to the battery plant nearby, where its joint-venture plant Ultium Cells LLC, makes the battery cells that power all of GM's new EVs using its proprietary Ultium propulsion system. GM said Ultium Cells plants will retain the Ultium name.

The purpose of investor day is for company leaders to offer investors a deep dive into the automaker's overall business strategy and vehicle programs. It is a chance for investors to test drive vehicles, see the company's processes first-hand and ask questions.

Barra touted GM's ability to find cost efficiencies especially in manufacturing saying that steadily declining battery cell prices driven by the scale, the quality and the efficiency of GM's Ultium Cell plants are key factors driving EV profitability.

"We’re adding EV assembly capacity in a capital efficient way as well," Barra said. "For example, we saved more $1 billion in capital at Spring Hill alone by adding EVs to our existing capacity instead of building a greenfield plant. We now have the scale to expand the Lyriq and add new models like the three-row Cadillac Vistiq. All of this clearly separates us from competitors who haven’t launched a dedicated EV platform or built their own cell plants.”

This year's investor day is a marked departure from those of the past when GM leaders would lay out ambitious goals, such as in 2021 when GM said it planned to double revenue to about $280 billion by 2030 with the help Cruise and lofty prediction in future EV sales. In Tuesday's meeting, GM leaders instead reassured investors that it is on a path to continually improve profits across the board.

GM President Mark Reuss told investors that in the third quarter GM captured a 9.8% marketshare of EVs, up from about 7% in the second quarter.

“We have more EVs on the way, including what will be our most profitable EV yet, the Escalade IQ,” Reuss said. “Late next year, we will launch the next generation (Chevrolet) Bolt. It will be a moneymaker for us. It will have the latest technology and faster charging. It is the direct result of an investment in the next generation platform.”

The price for the new Bolt is not final, Reuss said, but it will be only "slightly higher" than the 2023 Bolt which started at $28,795.

GM reduces the number of parts

Still, the a slower-than-anticipated EV transition by consumers has led many automakers to tweak their EV plans, including GM which in July said it would push back the reopening of Orion Assembly plant by about six months to mid-2026 based on the slower EV growth.

GM is sustaining its profitability largely on sales of gasoline-powered vehicles. In July, GM reported a 37% gain in its adjusted pretax income , to $4.4 billion, for the second quarter. GM leaders credited the results to strong sales of gasoline-powered pickups and SUVs, improving EV sales and stable pricing with low incentives.

But the automaker is also finding more efficient ways to engineer and produce vehicles that take out cost and make production more efficient. Reuss said as an example, engineers have taken out 24 parts in the Cadillac Lyriq, lowering its cost. The vehicles still demand strong pricing because of their performance and design, Reuss said, but moving away from various engine configurations saves costs and improves efficiency.

Going forward, GM expects to see higher profit margins for the new Chevrolet Equinox, Traverse, GMC Acadia and Buick Enclave SUVs.

“These segments represent more than a million units in annual volume so it is a big profit tailwind," Reuss said, adding that GM’s average transaction price this year has hovered around $50,000, which is $5,000 higher than the industry average.

Reuss said GM remains on track to offer hybrid variants to some models in 2027.

GM reports third quarter earnings on Oct. 22. But last week, GM reported a 2.2% decline in U.S. new vehicle sales in the third quarter as sales of its Chevrolet pickups, particularly to fleet customers, came in lower than the year-ago period, which was a strong quarter for comparison.

Shareholder expectations from GM

Many shareholders have grown uneasy about the U.S. auto market as affordability of new and used cars remains constrained and growth in EV sales has been slower than anticipated. The result has been GM's stock price has been volatile throughout the year, even after the company posted upbeat earnings results in recent quarters, and raised guidance. GM’s stock price closed up .065% to $46.01 Tuesday afternoon.

Morgan Stanley analyst Adam Jonas recently downgraded GM and Ford Motor Co.'s stock noting the automakers growing U.S. inventories, affordability issues and the competitive threat from China. Investors are seeking assurance that EVs will not remain profitless and that GM can bring down the costs of EVs.

"The big areas of focus for GM at the investor day should be providing the framework how to evaluate success on the EV landscape over the next three to five years. Wall Street wants to hear when EVs will be profitable for GM and what does the scale and scope of its EV operations look like the next few years," Dan Ives, managing director of Wedbush Securities told the Detroit Free Press. "It's an evolving environment for GM and this an important event for Barra & Co.  we also believe comments and strategy about Cruise and the future for this troubled unit will be a focus for investors."

Last month, GM and Hyundai Motor Co. agreed to look into areas where the two automakers might collaborate in the future to lower costs and bring a wider range of vehicles and technologies to customers faster.

One point of investor concern has been Cruise. Last year, Cruise faced a crisis after a pedestrian in San Francisco was dragged by one of its self-driving cars. GM halted use of its Cruise autonomous vehicles and only recently has it begun to roll out operations again with a small fleet of human-driven vehicles in some parts of the U.S.

Barra said GM will continue to be disciplined with its investments in Cruise and will provide updates going forward including "updates on our on going discussions with potential partners.”

(This story has been updated to add new information and because an earlier version included an inaccuracy.)

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Contact Jamie L. LaReau: jlareau@freepress.com . Follow her on Twitter @ jlareauan . Read more on General Motors and sign up for our autos newsletter . Become a subscriber .

This article originally appeared on Detroit Free Press: GM drops Ultium name, says it will build a new battery center and EVs will be profitable