Detroit — In its storied past, General Motors Co. built refrigerators, locomotive engines and a gamut of auto parts before dumping those businesses in a long-running battle to return to profitability.
The 112-year-old automaker is making money again and back in the business of building product for others, this time developing green powertrains for the future while the nation reckons with rising climate change concerns and a coming wave of electric vehicles.
Moving to commercialize its Ultium-branded battery and Hydrotec fuel-cell technology could give GM a leg up in a competitive market, more cash flow for these expensive programs and make a Detroit automaker known for its Chevy trucks into something it’s not really been considered — a tech-savvy company leveraging its vehicle manufacturing might to compete (or do business with) just about any Silicon Valley heavyweight.
GM claims its Ultium batteries are unique to the industry because the large-format pouch style cells can be stacked vertically or horizontally inside the battery pack, allowing designers to optimize battery storage and layout for each vehicle’s design. The Ultium battery energy has range options from 50-200 kWh, which GM estimates will provide a range of up to 400 miles or more on a full charge.
GM’s Mary Barra is set Thursday to discuss in detail the automaker’s electric-vehicle strategy at the Barclays Global Automotive Conference. Part of her talk is expected to focus on GM’s commitment to sell its technology, a bid to realize the profitability of its electric endeavors faster. GM already is planning to build two Honda Motor Co. vehicles with its Ultium technology, and it remains in negotiations with Nikola Corp. to build electric and hydrogen fuel-cell vehicles with the startup.
GM’s new Ultium batteries are unique in the industry because the large-format, pouch-style cells can be stacked vertically or horizontally inside the battery pack. This allows engineers to optimize battery energy storage and layout for each vehicle design.
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“Mary Barra is making the hard decisions that she needs to make to prepare GM for the future, because if they keep doing the same old thing then they’re never going to be competitive in a rapidly changing environment,” said Jessica Caldwell, executive director of insights for market researcher Edmunds.
“Putting resources in Ultium — and perhaps being a battery source as we know that so many people will be looking for that in the future as we move toward battery electric — could put GM in a more favorable position. Whoever has the biggest piece of that market will be the companies that survive, the companies that thrive. That’s what they’re all scrambling to do.”
GM’s push toward the future comes after years of restructuring to make itself more profitable. It exited markets where it struggled to make a profit, such as Europe, Russia, Indonesia and Australia; closed such U.S. plants as the sprawling Lordstown, Ohio, complex; and offered buyouts to salaried workers. Last year, GM employed 164,000 globally compared with 225,000 in 2016.
“These tech companies don’t have the legacy of the old auto industry,” said Larry Burns, adviser to autonomous-vehicle companies and GM’s former vice president of research and development. “That legacy is an anchor dragging them back.”
Barra has shed GM of unprofitable markets “in order to free up resources to position for the plays she’s trying to make,” Burns said.
That play is to be a leader in future powertrain technology. In the midst of the most disruptive time in the industry since at least World War II, automakers are pressing to be the one with the emerging technology that gets the nation and world to a greener future faster — and collects more green in the process.
This is technology that can affect more than the auto industry, analysts and industry executives say. Any machine with a gas-powered engine could one day have a battery or fuel-cell system powering it instead.
“I think the sky’s the limit: I can imagine every internal combustion engine usage being replaced with a zero-emission usage,” said Ken Morris, GM’s vice president of electric and autonomous vehicle programs. “That’s the best case scenario.”
General Motors reveals its all-new modular platform and battery system, Ultium, Wednesday, March 4, 2020, at the Design Dome on the GM Tech Center campus in Warren. (Photo: Steve Fecht for General Motors)
Expanding the use of these powertrain technologies beyond GM enables the company to meet its goal of zero emissions, allows GM to leverage its industrial scale by building batteries and other electric powertrain components, and opens a new revenue stream should demand for gas-powered vehicles eventually ebb.
Commercializing technologies to produce more at once “brings the material costs down pretty dramatically, so it becomes even more attractive for us in the way we use them, and then other companies and the way they can use them,” Morris said.
GM isn’t alone in making its own moves in battery production. Volkswagen Group Components, a supplier of central electric vehicle components for the brands and joint ventures of the Volkswagen AG, on Monday announced production of new electric drives in China. VW in August said it would expand production at its Chattanooga, Tennessee, plant to include a North American center for electric vehicles. It will include a laboratory to develop and test electric vehicle cells and battery packs for upcoming models made in the U.S.
Ken Morris, vice president of electric and autonomous vehicles at General Motors during the Cadillac LYRIQ debut in August 2020, with the Ultium battery platform. (Photo: General Motors Co.)
“There are two ways that auto companies approach the development of electric vehicle batteries,” said Wolfgang Maluche, vice president of engineering at Volkswagen of America. “A lot of them will farm out the development and testing of batteries to another company, and some will actually do the work of developing and testing in-house. We are doing the latter.”
Ford Motor Co.’s CEO Jim Farley recently said the Dearborn automaker is exploring making its own battery cells and packs, months after his predecessor, Jim Hackett, downplayed the prospect.
The success of gas-powered vehicles remains crucial to helping GM accelerate electric-vehicle investment. Acting Chief Financial Officer John Stapleton said during the third-quarter earnings GM previously planned to spend $7 billion a year on capital investment, but will now exceed that through at least 2023 as it accelerates electric vehicle investments.
GM is hiring 3,000 new staffers in engineering, design and IT to help it push forward as a leading electric vehicle maker and to develop more in-car connected technologies. The pandemic hasn’t prohibited GM from advancing electric-vehicle plans. In fact, it has pulled forward two major electric vehicle programs since its March EV Day, the company confirmed, declining to specify which ones.
GM doesn’t just claim to have the technology to be able to execute a profitable electric-vehicle strategy; it also touts its manufacturing capabilities and knowledge of producing high-volume vehicles in a very complex industry to help get them there. The automaker recently announced a $2 billion investment at the Spring Hill, Tennessee, manufacturing plant where the Cadillac Lyriq, an electric crossover coming to market in 2022, will be built.
The investment would make Spring Hill GM’s third electric vehicle plant behind Factory Zero Detroit-Hamtramck Assembly Center where the new Hummer EV will be built starting in late 2021, and the Orion Assembly plant where the Bolt EV and new Bolt EUV will be built. Building vehicles at high volume isn’t easy, as such startups as Tesla Inc. have found in the past.
“An automaker grafting a technology company onto it is much easier than a technology company grafting all the automotive capabilities onto it,” said Karl Brauer, analyst for executive analyst at iSeeCars.com.
The electric push is continuing, perhaps even at a faster pace, as a new president gets ready to take office. President-elect Joe Biden is expected to place more emphasis on green vehicles than his predecessor. Barra has consistently pushed to see more federal guidelines on zero emissions policies rather than a state-by-state patchwork.
“However aggressive we already were about future tech, either for autonomous reasons or for clean emissions and environmental reasons,” Brauer said, “we have to be even more so now.”
But it’s not just about electric vehicles. GM also is focused on pushing its Hydrotec hydrogen fuel-cell technology to help achieve its zero-emissions goal. The automaker has worked with Honda to develop the technology. GM Defense LLC used the technology in the past for a project with the U.S. Army. The small startup inside GM is continuing to explore the potential for fuel-cell vehicles on military vehicles. Fuel-cell vehicles offer longer range than their battery-powered peers.
“It’s really important to look at this not just as: ‘Is the fuel cell better than the battery?’ That’s not the question,” said Burns, the former GM R&D executive. “The question is: if you have fuel cells and you have batteries and you’re a full-line transportation company, is there an advantage in doing both? And absolutely there is an advantage.”
GM is hiring more than 1,000 people at a new 3-million-square-foot battery-cell manufacturing plant where battery cells for Ultium battery packs will be made starting in early 2022. GM is building the plant with South Korean battery manufacturer LG Chem. Building its own battery cell plant will drive down electric vehicle costs, often a barrier for consumers.
Selling these cells for use in vehicles beyond GM’s will help get GM to scale faster.
“Until they’re in a position where they’re selling enough EVs using those batteries that they are consuming 100 percent of what that plant can build — anybody else that wants to buy them, I’m sure they’ll be happy to sell them,” said Sam Abuelsamid, principal research analyst for Navigant Research.
The Ultium battery energy range options from 50 to 200 kWh, which GM estimates give a range of up to 400 miles or more on a full charge. In comparison, the 2020 model Bolt hitting dealerships later this year offers 150 kWh and 259 miles of range on a full charge.
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GM, which plans to have 20 electric vehicles by 2023, plans to power its future electric with five drive units and three motors known as Ultium Drive. Components for Ultium Drive will be built with globally sourced parts at GM’s existing global propulsion facilities, allowing the company to more quickly ramp electric vehicle production and adjust production mix to match market demand.
“Tesla obviously has been rewarded handsomely for stealing the technology banner from companies like GM and Ford and others,” Burns said. “GM got through the bankruptcy; they got through the next decade. They’ve done reasonably well, but their stock price hasn’t moved one iota since the IPO. So what are you gonna do? I think you’ve got to reposition yourself as one of the key technology players. What they’re out there signaling now is that they have that technology in-house.”
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