GM is open to further agreements with suppliers to ensure production of electric vehicles

With inflation and rising commodity prices, General Motors is planning strategic partnerships with suppliers to keep EV launches on schedule.

GM CFO Paul Jacobson said the automaker will continue to form partnerships or invest in raw material suppliers to ensure GM has the parts it needs to meet a production goal of 400,000 electric vehicles in North America by the end of next year.

“Everything is on the table when it comes to how we need to think about some of these commodities that could become scarcer in the future,” Jacobson said Wednesday during the Deutsche Bank Global Auto Industry Conference webcast.

That means GM is willing to invest money and equity in suppliers, partner with them, or fund some startups, he said. Jacobson didn’t specify which commodities might be scarce, but GM has contracts for the supply of cobalt and lithium — which are critical to electric vehicle battery production — and most recently, wind power.

“We’re thinking really creatively because we can’t limit ourselves to how business with some of these trends has always been done in the future,” Jacobson said.

Prepare for the worst

The trends he is referring to are various supply chain issues in recent months and inflation.

Like all automakers, GM has been struggling to produce enough vehicles to meet demand since early last year, when a global semiconductor chip shortage crippled new-vehicle production across the industry.

More:The lack of chips makes finding the perfect car challenging, but could help you get out of a lease

Jacobson said that as of mid-June, GM will have “several hundred thousand” fewer vehicles than what it would have traditionally held in inventory due to the chip shortage and other supply issues. But supply is improving, and he’s sticking with GM’s forecast of 25% to 30% more new cars being built this year compared to last year.

GM's newly hired CFO, Paul Jacobson, is joining the automaker from Delta.

Jacobson regularly reviews GM metrics to monitor the impact of inflation on consumer demand for GM vehicles. So far, demand is still strong and prices are high.

He’s also observing rising raw material costs to keep GM well-stocked and able to mitigate shortages beyond chips that could impact EV production.

“We need to make sure we’re preparing for a world where inflation might linger a little longer,” Jacobson said. “That is our job as a finance team. We just have to make sure we’re very nimble and very practical in how we think about it.”

More:GM says no to hybrids and reveals more about future electric vehicles

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More offers will follow

GM is making a big bet on electric vehicles where it can’t afford to make a mistake on a launch. The automaker will invest $35 billion in EV and autonomous driving technology by 2025. By then, 30 new electric vehicles will be on the market.

To ensure all of this can happen, GM has made and will be making strategic investments in key raw material suppliers, Jacobson said.

In March, GM partnered with Singapore-based lithium-metal battery developer SolidEnergy Systems. Through its joint venture with SolidEnergy, GM will construct a prototype assembly line for a pre-production, high-capacity electric vehicle battery in Woburn, Massachusetts by 2023.

In April, GM and Glencore entered into a multi-year sourcing agreement. Glencore, headquartered in Baar, Switzerland, will supply GM with cobalt from its Murrin Murrin operation in Australia. Cobalt is a metal used in the manufacture of electric vehicle batteries. It gives batteries energy, density and longevity.

“If you look at the progress we’ve made with lithium and other commodities, I think we’re in a really, really good position” to build 400,000 electric vehicles by 2023, Jacobson said.

windbreak

Earlier Wednesday, GM announced that its investment arm, GM Ventures, had invested $10 million in Wind Catching Systems, a Norway-based developer of floating offshore wind power generation.

GM will support the design, engineering and supply chain formation that will help Wind Catching Systems develop its technology.

The idea is that operators and developers of offshore wind turbines can produce electricity at a price that competes with other energy sources. GM said the technology will significantly increase efficiency compared to traditional floating offshore wind farms.

“As GM continues to move toward an all-electric future, it’s critical that we simultaneously advance the power grid’s transition to low-carbon energy sources,” said Kristen Siemens, GM’s chief sustainability officer.

Contact Jamie L. LaReau at 313-222-2149 or [email protected]. Follow her on Twitter @jlareauan. continue reading General Motors and register with us cars newsletter. become a subscriber.

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