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GM CEO Mary Barra says company is worth more keeping EV battery unit in house
June 16, 2021
Michael Wayland

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General Motors CEO Mary Barra on Wednesday once again pushed back on spinning off its emerging electric vehicle battery business.

Keeping the unit within GM will create more value for the company than spinning it off, Barra said.

"For an electric vehicle, it's all about the battery," she said in an interview on "Squawk on the Street." "I think keeping that technology close and leveraging the deep battery expertise we have at General Motors is the way we're going to accelerate that value creation."

Barra touted the company's plans to sell its Ultium battery cells as well as its Hydrotech fuel cell technology to other companies. It currently has a deal with Honda Motor for two EVs and this week announced the signing of a memorandum of understanding for GM to engineer and supply its Ultium battery and Hydrotec systems for Wabtec freight locomotives.

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Discussion Starter · #2 ·
Good, keep it in-house. After reading about the train engines in yesterday's post, it brought it home to me how valuable it is to GM to build their own batteries vs. buying them from a 3rd party. To me, not developing your own leaves your car company as little more than an assembler of parts with only styling to differentiate your company.
 

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IDK how many automakers are gonna be able to handle the investment required to get into EVs.
A lot of them won't be able to handle it. Better to be the guy they come to than the guy that goes knocking.
 

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Yup. Good choice for many reasons.
 

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Discussion Starter · #5 ·
And, think of all the applications - lawn equipment, maybe someday construction trucks, though probably limited applications for BEV construction trucks for now. I might someday have an Ultium powered lawn mower.
 

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And, think of all the applications - lawn equipment, maybe someday construction trucks, though probably limited applications for BEV construction trucks for now. I might someday have an Ultium powered lawn mower.
I have a 'lektrik lawn mower. Kobalt, not cheap. I prefer the old gasser with big back wheels. This thing just doesn't act quite normal.
 

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"For an electric vehicle, it's all about the battery," she said in an interview on "Squawk on the Street." "I think keeping that technology close and leveraging the deep battery expertise we have at General Motors is the way we're going to accelerate that value creation."

Barra touted the company's plans to sell its Ultium battery cells as well as its Hydrotech fuel cell technology to other companies. It currently has a deal with Honda Motor for two EVs and this week announced the signing of a memorandum of understanding for GM to engineer and supply its Ultium battery and Hydrotec systems for Wabtec freight locomotives.
I agree with that notion of vertical integration.
It makes sense for GM to control it and partner where it makes the most sense.
 

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I might someday have an Ultium powered lawn mower.
Ultium powered lawn mowers would be great. Maybe Honda can source Ultium components from General Motors for future battery electric lawn mowers (GM and Honda have a very fruitful partnership on electrification).

 

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Ultium powered lawn mowers would be great. Maybe Honda can source Ultium components from General Motors for future battery electric lawn mowers (GM and Honda have a very fruitful partnership on electrification).

Forget that little crappy thing for a city lot. You can already buy large Zero Turn mowers that are all electric. Still pricey but will eventually be cost competitive.
 

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Good, keep it in-house. After reading about the train engines in yesterday's post, it brought it home to me how valuable it is to GM to build their own batteries vs. buying them from a 3rd party. To me, not developing your own leaves your car company as little more than an assembler of parts with only styling to differentiate your company.
So the opposite of what the auto-industry has been for the last ~20+ years?

Henry owned the entire supply-chain, but that has been a while; will be interesting to see how this plays-out, typically you miss-out on cost-savings, when you own the supply chain and miss-out on better technology.
 

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So the opposite of what the auto-industry has been for the last ~20+ years?

Henry owned the entire supply-chain, but that has been a while; will be interesting to see how this plays-out, typically you miss-out on cost-savings, when you own the supply chain and miss-out on better technology.
If you do it right, vertical integration can be hugely beneficial. "Doing it right" for EVs means owning the parts where the benefits of tighter integration outweigh the benefits of scale of an external supplier. Owning the battery and motor tech under one roof is crucial for tighter integration and optimization in EVs. I think GM is doing the right thing here.
 

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Discussion Starter · #14 ·
So the opposite of what the auto-industry has been for the last ~20+ years?

Henry owned the entire supply-chain, but that has been a while; will be interesting to see how this plays-out, typically you miss-out on cost-savings, when you own the supply chain and miss-out on better technology.
Yes! Will be interesting to see how GM handles this. I can see the advantage to what they are doing in the infancy of BEV, it allows them to control the process and make something unique to GM. Though, if self driving ever takes off, I can see building batteries as a piece of how GM can stay alive in such an environment. Which, as we all know, 5 years ago the general assumption was that they were going to crack the self driving code by now (and yes, you were right, they haven't) - but, that assumption would've shaded their near future battery plans.

I can see GM spinning off the battery division once the tech matures (20 years? 50 years?).

Or, it could be their way of signaling they made a mistake in spinning off their parts. An interesting analogy is Pepsi, around 2000 they spun off the bottling division, in what was then the biggest IPO ever. 10 years later, Pepsi recognized their error and bought back the bottling.
 

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An interesting analogy is Pepsi, around 2000 they spun off the bottling division, in what was then the biggest IPO ever. 10 years later, Pepsi recognized their error and bought back the bottling.
Good example, BlackGTP! Another instance of bringing in-house business activities that were formerly outsourced comes from General Motors itself, specifically the company's information and communication technology operations. As many on this forum know, from the late 1990s until the early 2010s, GM outsourced the majority of its MIS and IT functions to third parties, particularly EDS/HP (which GM itself owned until 1996). Here's an InformationWeek article from 2012 that summarizes GM's strategy:

General Motors Will Slash Outsourcing In IT Overhaul

"Today, about 90% of GM's IT services, from running data centers to writing applications, are provided by outsourcing companies such as HP/EDS, IBM, Capgemini, and Wipro, and only 10% are done by GM employees. Mott plans to flip those percentages in about three years--to 90% GM staff, 10% outsourcers.

Insourcing IT on that scale will require GM to go on a hiring binge for software developers, project managers, database experts, business analysts, and other IT pros over the next three years. As part of that effort, it plans to create three new software development centers, all of them in the U.S. IT outsourcers, including GM's one-time captive provider, EDS, face the loss of contracts once valued at up to $3 billion a year."
 

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Good example, BlackGTP! Another instance of bringing in-house business activities that were formerly outsourced comes from General Motors itself, specifically the company's information and communication technology operations. As many on this forum know, from the late 1990s until the early 2010s, GM outsourced the majority of its MIS and IT functions to third parties, particularly EDS/HP (which GM itself owned until 1996).
Yes, GM was using EDS so much they figured it would be cheaper to buy it, then a few years later, decided to sell it.........

Sold-off axle division.................. American Axle
Sold-off steering division.............Nexteer
Sold-off components division......Delphi
 

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It's all about capital allocation but I think owning the battery unit at this point makes the most sense regardless. GM does not have the debt issues it used to, it's a very different company today and it can afford to do this.
 

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You mean it doesn't make a lot of noise? :D
It makes a surprising amount of noise. Maybe a bit less than a gasser, but not a lot.
A buddy of mine fitted all his home racket devices with small motorcycle mufflers: generator, lawn mower, whatever. Made big difference. I'm not that gadgety, but I'm sure a local mechanical wizard could figure out how to do that.

So the opposite of what the auto-industry has been for the last ~20+ years?

Henry owned the entire supply-chain, but that has been a while; will be interesting to see how this plays-out, typically you miss-out on cost-savings, when you own the supply chain and miss-out on better technology.
Henry was a smart man. Control freak. Monster in some ways. But he had that supply chain nailed down.

If you do it right, vertical integration can be hugely beneficial. "Doing it right" for EVs means owning the parts where the benefits of tighter integration outweigh the benefits of scale of an external supplier. Owning the battery and motor tech under one roof is crucial for tighter integration and optimization in EVs. I think GM is doing the right thing here.
 

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... "For an electric vehicle, it's all about the battery," she said in an interview on "Squawk on the Street." ...
This is the key statement.

You MUST control the critical ingredient, the ingredient that your business revolves around. Mary gets it.
 
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