I don't see how GM spins off Ultium Motors - it seems more like Unobtainium Motors to me.
First, Cathie Woods has pointed out that the legacy ICE automakers aren't spending what they need to spend on EV development. She said GM was spending about 10% of its R&D budget on EVs and 90% on improving ICE - when it should be reversed.
Second, she points out that these companies are between rocks and hard places. They need to spend more, but their existing products are selling in smaller numbers at smaller margins. So, they don't have the money to properly invest.
Third, how does GM structure ownership so that the new company is free enough to do what's really necessary to be successful without ending up competing with its parent company? Every electric SUV Unobtainium Motors sells is one less Silverado GM gets to sell. And if Unobtainium gets vehicle autonomy, who handles the knowledge transfer to GM, and how does that transfer not hurt Unobtainium Motors ability to innovate?
So while an EV spin-off does the Clayton Christensen thing of getting people focused on the new thing without having to support the old, I don't see how GM can properly finance the new company without killing itself off. Mary Bara is not going to fund Unobtainium Motors with 90% of GM's R&D budget for 7 years, so how much does GM put in and how much can they raise?
I suppose they think with frauds like Nikola raking in the dough they'd be able to raise billions.
But, what really kills this is Mary Bara's failure to recognize how quickly change is coming. She still thinks there's a decade or two for EVs to take root. Just watch the video a couple pages back. She's in no rush, and I doubt GM will be able to form a company where the leaders do recognize how far behind they already are and how quickly they really need to move.
All excellent points! Now, what about GM's culture? Even if I
didn't know someone working on the EV-side I
do have family working at GM. A few days ago I think it was there was a post about the blindness at GM because they refuse to acknowledge the competition. Managers are all required to drive GM
and only GM. Including spouses. When first exposed to the rule it can get on the nerves, but people adjust (in order to keep their job) and after a while, well, it just becomes all they know.
GM
really thinks they have what it takes to compete in the EV market. They don't. No offense to my relatives working there, but they have no idea. Its intentional blindness that leads to the present situation and sets up the future fail. On paper Ultium sounds good. Really good. I'm rather fond of object oriented programming and recognize it being replicated in hardware. Everything is interchangeable, everything is configurable. Want cells stacked vertically? No problem. Horizontally? No problem. Want different chemistries? No problem. Want arbitrary modules? No problem. But there's a problem with all of this: the overhead imposes cost and restricts efficiency for a freedom you don't really need or even want.
GM
obviously sees this as the answer to their problems: one battery architecture for
every EV they will ever make. The overhead in costs? GM believes they will make up for it in volume. That's why you keep seeing them float absurd numbers for different EV models. They believe this approach will allow them to flood the market with a wide variety of EVs, enough so that anyone who wants an EV will see what they like and buy it. From GM. In this way they are hoping to reach market in every sector simultaneously.
Well, kind of. First, they announced the new hummer. And now the Lyriq. But there are no concrete plans to actually launch twenty models in short order. First they are going to test the water with those two. I'm sure they will announce more models soon, but production dates are going to continue to be "at some point in the future" and staggered so that GM can gauge consumer interest. After all, they need to be good stewards and not spend too much money at once on this new-fangled, unproven, hopefully-no-one-really-wants-it technology. As was already pointed out, just look at their R&D spending to see the proof of this in hard numbers.
But it gets worse. You don't
really want to be mixing batteries. For one, managing differences in cycling will just be too complicated to be practical. And the lowered efficiency that is inherent with the design has a real cost: it means you have to have a larger battery to achieve a given range. And why pay the overhead of the flexibility up front (especially when you are not planning on more than a few token units anyway) when designing the pack properly for the vehicle has up front benefits in terms of lower costs and higher efficiency.
In the end, Ultium is a buzzword compliant solution to meet managements wet dreams. "it scales" (poorly) and it "is flexible" (in ways that are detrimental). Who benefits? The partner: GM is funding this, remember.
And GM got there by deliberately turning a blind eye to what was happening around them. Its simple hubris.
Which is good news for $TSLA investors even if it is bad news for the world which I continue to believe would be better served by more serious EV manufacturers. Rivian seems to me to be the only serious competitor -- not because they plan on making an EV pickup, but because they seem to have the best plan for how to actually continue selling vehicles in the future. Toyota is still out doing GM for blindness. Honda isn't much better. VW's execution is lacking. BMW is still in denial. Jaguar has refused a bailout over EV requirements. Daimler and Mercedes seem no better positioned. I believe there is a huge vacuum here, a large opportunity, but one fraught with risk as automotive startups have a hard time succeeding and legacy makers seem incapable. Maybe BYD or another Chinese manufacturer will enter the void.
