GM aims to create a domestic battery supply base to make EVs cheaper and profitable aided by Kurt Kelty, who built Tesla’s critical Panasonic relationship in its startup days.

By Alan Ohnsman, Forbes Staff

Tesla CEO Elon Musk kickstarted the market for electric cars when he first began selling the Roadster in 2008, but 17 years later his dominance is slipping.

The company’s sales are in decline for the first time and with the mercurial billionaire’s short attention span fragmented between five different companies, a key role in the new Trump administration and a monomaniacal obsession with owning the libs, he’s off his game. And rivals are taking notice.

Top among them is General Motors. The Detroit-based carmaker, which notoriously killed off its first commercial electric car, the EV1, in 2002–a move that inspired Tesla’s creation in 2003–is positioning itself for major growth in the space.

In 2024, GM’s EV sales surged 50% to 114,432, its highest ever aided by the new Equinox EV, a Tesla Model Y fighter. That made it one of the fastest-growing players in the electric space. Meanwhile, Tesla, long past its scrappy startup years, reigns as the dominant electric nameplate, selling 633,762 EVs to U.S. buyers, five times GM’s volume. But that’s down 5.6% from 2023, even with the addition of its polarizing Cybertruck. Add in CEO Elon Musk’s controversial behavior and the brand faces further challenges this year–especially in EV-crazy California, the country’s top market.

GM isn’t just going after Tesla’s market share. It’s targeting the company’s beating heart: batteries. And it’s getting help from a Tesla veteran with serious battery chops to make sure GM EVs are as profitable as possible.

“It starts with the battery. It’s the biggest cost driver so we’re putting a huge effort into that,” said Kurt Kelty, who joined GM last year, after 11 years with Tesla, where he worked on battery packs from the company’s Roadster startup days to mass production of Model 3s in 2017. He also spent over six years with battery tech startup Sila, created by another early Tesla alum, and did a stint at Panasonic, Tesla’s most important cell supplier when it started out.

Slashing those costs means taking a page from the world’s dominant battery and EV producer–which Tesla and other U.S. automakers rely on for processed lithium, graphite, cobalt, anodes and cathodes.

“We’re going to, in essence, replicate what’s being done in China,” Kelty, GM’s vice president of battery operations, told Forbes. “We’re trying to bring that supply chain here … vertically integrate in North America.”

Those steps include investing more than $1 billion in companies making graphite and lithium, as well as deals with South Korea’s LG Chem to produce cathodes for it in Tennessee. That results in big savings related to shipping battery components from China, a multiweek process, as well as fewer quality control headaches.

Like “having product on the water for five weeks that you’re financing, only to find out there’s a reject in that part,” he said. “There’s a lot of costs that are not included upfront.”

Moves to set up a lower-cost battery supply base were cited among reasons Deutsche Bank equity analyst Edison Yu raised GM’s shares to a Buy this month, noting that its EV strategy wasn’t “entirely dependent on volume but also on battery and materials cost savings.”

EV Rejectors

Affordability is central to GM’s EV strategy and it’s starting to pay off. The new Equinox, priced from about $35,000, powered the company’s 125% jump in 2024’s final quarter. It’s counting on a revamped Bolt hatchback due this year, priced from the low-$30,000s, to push things up even higher. GM’s new $52,000 Cadillac Optiq, a small SUV, and larger Cadillac Lyriq, priced from $58,000, are also boosting sales to premium buyers. Even before the new Bolt and more Cadillac models roll out, GM already has the broadest U.S. EV lineup: nine models versus Tesla’s five.

Curbing electric car prices has become even more critical. With the Trump administration killing the $7,500 federal credit incentive for buyers of new EVs, average costs could rise from a current $55,500, according to Cox Automotive. That makes them 12% more expensive than the $49,740 average for all new vehicles.

“When we survey consumers and identify what we call EV rejectors, people who say they will not buy one, the number one reason they cite is price,” said Ed Kim, president of industry consultancy AutoPacific. “Where we see a big rise in interest is at $35,000. Basically at price points from $35,000 and down all of a sudden the hard ‘nos’ turn into strong ‘maybes.’”

That’s one reason, aside from its brutalist styling, Tesla’s $100,000 Cybertruck hasn’t been the runaway hit Musk led fans to expect it would be. Tesla sold just 38,965 last year, despite once crowing about 250,000 reservations years ahead of its on-sale date. It will likely remain a niche model as Tesla recently killed off a cheaper $61,000 version.

Cheaper EVs

Affordability is top of mind for GM President Mark Reuss as the company ramps up Equinox production and readies a fully revamped Bolt. It replaces the mid-$30,000 first-generation model it discontinued in 2023, even as the car’s price made it GM’s top-selling electric.

Bolt “opens up a whole new class segment and customer for us. People who may not have tried an EV before because they were so expensive can now get into an EV as their daily transportation at a really good price point,” said Reuss, whose father, former GM President Lloyd Reuss, oversaw the EV1 program in the 1990s. “There’ll be a lot of first-time buyers with this one–entering General Motors for the first time.”

Both Reuss and Jeremy Short, GM’s chief engineer for the new Bolt, declined to share specifics about the new version, other than that it will be affordable and offer range of around 300 miles per charge. There’s also potential to turn it into a platform for other EVs. “I wouldn’t be surprised if we followed with a few other things off of Bolt. That may even be different price points of Bolt,” Reuss said, declining to elaborate.

Final pricing for it may be influenced by whether, as analysts expect, Tesla releases cheaper versions of its Models Y and 3, the top-selling EVs in the U.S., to buoy sales as federal incentives end. Last year, Musk seemed to shoot down the idea of a so-called $25,000 Tesla Model 2, something he’d promised as far back as 2006.

But Tesla is likely to lose more U.S. market share this year, regardless of how people view Musk, precisely because GM, as well as Hyundai, Kia, Honda, Volkswagen, Rivian, Lucid and numerous other brands are adding so many new models, said AutoPacific’s Kim.

Tesla’s market share is going to be down further due to more competition,” he said. “His far-right extremist, tomfoolery absolutely has an impact, but even more so than that is just the sheer quantity of direct competition coming into the EV space.”

Tesla’s brand appeal is also weakening. In its latest assessment, Strategic Vision, a San Diego-based research firm that surveys tens of thousands of people weekly, found that 63% of potential new carbuyers say they definitely wouldn’t consider a Tesla as their next vehicle, up from 48% in 2023.

“Tesla is significantly wounded with a more than 50% drop in definite future consideration from previously in 2023,” Strategic Vision CEO Alexander Edwards told Forbes. “If you’re playing a long game, that’s unforgivable.”

For its part, GM is only saying it expects its EV sales to rise strongly this year, without offering a hard number. For the overall industry, EVs should grab a 10% market share this year, up from about 8%, or more than 1.3 million sold in 2024, Cox forecasts. Growth would be even faster were it not for Trump’s ending of federal incentives.

“If the credit goes away, I’m not sure it affects our strategy or plans so much,” said Reuss. “It may slow some of the adoption overall, but … our plans and our strategy have been the same for quite a few years.”

Battery Veteran

Kelty worked for Panasonic before being hired by Tesla cofounders Martin Eberhard, then CEO, and former CTO JB Straubel, in early 2006, and is well-suited to keeping GM focused on battery prices and quality. He’s got the acumen and connections to help hit GM’s cost targets. And what he’s doing isn’t entirely different from doggedly pushing to get better lithium-ion cells for Tesla’s first vehicle, the Roadster, 19 years ago.

At the time, Tesla was buying cells from a new Chinese company, the only one that would sell to it, but they “were terribly inconsistent,” he said. “My job was to convince one of the Japanese or Korean companies to supply us.”

He lined up a deal with Japan’s Sanyo but believed Panasonic, his former employer, or Sony would be even better. “They just refused to sell to us. We were too dangerous,” Kelty said.

“The president of Panasonic wrote an email to Martin (Eberhard) telling him they didn’t want to sell to Tesla and Kurt should stop bothering them.” Even Straubel, Kelty’s boss at the time, told him to stop. Nevertheless, he returned to Osaka anyway and “finally convinced the company to sell to us! From there, it’s history.”

That deal was one of the critical steps that put Tesla on a path to commercial success. Not only did Panasonic become its top cell supplier, it invested directly in the company, buying 1.4 million shares for $30 million in 2010 at the time of its IPO. A smart move as it later sold the stake for $3.6 billion. Panasonic also partnered with Tesla on its first battery Gigafactory in Nevada and made solar panels for it at Tesla’s Buffalo, New York, plant for a while.

These days Kelty has far greater resources to work with, owing to GM’s large battery R&D team and the ability to make prototype cells in-house. He’s convinced GM can soon develop a battery that’s in the “sweet spot” for automotive applications: energy density rivaling lithium-ion cells and the low cost and durability of cheaper lithium-iron cells that Chinese battery giants CATL and BYD specialize in.

“We’re going to take that chemistry that’s in the middle of those,” he said. “It doesn’t need to be super high energy density. We’re finding if you get over 300 miles, you’re in a good spot with customers.”

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