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The struggling battery factory behind GM’s electric vehicle problems

By David Welch, Bloomberg News
Published: March 23, 2024, 5:01am

General Motors Co. is racing to fix problems in its electric vehicle business to make good on promises Chief Executive Officer Mary Barra made five years ago. It still has a long way to go.

Fresh off exiting major markets like Europe and India, Barra told GM employees in the spring of 2019 that the company was pivoting its strategy to bet heavily on EVs and self-driving cars. She wasn’t content for the automaker to just survive the new technology-driven era for transportation; it needed to be a leader.

That transition has been fraught with delays, including automation issues and software glitches that caused the carmaker to miss its EV delivery targets the past two years. Getting the EV plants humming is Barra’s last shot to take GM from a 20th-century metal-bender to a transportation company of the future.

GM executives think they may be finally crawling out of their “production hell” phase, similar to the robotics problems that delayed Tesla Inc.’s Model 3 seven years ago. GM aims to build 200,000 to 300,000 all-electric vehicles this year with its much-ballyhooed Ultium battery packs, about 20 times more than it made last year but still well short of its previous ambitions.

“We’ve had some challenges scaling it,” Chief Financial Officer Paul Jacobson said of the Ultium problems in a recent speech at an industry conference in Washington. “I think most of those are behind us.”

Investors say it’s time for GM to prove it. The company sold fewer than 14,000 Ultium EVs all of last year, about as many as struggling startup Rivian Automotive Inc. delivered in just the fourth quarter. Since then, GM says it has doubled battery production at its Factory Zero plant in Detroit, but the company needs to expand much faster if it’s going to meet its goals.

Factory Zero is the auto industry’s first attempt to scale up a fully automated assembly line with pouch-shaped battery cells. President Joe Biden lauded Barra’s vision and the promise of U.S.-built electric cars during a tour of the plant in November 2021. He even took a prototype electric Hummer for a test drive in the parking lot.

GM bypassed its own best practices to rush the battery packs into production. Typically, when the company is preparing to build an all-new model, it sets up assembly-line equipment in a nearby supplier’s warehouse for testing. Then, once the bugs are worked out, equipment is pulled up and moved to the assembly plant for production.

GM skipped that step with Ultium, choosing to install new fully automated battery assembly lines right away rather than testing them elsewhere first, according to Mike Anderson, vice president of global electrification and battery systems.

Inside a fenced-in area at Factory Zero, robots stack battery cell pouches together six at a time, pressing them down like a panini and then placing four of the sandwich packs into a box with a cooling plate at the bottom. The cells must be pressed and packed precisely so the weld tabs that connect the modules fit through slots in the module box. If they don’t line up exactly, the tabs will bend and the cell won’t be linked with others. The battery will fail quality checks.

Therefore, each time a cell’s tab misses its slot in the box, engineers have to go inside the fence, find the problem and come up with a solution. That’s a time-consuming and costly process, Anderson said.

The Detroit Fire Department says it’s been called nine times to Factory Zero since August. The most recent was on Dec. 19, when a stack of EV batteries started to burn after a forklift pierced battery packs. In other incidents, fire fighters were called to investigate battery gas leaks as a safety precaution, according to a GM spokesman.

“That’s more fires than anyone would want to see,” Anderson said. “It’s part of the growing pains.”

GM has brought in more battery experts, consultants and manufacturing executives to help fix the assembly problems. In February, the company hired former Tesla battery executive Kurt Kelty to run GM’s battery operations. JP Clausen, who led the rapid scaling of EV propulsion systems at Tesla’s factory in Nevada, was named GM’s new head of manufacturing last week.

Anderson said he thinks the company has “turned the corner” at Factory Zero and will continue to ramp up production en route to hitting GM’s latest production targets. The company will employ what it learned there to a new battery plant in Tennessee, scheduled to open later this year, and other future sites.

Software bugs have also delayed GM’s EV ambitions. The Chevy Blazer EV was on hold for almost three months due to issues with GM’s in-house infotainment software that is intended to replace Apple CarPlay and Google Android Auto. GM wants all vehicle software to be made in-house to better integrate it with the cars’ hardware. After testing the vehicles over thousands more miles, the company said March 8 that it had fixed the software and would cut prices on the Blazer EV as sales resume.

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“They should be able to eventually solve the battery production problems, but GM is struggling to build the right organization to develop software,” said Sam Abuelsamid, an analyst with Guidehouse Insights. “At this point, you can’t take GM at their word with Ultium EVs.”

GM isn’t the only automaker struggling to accelerate EV production. Volkswagen AG also had buggy software in its cars. Wheels fell off Toyota Motor Corp.’s bZ4X. Ford Motor Co. last month halted production of its F-150 Lightning electric pickup due to quality issues.

The setbacks come at a difficult time for the industry when sales growth for electric cars is slowing globally due to high price tags and concerns about charging requirements. Manufacturing delays add further reputational risk for companies, especially among car shoppers considering buying an EV for the first time.

GM is hedging its bets on EVs with a simultaneous reintroduction of plug-in hybrids in North America, a business that it left five years when it discontinued the Chevy Volt.

“This is the Wild West,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “Everyone is having a tough time.”

GM has a lot riding on EVs. Barra downsized GM’s global business — ceding turf to Toyota and Volkswagen — in order to invest in EVs and self-driving cars. She had an ambitious plan to double revenue to $280 billion by the end of the decade by transforming GM into a tech company.

The Cruise robotaxi business is in shambles after a pedestrian accident and alleged coverup in California forced the company to ground its entire fleet.

There are also federal government subsidies at stake. The Inflation Reduction Act gives money to automakers for building EVs that meet certain production requirements. GM says it stands to get $3,500 to $5,500 in tax credits for every EV it makes under the Biden administration’s policy. That equates as much as $1.65 billion if it reaches 300,000 EVs. The payments could balloon in coming years as the automaker aims to expand production capacity to 1 million EVs in 2026.

But GM fell well short of its goal of producing 150,000 EVs last year — half of which were to be Ultium-powered — and until recently had been targeting a cumulative total of 400,000 EVs by the middle of this year. Last year, most of its EV sales came from the now-discontinued Chevy Bolt. AutoForecast Solutions expects the company will only sell 112,000 battery-powered vehicles in 2024.

“Buyers just aren’t lining up for these vehicles,” Fiorani said. “If GM could make as many as they want, they might just end up competing on price with themselves.”

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