Profitable EVs key to success

General Motors' global head of quality says the next automotive battle will be won by the company that can make money from electric vehicles (EVs) – not just build thousands of them. And he suggests Tesla may not be that brand.

"The company that can be profitable with EVs will be the winner," Tyrone McGinnis, GM's global head of quality told motoring.com.au during a recent visit Down Under.

"My opinion is Tesla is finding the automotive industry is a bit harder than expected.

"I know some people in the supply base that are not wanting to deal with Tesla," he proferred.

McGinnis implied that Tesla CEO Elon Musk is reportedly a tough negotiator – hence some suppliers' reluctance. But he also noted that the company's diversification into space travel, battery production and other segments was prudent.

In contrast, with regard to production EVs and profitability, the exec says GM is well placed, particularly in the metric of "battery profitability".

"Right now [with vehicles like Chevrolet Bolt] we're actually leading in the cost-per-battery measure."

A large part of the Singapore-based exec’s role is to ensure GM's global car factories are up to scratch.

But he is clearly keeping a weather-eye on the changes the advent of autonomous vehicles, EVs and the buying power of ride-sharing companies will make to the way both consumers and car companies operate.

According to McGinnis, the financial step change will come when autonomous vehicles, ride-sharing and EV technologies converge.

"These ride sharing companies, in fleet use, and what they can do with autonomous – then the [EV] business case works."

Ford has already announced it will deliver an autonomous taxi fleet by 2021, comprising new vehicles that won't even include steering wheels.

But the changes required of 'old world' car makers are considerable, he suggested.

"We have autonomous cars on the road in San Francisco today, and I will tell you from a quality perspective, the whole quality systems have to change.

"How we validate; how we build;how we check supplier capabilities; it's going to transform the industry.

"The speed with which it's coming blows me away, it really does," he said.

Major US car makers are investing heavily in car-sharing and ride-hailing businesses, with General Motors snapping up LYFT for a cool $US500m in early 2016.

We suggested this is a signal that major car makers understand bricks and mortar car dealerships may not have a monopoly on personal transport needs.

McGinnis agreed.

"I think what [GM CEO] Mary [Barra] and the team have done with the recent investments signals that. And you're right, you could put your head in the sand and say we'll go traditional.

"But as we partner up with LYFT and others, and the mindset of how Silicon Valley thinks, it's changing our [business] paradigm and speed," said McGinnis.