GM’s Newest Weapon in the EV Wars Is a Factory

General Motors Inc. GM is all-in on electric vehicles. The facilities that produce some of the most recent EV models demonstrate confidence and some of the changes that EVs bring.

Barron's was given a tour of Factory Zero, GM's (GM) first factory dedicated only to EVs. If attitude and eagerness are any indications, GM will be a genuine EV contender to Tesla (TSLA) or anybody else.

The facility is located in both Detroit and Hamtramck, Michigan. The term Zero represents GM's goal for an automotive future with zero emissions, zero accidents, and zero traffic congestion. Accidents and congestion reductions are the results of GM's autonomous-driving initiatives. EVs contribute to emissions.

The plant has a real American feel about it. There are American flags and the information that the facility manufactures pickup vehicles. Factory Zero currently manufactures the all-electric GMC Hummer super vehicle. That 9,000-pound beast costs around $110,000 and has 1,000 horsepower.

But those aren't the only ones. Plant manager Jim Quick, who gave us a tour, began his career on a GM assembly line. That sounds like an American success story. Quick is now guiding the plant through a tremendous regeneration, much like the two cities surrounding it.

Factory Zero, which was closed at the end of the previous decade, is again producing automobiles, while considerable work is still underway. The atmosphere at the institution is one of "just get it done." And while the factory appears to have been built in the 1980s, the technology within is far from outdated.

The production starts with a body shop outfitted with 1,500 robots. Paint will be applied after the body is built. Module, or mod, lines for final assembly radiate from the paint stage. More lines allow greater flexibility than older factories committed to one or two models. Furthermore, the lines may be altered more rapidly and with less expenditure to accommodate diverse items.

The factory will eventually feature around six distinct mod lines, up from two today.

The tooling is also different than in the past. Electricity rather than pneumatic tools now power almost everything. And because the tools are wirelessly connected to stations, there can be no mistakes produced by using the wrong tool in the wrong location. A tool simply does not operate outside of a specified station.

On the Hummer mod line, there are around 40 stations where workers conduct a ballet of activities. Wiring harnesses are installed first, followed by trim, batteries, electric motors, tires, and so on. Each station's halt lasts around seven minutes.

The Hummers ride on autonomous trolleys before the 3,000-pound battery pack is put into position. After the vehicles are lifted up to bolt batteries, the trolleys drive themselves back to the start like big, orange Star Wars droids approximately halfway down the finishing line.

The automobile is suspended in the air at the charging station until the tires are installed. The tires, which have an outside diameter of 35 inches (that's large), as well as the drive units (basically the axels, suspensions, and electric motors), are constructed outside of GM at what Quick refers to as VAAs or value-added assemblers.

Eventually, the Hummers roll off the assembly line.

Factory Zero is now running on one shift and employs around 700 people. Only the Hummer mod line produces vehicles for client delivery. A second modification plant has begun production of Hummer SUVs in limited quantities. All-electric Chevy Silverados will be manufactured in the near future. The Silverado will be available to consumers in early 2023.

The factory, as well as the new EV cars, are critical to GM's strategy. In 2022 and 2023, the business intends to sell 400,000 EVs in North America. GM also hopes to sell one million electric vehicles in North America per year by 2025. What comes to new models of EV’s, the Cadillac Lyriq will be available later in 2022. In 2023, the Silverado will be joined by the Chevy Equinox and Blazer crossovers. More models will be required to achieve that aim. Nowadays, GM sells the Bolt and the Hummer.

The lineup, as well as Factory Zero, will be critical to GM stock's long-term performance. CEO Mary Barra believes that EVs are fast becoming better, more useful vehicles than traditional automobiles and that EV penetration of new-car sales in North America may reach 50% by 2030, up from 5% in 2021.

This is still a long way off, and for the time being, investors are more worried about inflation and increasing interest rates, which can pinch profit margins and dampen demand for new automobiles. GM stock is down about 35% year to date, outperforming the S&P 500 and Dow Jones Industrial Average DJIA, which are down 13% and 9%, respectively.