GM: Fewer configurations, more money

General Motors' need to funnel more capital toward electric vehicles means buyers of the next-generation Chevrolet Equinox and GMC Terrain won't be able to choose from as many colors, engines or other options. Fewer choices allows GM to save significant money by ordering fewer parts.

Last year, GM eliminated about 3,500, or 12 percent, of the parts used in its plants. This year, it aims to eliminate 25 percent more.

The compact crossovers' next redesign, which Automotive News has reported is likely in 2023, will incorporate more reused and shared parts, Reuss said. GM will cut the number of trims to six from eight, and five engine variants will be offered instead of 11. Overall build combinations will be cut to fewer than 100 per program from 200 today, Reuss said.

"This action will help us self-fund our electrification programs," Reuss said. "And beyond that, we'll continue doing all the big-picture things like getting out of footprints that don't make money."

Reducing complexity is among the actions GM is taking within its manufacturing process to support its EV product plans and find additional profit opportunities in preparation for the next economic downturn.

GM already has achieved about $3.3 billion of its 2018 cost-cutting plan and aims to cut another $1 billion in 2020, CFO Dhivya Suryadevara told reporters last week. The company expects the strategy to contribute $6 billion in cash savings by the end of this year — $4.5 billion in cost reductions and $1.5 billion in lower capital expenditures.

A flexible battery pack design and architecture also will result in cost savings relative to GM's competition, Reuss said. The pack will be usable for multiple brands and segments, and its design allows for as many battery packs as a vehicle needs — as few as six for a smaller EV or up to 24 when there's room for two trays of 12 packs.

"This allows us to be as agile as the market dictates, never locked into any one thing," Reuss said.

"It also means we're not spending money validating way more designs than necessary. We just slap the configuration we need into whatever product we need whenever we need it."

GM's battery-pack development alone could eventually result in a new revenue stream, Reuss said.

In December, GM and LG Chem said they would invest a combined $2.3 billion to mass-produce battery cells in Ohio. GM plans to introduce 20 EVs globally by 2023 and expects the investment to reduce the cost of making them.

GM's EVs also benefit from the automaker's scale and the strategies it has formed to eliminate waste and reuse parts and materials. "That's a big reason why we keep saying we're going to have a profitable EV program," Reuss said.