GM scales back EV investment

GENERAL MOTORS has announced that it will scale back electric vehicle production through the end of calendar year 2024 as demand in North America wanes.

GM said it will slash production by up to 50,000 – 100,000 units over the coming six months and is now expected to build as few as 200,000 – 250,000 units for the entire calendar year.

Speaking at the Deuthsche Bank Global Auto Conference this week, General Motors chief financial officer Paul Jacobson said the forecast has been reduced from earlier forecasts of up to 300,000 units from its range of brands – including Cadillac, Chevrolet, GMC and commercial van unit BrightDrop – as EV market penetrations trend lower than anticipated.

Mr Jacobson said GM still expects to achieve positive variable profit on its EVs in the second half of 2024 (excluding fixed costs), though that will likely occur in the final quarter of the year.

General Motors has said that it aims to achieve mid-single-digit EV margins in 2025.

“Despite the fact that we’re seeing a little bit of slowing that growth, for our portfolio, it’s still pretty strong,” added Mr Jacobson, saying GM sold more than 9500 electric vehicles in North America across the month of May.

GM predicts that electric vehicles will account for about eight per cent of all new vehicles sold in the United States for the 2024 calendar year, a figure that is down two per cent on previous forecasts.

The American giant had been ramping up EV production this year after working through battery module assembly issues that restricted production across 2023.

Before this week’s announcement, Chevrolet had resumed sales of its Blazer EV after a software glitch and is launching an electric version of the Equinox SUV and retail grades of the Silverado EV full-size pick-up truck.

Meanwhile, GMC is preparing to launch its Sierra full-size pick-up and Cadillac the Escalade IQ full-size electric SUV.

Yet, slow EV growth has prompted General Motors to delay some investments, including the start of electric pick-up production at a second planned EV plant in Detroit until 2025.

“We don’t want to end up in a position where we give out a production target and then we just blindly produce and end up with hundreds of thousands of vehicles in inventory because the market’s just not there yet,” added Mr Jacobson, perhaps referencing lessons learnt from others in the market.

“We think that this is a really good blend of being able to drive the scale benefits that we need, but still not get crazy with inventory levels, such that we have to start engaging in deep discounting to where customers who have already bought one start to see their residual values suffer.”