General Motors (GM) is making some significant adjustments to its electric vehicle (EV) plans. The company has decided to slow the launch of several EV models and cut back on EV product spending in an effort to manage costs effectively amid ongoing strikes.
One of the notable changes in GM’s approach is the decision to redesign and relaunch the Chevrolet Bolt EV, utilizing more cost-effective lithium-iron batteries from China, a move that CEO Mary Barra said would save the company billions of dollars. These changes are part of GM’s broader cost-saving strategy, as it seeks to streamline operations and allocate resources more efficiently.
Additionally, the company has abandoned its previous plan to invest $5 billion in developing new entry-level EVs.
GM is also revising its EV production targets. The automaker is no longer pursuing the goal of building 400,000 EVs between 2022 and mid-2024. According to Chief Financial Officer Paul Jacobson, GM is opting to avoid discussing interim production goals, suggesting a more adaptive and flexible approach to EV manufacturing. (via Reuters)
“We are also moderating the acceleration of EV production in North America to protect our pricing, adjust to slower near-term growth in demand, and implement engineering efficiency and other improvements that will make our vehicles less expensive to produce, and more profitable,” GM CEO Mary Barra said in the Q3 letter to shareholders.
Another cost-saving measure involves delaying the retooling of GM’s factory in Orion Township, Michigan, by up to two years a move that was announced last week. The factory was initially intended to produce the electric Chevrolet Silverado EV and GMC Sierra EV. This decision will result in capital investment savings of $1.5 billion in 2024. GM believes that this delay will provide an opportunity to incorporate improvements and innovations into the production process, ultimately enhancing profit margins when electric Silverados and Sierras enter production.
All of these changes were announced after GM posted its Q3 financial report, which came out ahead of analyst expectations. Third-quarter net income fell 7.3% to $3.06 billion, while revenue rose 5.4% to $44.1 billion. The adjusted earnings per share tracked by analysts were $2.28, ahead of Wall Street expectations and up from $2.25 a year ago largely due of the effect of share buybacks.
The stronger than expected earnings report resulted in the UAW expanding its strike to include GM’s factory in Arlington, Texas, which produces the Cadillac Escalade, Chevy Suburban, and other SUVs.