General Motors will be slowing its electric car (EV) production in North America due to lower-than-forecast demand, pushing its manufacturing targets well into 2025. The decision saves the company $1.5 billion next year, CFO Paul Jacobson said today on GM’s quarterly earnings call.
The automaker had previously planned to sell 400,000 EVs in North America from 2022 through mid-2024 and produce 100,000 EVs in North America during the second half of this year. Models impacted by the delay will include the Equinox EV, Silverado EV, and GMC Sierra EV.
Last week GM announced delays in EV truck production at a plant near Detroit to “better manage capital investment while aligning with evolving EV demand,” hinting at weaker interest for electric trucks.
“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,” CEO Mary Barra wrote in her third-quarter letter to shareholders, published today.
GM plans to hit an annual EV capacity of 1 million units in North America by the end of 2025 and is targeting a “low to mid-single-digit EBIT EV margin” for that year.
The automaker said it is committed to spend $35 billion by 2025 for its electrification plans, with a goal of being all-electric by 2035.
Earnings still beat despite labor strikes
Labor strikes have prompted the automaker to cut pretax earnings by $800 million this year, and another $200 million per week after that, Paul Jacobson, GM’s chief financial officer said during the earnings call today (Oct. 24).
Workers started walking off production plants in Detroit on Sept. 15, with pickets expanding to Arlington, Texas on Oct. 24.
GM third quarter performance by the digits:
$2.28: Adjusted earnings per share compared to the expected $1.88.
$44.13 billion: Revenue compared to the expected $43.68 billion.
32,000: EVs produced during the third quarter.
$1.9 billion: Loss on Cruise, GM’s majority-owned autonomous vehicle subsidiary, from January through to September.
9,200: GM workers at the Michigan plant on strike.
2,350: Laid off GM workers due to the strikes, according to the company.
39: Days since UAW started striking.
Slow EV demand?
Buyers of the Chevy Blazer EV could be seeing steep markups to get in early. Automotive sales platform CarsDirect found dealers claiming markups as high as $10,000 based on supply and demand “as well as the current market situation.”
With a federal tax credit of up to $7,500 for buying new EV cars in the US, there’s motivation for motorists to keep buying clean cars, although buyers are becoming more sensitive to price. As a result, a booming secondary car market for EVs is overshadowing new EV sales.
According to data from Recurrent Auto, a used EV car and battery research firm, used EV car sales now dwarf the sales of every new EV model except the Tesla Model Y.
About 30% of used EVs qualify for a $4,000 clean vehicle credit, according to Recurrent Auto. The average price of a second-hand electric car is $27,800.