GM Walks Away From Big EV Investments

Cars and Drivers

Published: July 24, 2024 6:40 am

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General Motors Co. (NYSE: GM) has slowed its electric vehicle (EV) plans.
Investors will no longer tolerate large EV investments.

General Motors Co. (NYSE: GM) said two things about its electric vehicle (EV) plans when it announced earnings. The first was in the shareholder letter: “As excited as we are about our EVs and our early success, we are committed to disciplined volume growth, which is the key to earning positive variable profits from our portfolio in the fourth quarter, which remains our goal.” Many thought the automaker’s investment in EVs was too aggressive. GM has slowed the process to show investors it will not overspend.

According to The Wall Street Journal, the second sign was “GM Chief Executive Mary Barra told Wall Street analysts Tuesday that GM is deferring investments to ensure the company doesn’t get ahead of demand.” This is part of a significant reversal of GM’s plan to have the capacity to produce a million EVs in 2025. Management said the target was now “flexible” based on demand.

It is easy to see why GM has begun an EV retreat. According to the quarterly report, it sold only 22,000 EVs in the first half. That works out to about 7,000 a month. The company has to be losing money on each of those sales.

Shifting Sentiment About EVs

GM, Ford, and several other large car companies have found that investors will not tolerate large EV investments, despite earlier plans to aggressively take a substantial piece of a rapidly growing pie controlled by Tesla Inc. (NASDAQ: TSLA). Tesla’s new earnings demonstrate that even it is struggling with price cuts, another reason for GM to retreat. In short, the entire industry has to wrestle with Tesla’s unexpectedly poor numbers.

The American appetite for pickups and SUVs will not go away. And that is the part of the market that makes money. GM acknowledged that.

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