GM has announced plans to slow down the rollout of several electric vehicle models in order to cut costs, a strategic reversal from their aggressive EV ambitions revealed just months ago.
CEO Mary Barra stated GM will pause or stretch out plans for at least two future EVs, including delaying the launches of a Chevy crossover and Buick SUV EV. The moves aim to offset rising battery costs and supply chain disruptions hampering automakers.
As part of the pullback, GM is also abandoning its previous goal to deliver 400,000 EVs in North America from 2022 to mid-2024. The target will be pushed back as launches are delayed to conserve cash.
Barra admitted GM has “work to do” to achieve its profitability targets for EVs, including hitting low- to mid-single-digit EBIT margins by 2025. The sober outlook contrasts sharply with the company’s fanfare around an “EV future is now” just 10 months ago.
Analysts viewed the sudden EV speed bumps as a worrying sign GM may be returning to its past dysfunction by deprioritizing EVs when economic conditions get tough. Given how rapidly the segment is expanding, tapping the brakes now seems short-sighted.
While course correcting from an overly-aggressive target is understandable given macro headwinds, backing off EV investment risks leaving GM behind competitors pushing ahead. The auto industry is undergoing irrevocable change that won’t pause for those failing to adapt.
However, Barra stated the layoffs and other cost cuts are necessary for GM to ultimately deliver more affordable EVs profitably. Once conditions improve, she expects growth plans to accelerate again.
But rivals like Hyundai and Kia are showing affordable, profitable EVs are already possible now through smart engineering and supply chain leverage. GM has no excuse to cling to gas vehicles amidst transformations upending that dying business model.
Overall, GM’s actions to delay EV models risk repeating historic mistakes of prioritizing short-term returns over forward progress. While chasing near-term profit, GM may sacrifice its role in the inevitable EV future.
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