GM lowers EV production goal in North America

General Motors Co. is narrowing its 2024 electric-vehicle production goal by at least 50,000 units to between 200,000 and 250,000, down from 300,000, GM CFO Paul Jacobson said Tuesday at the Deutsche Bank Global Auto Industry Conference.

The move is “100% demand driven,” Jacobson said, because GM overcame issues it had with battery module supply and was “on track” to produce 300,000 EVs this year.

“The market a few years ago, or even more recently than that, had said, ‘You got to produce more EVs if we’re going to ascribe any value to your company,’ ” Jacobson said. “We, as an industry, over-produced, and you’ve seen a lot of pricing impacts result from that, residual value impacts.”

The industry has been grappling with slowing EV pace and trying to get mainstream consumers interested in battery-powered models. GM has started delivering the Equinox EV to appeal to those mainstream customers and also has the Chevrolet Blazer EV.

GM expects by the fourth quarter that its EVs will be variable profit-positive, or when it’s able to cover the cost of producing the vehicles, when about 200,000 are produced.

“We’ve been very consistent about building a platform and growing EVs off of that, and being able to do it in a way that meets customer expectations, and we can grow into profitability,” Jacobson said. “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.”

EV sales up

Still, with new EV models available, GM had its best sales month for them in May with more than 9,500 EV sales. Overall, it was the best month since December 2020, Jacobson said, adding that GM expects second-quarter earnings will be better than the first quarter, when it reported net income of $3 billion in the January-through-March quarter on revenue of $43 billion. GM will report its second-quarter financial results on July 23.

North American EV market share from January to April this year was 7.1%, up from 6.9% the same time last year, according to S&P Global Mobility.

While EV sales and demand continue to grow as more models arrive, Stephanie Brinley, S&P Global associate director of auto intelligence, noted this is also a time when automakers are still educating consumers on EVs, the EV charging infrastructure is still growing and the price for most EVs is still high.

“Where automakers need to be right now is having the ability to really keep your production as close to demand as possible,” she said. “It is going the right direction, but what we’re seeing is that the installed capacity and the capacity plans may be a little bit ahead of where consumers are ready to go.”

Sales of all-electric vehicles in the United States surpassed 1 million for the first time last year, but the growth rate has slowed. EV sales in the first quarter rose 2.6% year over year, but fell 15.2% from the fourth quarter, according to Cox Automotive.

Cruise expands testing

On the AV side of the business, GM’s Cruise LLC self-driving unit is expanding its road testing to Houston in another sign it’s moving forward after facing safety scrutiny last year over a pedestrian crash.

Cruise last month announced the start of robotaxi testing with human safety drivers in Phoenix. It’s also testing in Dallas.

Cruise suspended operations in October when one of its AVs dragged a pedestrian down a San Francisco street after the person was hit by a human-driven vehicle and thrown into the AV’s path. GM has since paid the victim between $8 million and $12 million, according to Bloomberg News.

Also on Tuesday, Jacobson announced at Deutsche Bank’s Global Automotive Industry Conference that the automaker is investing $850 million this month to provide Cruise with operational cash while it advances its AV technology.

“This buys us time to continue to pursue our strategic review going through how we’re going to think about Cruise’s future as they continue to make good progress getting back to autonomous and full-autonomous driving,” Jacobson said, adding there will be “more to come.”

A Cruise spokesperson said the business “continues to make positive progress towards returning to driverless operations with manual and supervised testing underway in Phoenix, Dallas and now Houston, we appreciate GM’s continued support in our shared mission to transform mobility and improve road safety.”

In the first quarter, GM’s Cruise expenses were $400 million, down from the $800 million in the fourth quarter of last year as a result of halting services and a number of changes made following the pedestrian crash. Cruise expenses for the year are expected to be $1.7 billion, Jacobson told investors in April.