Some EV plans have scaled back but launches are going to continue.
It was a pivotal moment last year when Chairman and CEO Mary Barra said GM would get back into hybrids, and specifically plug-in hybrids. She has been laser focused on the push to pure EVs when it comes to electrification. GM’s only hybrid is the Chevrolet Corvette E-Ray and its only plug-in hybrids are sold in China. We have had precious little detail. But now we know the timeframe. Barra said GM will introduce some hybrids in 2027 in keys segments, but not across the board. She provided the timeline on a call with investors to discuss second-quarter earnings. The move to hybrids is because of the regulatory environment right now, Barra says. GM has an opportunity to decide what to put in the fleet based on how the company sees the current regulatory environment. GM has plug-in technology on sale in other markets which it can leverage. Barra has said any PHEVs sold in North America will be compliance models, added to the mix to meet stricter emissions regulations. In other words, expect hybrid versions of existing models, as opposed to new nameplates. GM sells a Chevrolet Equinox plug-in hybrid in China and there is a Buick Velite 6 PHEV sedan.
GM Not Backing Down On EVs
Meanwhile, GM reports its EV sales grew by 43 percent in the second quarter, outpacing the industry’s overall 11 percent, and GM is gaining share even with lower incentives. The new 2024 Chevrolet Equinox EV, which retails under $30,000 with tax rebates, is now in production; the first 1,000 units were delivered late in the quarter. Over next several months GMC will launch the 2024 Sierra EV, and Cadillac will add the 2025 Optiq, Escalade IQ, and deliver production models of the hand built Celestiq flagship sedan. Next year will follow with the 2026 Cadillac Vistiq three-row electric SUV. The next-generation Chevrolet Bolt EV due next year represents a growth opportunity with a shortage of affordable EVs on the market. And Buick’s first EV is coming as well, which had been planned for 2024. GM is also finalizing details with Tesla to use its chargers.
While all those plans are in the works, GM is also being prudent and adjusting spending to EV sales growth that is slower than forecast a few years ago. The Ultium Cells joint venture continues to ramp up battery cell supply but will pursue a more measured cadence. And GM has pushed back the reopening of the Orion Assembly Plant to make fullsize electric pickup trucks to mid-2026. The timing is six months later than the plan heading into the year.
GM still expects to produce 200,00-250,000 EVs this year, 200,000 being the breakeven point to cover production costs. If that volume does not materialize, the company has the flexibility to make more vehicles with internal combustion engines.
Trouble Spots: China, U.S. Election
In China, GM is reducing its inventory and aligning production to demand but it is still not enough and restructuring of its joint venture with SAIC continues. GM saw sales fall off by 29 percent in the quarter, reported a $104 million loss, and says the rest of the year will continue to be a challenge. They are not alone, Barra says. A number of companies are losing money in China in a race to the bottom that is not sustainable.
As for fears the EV regulatory environment could change with the pending U.S. presidential election, Barra says GM has the portfolio in place to veer in whatever direction is necessary and they continue to do scenario planning for what potentially could happen.
GM’s 2024 Second-Quarter Earnings
GM posted strong second-quarter earnings, bolstered by truck sales in North America. Net income was up 15 percent to $2.9 billion on revenue of $47.9 billion which was up 7 percent. Adjusted earnings were up 37 percent to $4.4 billion. Efforts are on track to reduce fixed costs by $2 billion this year. GM will spend an additional $400 million in the second half of the year to promote new vehicle launches.
The automaker raised its guidance once again. GM now expects adjusted earnings of $13 billion to $15 billion; net income of $10 billion to $11.4 billion; more free cash flow and capital spending in the $10.5 billion to $11.5 billion range which bodes well for future products.
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