General Motors (GM) is adjusting its electric vehicle (EV) production goals, citing profitability concerns. In a Q3 shareholder letter, GM CEO Mary Barra revealed that the company is revising its target of producing 400,000 EVs by mid-2024. The decision is influenced by the need to maintain pricing, adapt to a slower near-term EV demand, implement engineering efficiencies, and enhance profitability.
GM reported a healthy third-quarter profit of $3.1 billion in net income, despite disruptions caused by a strike led by the United Auto Workers union, which costs GM $200 million per week in profit.
Barra reiterated GM’s offer to union workers, describing it as a “historic contract” that would provide workers with a compensation of $40.39 per hour, or roughly $84,000 per year by the agreement’s end. She emphasized the importance of balancing fair compensation with the company’s future stability.
GM’s decision to moderate EV production may come as a surprise, as the automaker had previously shown strong commitment to EV technology, anticipating the eventual phase-out of traditional combustion-engine models. GM had set ambitious goals to transition away from petroleum-powered vehicles by 2035. However, it recently announced a delay in electric pickup truck production at a Michigan factory to better manage capital investments.
Other automakers have also faced challenges in their EV rollouts. Ford, for example, postponed its EV targets by a year in July, attributing the delay to lower-than-expected adoption rates. These adjustments are taking place against a backdrop of rising interest rates, which make EVs more expensive for consumers, contributing to slower sales growth.
GM’s decision reflects a growing trend among automakers who are carefully evaluating their EV production goals to align with market conditions and profitability concerns. As the automotive industry continues to transition toward electrification, striking the right balance between ambitious EV targets and financial sustainability becomes a critical challenge.
