The American auto industry went all-in on Joe Biden’s vision of an electric future.
Now automakers are having to wake up about the realities of the market.
And General Motors made one surprising decision that Joe Biden is going to hate.
General Motors cuts back on electric vehicle targets
Detroit’s Big 3 automakers were working hand-in-hand with President Joe Biden to achieve his vision of an all-electric future for the industry.
General Motors (GM) announced almost a week after Biden took office in January 2021 that the company would phase out gasoline and diesel engines to produce 100% electric vehicles by 2035.
The company boasted about its support for the President’s electric agenda.
GM CEO Mary Barra boasted about the automaker’s plans for “an all-electric future” with a lineup of more than 30 electric vehicles by the end of the decade.
“General Motors is joining governments and companies around the globe working to establish a safer, greener, and better world,” Barra said at the time. “We encourage others to follow suit and make a significant impact on our industry and on the economy as a whole.”
GM Chief Sustainability Officer Dane Parker said the automaker was “excited about the things the new Biden administration is doing.”
Biden showered American automakers with government subsidies and tried to prop up the market by offering a $7,500 tax credit for electric vehicles.
Try as he might, the public doesn’t want to buy Bidenmobiles.
Demand for electric vehicles is plummeting and that’s forcing automakers to reassess the future.
GM’s electric future is running out of juice
GM announced that it was authorizing a stock buyback of up to $6 billion after the automaker saw strong demand for its gas and diesel-powered vehicles.
After announcing that the automaker was phasing out gas-powered engines in 2021, GM CFO Paul Jacobson said they were now a focus.
“We are very focused on the profitability of our ICE [internal combustion engine] business, we’re growing and improving the profitability of our EV [electric vehicle] business and deploying our capital efficiently,” Jacobson said.
Deploying capital more efficiently involves cutbacks for the automaker’s electric division.
Jacobson said that GM was cutting its electric vehicle production by 50,000 vehicles in a decision that was “100 percent demand-driven.”
“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,” Jacobson explained.
GM’s electric vehicle sales fell by 21% in the first quarter of the year.
“But what we don’t want to do is get in this trap of . . . I think the market a few years ago or even more recently than that, had said, ‘You’ve got to produce more EVs if we’re going to ascribe any value to your company,’” Jacobson stated.
The automaker still loses money on every electric vehicle it sells.
Jacobson lamented that GM stopped production on the Chevrolet Bolt electric vehicle that was “loved” by consumers but the company “couldn’t make any money selling them.”
GM is the latest company to realize that electric vehicle hype doesn’t match the reality.
