General Motors (GM) had implemented a fairly ambitious strategy to boost the electric car. A plan probably too daring, because the American manufacturer must put on hold or abandon several of its current developments.
Did GM boss Mary Barra aim a little too high for the development of electric cars at GM? Traditional manufacturers are often criticized for not having reacted quickly enough to move towards 100% electric. General Motors (GM) nevertheless gave itself the means to achieve its ambitions, but it did not bear fruit.
GM currently finds itself in a tumultuous period: ongoing UAW strikes, rising interest rates that are slowing car purchases, abandonment of projects with Honda for new electric products, delays in factory work, taxis autonomous Cruise at a standstill… The end of the year promises to be rather tough for the American giant, which is losing ground on the stock market in the face of this situation, as underlined Reuters on October 25.
GM must rethink its priorities
Since 2020, the company has invested more than $35 billion to develop electric models, build a network of factories for cars and batteries. The ambitions of the brand boss were clear: to surpass Tesla.
Except that the economic context in the United States is no longer really celebrating. Despite the aid from the Inflation Reduction Act (IRA), aimed at encouraging the purchase of electric cars produced in the USA, it is not enough to compensate for soaring interest rates. A subject that also affects Tesla and other local manufacturers.
Mary Barra therefore resigned herself to drastically reducing the sail, time to let the storm pass. GM will reduce production volumes of its electric cars to better adapt to demand without building unnecessary stocks. This will prevent the brand from having to sell its unsold items. Margins will be maintained at a low to medium level depending on the products.
Affordable vehicles developed with Honda abandoned
GM and Honda formalized in 2022 a joint development of affordable electric vehicles. An investment of 5 billion dollars accompanied this major project over the coming years. The alliance with Honda on electric vehicles is now abandoned, by mutual agreement between the two participants.
Other projects will also be slowed down or revised with lower expectations. GM engineers must work on reducing costs for future electric cars. This could involve, for example, adopting Gigacasting to reduce the number of parts needed to assemble a vehicle.
Arrival in Europe threatened?
GM intends to sell its electric models in Europe from 2024. Among the decisions announced by the GM boss, nothing suggests that plans have changed for Europe. The brand needs to find new markets for its electric cars, and even if the models do not really meet European demand, the brand wants to attempt a winning comeback.
Risk-taking would be limited, because ultimately the brand would essentially opt for internet sales, without having to recreate a distribution network from scratch.
Now, the ongoing strike at American factories could still delay GM’s initial plans on this point.
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