US Markets
Monday, September 23rd, 2024 3:28 pm EDT
Key Points
- General Motors (GM) has faced delays in its plan to catch up to Tesla in electric vehicle (EV) sales, struggling with slower-than-expected EV adoption, production challenges, and supply chain issues. Despite these setbacks, GM is seeing increasing momentum with a growing EV lineup and strong sales growth in recent months.
- GM’s EV sales have surged by 70% compared to last year, putting the company in close competition with Ford for the No. 2 spot in U.S. EV sales, though both remain far behind Tesla. GM expects a strong finish to 2024, fueled by an expanded lineup of Ultium-based EVs, and aims to produce between 200,000 and 250,000 EVs this year.
- Despite ambitious long-term goals, such as offering exclusively EVs by 2035, GM has scaled back some of its initial 2025 targets, including North American production capacity of 1 million EVs and EV profitability comparable to gas-powered vehicles. However, the company remains optimistic about EV demand and its ability to adjust production based on market needs.
General Motors (GM) has faced significant challenges in its pursuit to catch up to Tesla in electric vehicle (EV) sales. Despite CEO Mary Barra’s ambitious goal in 2021 to overtake Tesla by 2025, GM has encountered numerous obstacles, including slower-than-expected EV adoption across the industry and GM-specific production, software, and supply chain difficulties. As a result, GM has retracted most of its previously set EV targets, but the automaker is starting to gain momentum with an expanding lineup of all-electric vehicles. GM President Rory Harvey claims the company is seeing strong growth in its EV sales, outpacing much of the industry, and is well-positioned with the most comprehensive EV lineup available in the U.S.
GM’s EV sales have risen by about 70% compared to last year, with nearly 21,000 EVs sold in July and August alone. This surge has placed GM within 2,000 units of Ford’s EV sales for the year, although it still trails Hyundai/Kia by more than 20,000 units and remains far behind Tesla, which sold over 164,000 EVs in the second quarter of 2024. While GM is optimistic about a strong finish to the year and expects continued growth in EV adoption, the company acknowledges that it is still battling for second place behind Tesla in the U.S. EV market.
GM currently offers eight EV models built on its Ultium platform, ranging from affordable options like the Chevy Equinox and Blazer to luxury models like the $300,000 Cadillac Celestiq. By the end of the year, the lineup is expected to grow to 10 models with the addition of the electric Cadillac Escalade and Optiq crossover. While GM’s range of EVs offers strong market potential, the company is under pressure to convert its investment into sales, especially after spending billions on the development of these vehicles.
The automotive industry as a whole is gradually transitioning to EVs, though it remains a long-term process. Analyst Stephanie Brinley from S&P Global notes that while GM has stuck to its EV development plans, consumer demand for EVs is still evolving, and it could take years for EVs to surpass internal combustion engine (ICE) vehicles in sales. Currently, EVs are expected to make up about 10% of all U.S. vehicle sales by the end of 2024, up from 7.3% in the first quarter.
Despite the push for more EV sales, GM faces profitability challenges. EVs are less profitable than traditional gas-powered vehicles, though GM expects its EVs to become profitable on a production basis once it reaches 200,000 units by the fourth quarter of 2024. The company has also maintained its long-term goal of exclusively selling EVs to consumers by 2035, although this target will be influenced by customer demand.
GM has withdrawn some ambitious targets set for 2025, including producing 1 million EVs in North America and achieving EV profits comparable to those of gas-powered models. Other goals, such as reaching $50 billion in EV revenue by 2025, remain uncertain. However, GM is still focused on its revised goal of producing 200,000 to 250,000 EVs in 2024, with flexibility to adjust production based on market demand.
GM’s approach to EV sales involves extensive customer engagement and roadshow events, as well as ensuring that its dealerships have sufficient EV inventory. The company believes that getting potential buyers behind the wheel is key to driving demand, with Harvey emphasizing that “butts in the seat sells cars.” GM remains optimistic about its EV prospects, but the road ahead is challenging, particularly as it continues to trail far behind Tesla in the increasingly competitive EV market.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/23/gm-ev-sales-momentum-building.html
