GM Trims EV Production Range for 2024 Due to Softened Demand
General Motors (GM) has made the decision to reduce its electric vehicle (EV) production range for 2024 by 50,000 vehicles. This move comes as the company anticipates an oversupply in the market due to softened demand. Despite initial expectations that the EV market would make up 10 percent of total auto sales this year, GM estimates it will only account for 8 percent. General Motors CFO Paul Jacobson addressed this issue during the Deutsche Bank Global Auto Industry Conference, where he stated that the decision to lower the output forecast is entirely driven by demand.
“We don’t want to end up with hundreds of thousands of vehicles in inventory because the market’s just not there yet,” Jacobson explained. He emphasized that GM wants to avoid blindly producing vehicles without considering the actual demand in the market. This cautious approach is a direct response to the oversupply issues currently facing the EV industry.
In fact, last year GM decided to discontinue production of its top-selling Chevy Bolt EV. While the vehicle was well-received by customers, the company found it difficult to turn a profit from selling them. This demonstrates the challenges that GM and other automakers face when it comes to making EVs financially viable.
Despite the challenges, Jacobson remains optimistic about the growth of electric vehicles within GM’s portfolio. In May, the company sold over 9,500 EVs in North America, indicating a strong consumer interest. Jacobson also highlighted the upcoming release of the Equinox EV, which he called a “game-changer.” With a range of over 300 miles and a retail price below $30,000 after tax credits, this new model is expected to have a positive impact on GM’s EV sales.
However, recent studies have shown a slight decline in consumer interest in EVs. According to a survey conducted by automotive data and analytics firm J.D. Power, 24 percent of respondents said they were “very likely” to consider buying an EV, down from 26 percent the previous year. Additionally, 58 percent expressed an overall likelihood of purchasing an EV, compared to 61 percent in 2023.
Among those who were less likely to consider buying an EV, a lack of charging-station availability was cited as the primary reason. Other concerns included high purchase prices, long charging times, limited driving distance per charge, and the inability to charge at home or work. These factors highlight the challenges that need to be addressed in order to accelerate EV adoption.
GM is committed to achieving price parity between EVs and internal combustion engine (ICE) vehicles by the end of the decade. This goal aligns with President Joe Biden’s aim of having 50 percent of all new vehicle sales be electric by the end of this decade. To support this transition, the Biden administration has announced $623 million in grants to build the EV-charging network across the United States. The government’s target is to have at least half a million publicly available chargers by 2030.
Despite the current challenges and fluctuations in demand, the overall trajectory for EV sales remains positive. According to Cox Automotive, a record 1.2 million American vehicle buyers chose an electric option in 2023, resulting in EVs making up 7.6 percent of the total U.S. vehicle market, up from 5.9 percent in 2022. This trend is expected to continue, making 2024 a promising year for EV sales.
In conclusion, GM’s decision to reduce its EV production range for 2024 reflects a cautious approach driven by softened demand and a desire to avoid oversupply issues. While there has been a slight decline in consumer interest in EVs, there is still strong potential for growth in this market. Addressing concerns such as charging-station availability and driving range will be crucial in accelerating EV adoption. With the support of government initiatives and a commitment to achieving price parity, the future of EVs looks promising.
