General Motors aims to recover from EV slowdown with new models, production capacity

General Motors aims to double its electric vehicle production capacity and reach profitability in its EV business by mid-year after experiencing a slowdown in demand last year, according to an April 23 earnings call.

GM saw profit improvements in its EV portfolio year over year, seeing a 21% increase in EV retail customer deliveries in this quarter, CEO Mary Barra said.

The company touts its brand of EV batteries, called Ultium, as a driver of its EV business. The company reported a 36% quarter on quarter increase in total US Ultium EV deliveries during the earnings call.

GM battery production plants in Ohio and Tennessee ramping up have allowed EV production costs to decrease, Paul Jacobsen, GM Chief Financial Officer said, citing a $12,000 production cost savings year over year for the Cadillac Lyriq. The newer Tennessee plant is expected to reach full installed capacity by the end of the year, he said.

Increased battery production allows the company to "remain on track to achieve 200,000-300,000-unit production and wholesale volume target in 2024" and allow for profitability in the EV portfolio in the second half of the year, Jacobsen said. This goal is a decrease from a previously stated goal to hit 400,000 units produced this year.

The company's EV strategy "continues to be guided by demand," Barra said.

In the company's 2023 year-end results, it reported a slowdown in EV growth, specifically stating: "It's true the pace of EV growth has slowed, which has created some uncertainty. But many third-party forecasts have US EV deliveries rising from about 7% of the industry in 2023 to at least 10% in 2024, which would mean another year of record EV sales."

Older models including the Chevrolet Bolt and Chevrolet Bolt EUV are undergoing a rework, according to a previous earnings call in Q3 2023, after the company initially announced plans to stop its production entirely earlier that year.

The company highlighted some new upcoming EV models, including the Chevrolet Equinox EV coming mid-year, an electric Chevrolet Silverado coming mid-year, as well as four new vehicles with unspecified launch dates.

The company's best selling EV in March was the Cadillac Lyriq, according to MotorIntelligence data provided to S&P Global Commodity Insights. Sales of the Bolt vehicles dropped sharply year over year.

EV uptake has seen double-digit and triple-digit gains over the past five years in most major markets, S&P Global data shows. Some degree of slowdown is expected as maintaining this significant growth would be "unsustainable," Suzanna Massingue, Low Carbon Transportation Analyst at S&P Global, said.

"Our forecasts are inherently bearish – we do not take policy and OEM targets at face value which builds some contingency against policy U-turns and overly optimistic OEM targets," Massingue said. "Whilst some of the short-term perceived slowdown may be attributed to increased inflation, the numbers show that EV sales remain high."

Plug-in electric vehicle sales had an average monthly market share of 9% in 2023, up from 7% in 2022, S&P Global data shows. PEV sales increased by 57% year over year, and similar growth is expected in 2024, S&P Global data shows. About 1.1 million EVs were sold in 2023; S&P Global projects up to 4.6 million EV sales by 2030.

Sales of electric cars, vans, trucks, buses, and two- and three-wheelers are expected to hit 17 million globally in 2024, the International Energy Agency estimates, up from almost 14 million in 2023, led by strong growth in China, the US and the EU.

The IEA on April 23 raised its estimates for global oil demand displacement caused by electric vehicles.

New emissions standards adopted in the US, EU and Canada will amount to 6 million b/d displaced by 2030, the IEA projected. In its previous outlook for EVs published in April 2023, the IEA estimated more than 5 million b/d of oil demand would be displaced globally by 2030 under its base-case scenario.