General Motors (GM) has recently announced a significant delay in the production of its electric pickup trucks at the Orion Township plant in Michigan, pushing the start date back by a year. This decision reflects the challenges GM faces due to a stagnation in the demand for electric vehicles in the market. Initially scheduled for late 2024, the production of the electric Chevrolet Silverado and GMC Sierra will now commence in late 2025.
The shift in the timeline is attributed to GM’s strategy to optimize capital investment and align more closely with the evolving demand for electric vehicles. It is important to note that this adjustment will not impact GM’s plans for battery production, which is a crucial component of their electrification strategy. Back in July, GM revealed that its battery production at the Ultium joint venture plant in Ohio had faced disruptions due to issues with the delivery of automation equipment.
Despite the production delay, General Motors maintains its ambitious goals for the electric vehicle market. In July, the company reaffirmed its target of producing 400,000 electric vehicles between 2022 and the first half of 2024, with a projection of generating $50 billion in electric vehicle revenue by 2025. GM also set its sights on producing approximately 100,000 electric vehicles in the latter part of 2023.
However, there are signs of a broader trend in the electric vehicle market, indicating that it might not be expanding as swiftly as initially anticipated. Reports suggest that while the U.S. electric vehicle market is indeed growing, the pace may not be rapid enough to prevent an accumulation of unsold electric vehicles at various automakers’ dealerships.
GM is not alone in grappling with these challenges. Its rival, Ford, recently announced that it would temporarily reduce production at the plant responsible for building the F-150 Lightning EV. In July, Ford had also expressed intentions to slow down the ramp-up of its electric vehicle production and projected a full-year loss of $4.5 billion for its electric vehicle unit.
It’s worth clarifying that GM’s decision to delay production, as revealed on Tuesday, is not related to the ongoing negotiations with the United Auto Workers for a new labor deal. Nevertheless, some analysts are apprehensive that a more expensive labor contract could impede GM’s spending plans.
In contrast to the delay in electric pickup truck production, GM is still committed to a significant boost in electric vehicle production in 2024, including the addition of a new shift at its Detroit-Hamtramck factory, which currently produces electric SUVs and pickup trucks. GM plans to commence the production of the GMC Sierra EV in Detroit next year.
Despite these production adjustments, General Motors remains steadfast in its mission to cease the sale of gas-powered vehicles by 2035. However, it’s worth noting that, as of now, only 2.8% of GM’s total U.S. sales in the current year are electric vehicles, indicating that there’s much work ahead to realize this ambitious vision in the coming years.\
Source: Reuters
