In an aerial view, brand new Subaru cars sit in a storage lot at Auto Warehouse Co. on March 4, 2025 in Richmond, California.
Justin Sullivan | Getty Images
The White House on Wednesday announced a one-month North American tariff exemption for automakers after President Donald Trump spoke a day earlier with heads of General Motors, Ford Motor and Stellantis.
Automakers have urged Trump to waive 25% tariffs on Mexico and Canada on vehicles that comply with the United States-Mexico-Canada Agreement’s trade rules of origin.
“Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage,” Press Secretary Karoline Leavitt said on behalf of Trump.
Spokespeople with the three companies as well as other automakers did not immediately respond for comment on the delay, which comes only a day after the tariffs went into effect.
Leavitt said the president is “open” to hearing requests from other industries seeking exemptions as well.
Leavitt also confirmed the “Big 3” Detroit automakers requested the Tuesday call with Trump, who mentioned it during his address to Congress later in the day.
Two sources on Wednesday confirmed to CNBC that GM CEO Mary Barra, Stellantis Chairman John Elkann, Ford CEO Jim Farley and Ford Chair Bill Ford participated in the call.
The White House said it granted a one-month delay for tariffs on automakers whose cars comply with USMCA, which was negotiated under Trump’s first term in office.
GM, Ford and Stellantis stocks
Shares of those automakers were up between 5% and 10% mid-Wednesday afternoon.
It was not immediately clear whether just vehicles will be exempt, or if automotive parts would also be included.
The exemption allows for additional preparation and discussions between the White House and automotive industry on tariffs. It also more closely aligns with potential vehicle tariffs on imports from outside of North America.
Trump previously said those tariffs would be confirmed on April 2, in a push for automakers to invest more in the U.S. for vehicle production.
“We’re going to have growth in the auto industry like nobody’s ever seen,” Trump said Tuesday night before a joint session of Congress. “That’s a combination of the election win and tariffs.”
Trump erroneously touted a “new” plant investment in Indiana for Honda Motor during his speech Tuesday night. The company operates a large assembly plant in the state, but its most recent major investments have been in Ohio.
President Donald J Trump addresses a joint session of Congress as Vice President JD Vance and Speaker of the House Mike Johnson (R-LA) listen in the Capitol building’s House chamber on Tuesday, March 04, 2025 in Washington, DC.
Jabin Botsford | The Washington Post | Getty Images
Honda on Wednesday thanked the president for acknowledging the company, but confirmed it “did not announce plans for a new plant in the U.S. at this time.”
“We have invested over $3 billion in advanced vehicle manufacturing in America in just the past three years, with a cumulative total of more than $24.7 billion,” Honda said in an emailed statement. “We look forward to continuing to invest locally and build quality products in America, as Honda has been doing for the past 45 years.”
The American Automotive Policy Council, which represents Ford, GM and Stellantis — all of which are heavily affected by the tariffs — earlier this week argued that vehicles and parts that meet USMCA requirements should be exempt from the tariff increase.
“Our American automakers, who invested billions in the U.S. to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American workforce, while our competitors from outside of North America benefit from easy access to our home market,” said former Missouri Gov. Matt Blunt, president of AAPC, in a statement Monday night.
There was major concern among automotive executives and experts that prolonged tariffs would quickly eat into company profits and production plans.
Executives with France-based auto supplier Forvia on Wednesday said the company and its customers, including automakers, have been planning different contingency plans for the tariffs. That has included working with customers to reach parts agreements since the 25% tariffs took effect Tuesday.
“The whole supply chain cannot swallow 25%,” Forvia CEO Martin Fischer said during a media event. “Cars will get more expensive for consumers if tariffs continue for a long time.”
The data and forecasting firm reports 25 automakers on average produce 63,900 light-duty passenger vehicles in North America per day. A majority of those, roughly 65%, are assembled in the U.S., followed by 27% in Mexico and 8% in Canada.
A car carrier trailer waits in line next to the border wall before crossing to the United States at Otay commercial port in Tijuana, Baja California state, Mexico, on Jan. 22, 2025.
Guillermo Arias | AFP | Getty Images
DETROIT — Tariffs announced Saturday by the Trump administration of 25% on goods from Canada and Mexico as well as an additional 10% on products from China are expected to have a profound impact on the global automotive industry.
For months, automakers have been taking a “wait-and-see” approach to the Trump administration’s tariff threat. That waiting period is coming to an end and automakers will likely need to implement prior contingency plans to attempt to offset additional costs in the coming weeks and months.
Depending on the details, the tariffs on Mexico could have the greatest impact on the automotive industry, followed by Canada and then China, depending on the automaker.
“Any tariff action must be followed with a renegotiation of the [United States-Mexico-Canada Agreement], and a full review of the corporate trade regime that has devastated the American and global working class,” Shawn Fain, president of the United Auto Workers Union, said in a statement.
Read more CNBC tariffs coverage
General Motors and other major automakers did not immediately respond for comment regarding the tariffs Saturday night. Others such as Ford declined to comment, while Honda issued a broad statement: “North American auto trade is key to the success of Honda globally and we look forward to a swift resolution that provides clarity and stability throughout the region.”
Most major automakers have factories in the U.S. However, they still rely heavily on imports from other countries including Mexico to meet American consumer demand.
Nearly every major automaker operating in the U.S. has at least one plant in Mexico, including the six top-selling automakers, which accounted for more than 70% of U.S. sales in 2024.
A tariff is a tax on imports, or foreign goods, brought into the United States. The companies importing the goods pay the tariffs, and some fear the companies would simply pass any additional costs on to consumers — raising the cost of vehicles and potentially reducing demand.
The formal announcement provides some clarity for companies but could cost automakers, many of which have produced vehicles without tariffs in Canada and Mexico for decades, billions of dollars.
Uncertainty about trade took a toll on GM on Tuesday, when the automaker’s stock had one of its worst days in years even after it beat Wall Street’s expectations for its 2025 guidance and its top- and bottom-line for the fourth quarter.
“Our key take from GM’s 4Q [earnings] result is that while the opportunity for GM is highly compelling, US policy uncertainty must be navigated for the time being,” Barclays analyst Dan Levy said in an investor note Wednesday.
GM stock
GM did not account for potential tariffs in its guidance, which CFO Paul Jacobson described as a “cautious” approach given no duties on North American goods had been implemented yet.
Both Jacobson and GM CEO Mary Barra said the company has contingency plans for any actions, but that wasn’t enough to appease anxious investors.
“There’s just so much noise,” Jacobson told investors Tuesday, citing the inauguration and California wildfires, among other issues and events. “We’re being cautious until we get a little bit more smooth data from the marketplace just because January was so noisy.”
Flanked by Blackstone CEO Stephen Schwarzman (L) and General Motors CEO Mary Barra (R), U.S. President Donald Trump holds a strategy and policy forum with chief executives of major U.S. companies at the White House in Washington February 3, 2017.
Kevin Lamarque | Reuters
Nearly every major automaker operating in the U.S. has at least one plant in Mexico, including the six top-selling automakers, which accounted for more than 70% of U.S. sales in 2024.
The industry is deeply integrated between the countries, with Mexico importing 49.4% of all auto parts from the U.S. In turn, Mexico exports 86.9% of its auto parts production to the U.S., according to the International Trade Administration.
Wells Fargo estimates that 25% tariffs on Mexico and Canada imports would cost the traditional Detroit automaker billions of dollars a year. The firm estimates the impact of 5%, 10% and 25% tariffs on GM, Ford Motor and Chrysler parent Stellantis would collectively be $13 billion, $25 billion and $56 billion, respectively.
S&P Global Mobility, formerly IHS Markit, estimates a 25% duty on a $25,000 vehicle from Canada or Mexico would add $6,250 to its cost — some if not most of which could be passed on to the consumer.
Some of those automakers also heavily rely on production in Mexico, but not all producers would face the same disruptions. On a percentage of sales basis, German automaker Volkswagen is the most exposed to tariff risk in Mexico, followed by Nissan Motor and Stellantis, S&P Global Mobility reports.
“We are working, obviously, on scenarios,” Antonio Filosa, head of Stellantis’ North American operations, said Jan. 10. “But yes, we need to await his decisions and after the decision of Mr. Trump and his administration, we will work accordingly.”
Here are the automakers that are most exposed to tariffs on vehicles imported from Mexico, based on the percentage of their U.S. sales being produced south of the border:
A Cruise autonomous taxi in San Francisco, California, US, on Thursday Aug. 10, 2023.
David Paul Morris | Bloomberg | Getty Images
DETROIT — For years, General Motors CEO and Chair Mary Barra has promised a new future for the company, away from a stodgy metal-bending automaker into a tech-driven, forward-thinking company poised for growth.
Part of the plan was for GM’s innovation division to identify trillions — yes, trillions — of dollars in new market opportunities such as electric commercial vehicles, auto insurance, military defense, autonomous vehicles and even, eventually, the potential for “flying cars,” also known as urban air mobility.
“We are creating world-class technology solutions and services that will change the way people move, along with new fleet solutions and entirely new business models,” Barra said during a virtual CES keynote in January 2022.
While GM has declined to disclose how much revenue such businesses have produced, Barra, with the ending of its Cruise robotaxi operations on Tuesday, made it clear that the automaker’s growth priorities have shifted amid a broader, industrywide retrench to preserve capital. Companies including GM are now focused on more “core” operations and adjacent business opportunities, including software, EVs and “personal autonomous vehicles.”
“You’ve got to really understand the cost of running a robotaxi fleet, which is fairly significant, and, again, not our core business,” Barra said during a Tuesday call with Wall Street analysts.
The driverless ride-hailing service was supposed to be the shining star of GM’s growth opportunities, with executives just a few years ago referring to it as an $8 trillion market opportunity that the automaker would lead. That included former executives touting $50 billion in revenue by the end of this decade, and Cruise being valued at more than $30 billion.
Instead, after spending more than $10 billion on Cruise since acquiring it in 2016, GM is ending the robotaxi business and folding Cruise’s operations and an undetermined number of its nearly 2,300 employees into the automaker.
To GM’s credit, Wall Street, which previously pushed for such growth businesses, applauded the decision to end Cruise’s robotaxi ambitions. Shares of the company were initially higher, before ending the week level with when the announcement was made.
GM stock since Dec. 9, 2024
GM, like other companies, has quickly shifted from trying to impress Wall Street with growth initiatives, including generating $280 billion in new businesses by 2030, to refocusing efforts on its core business to generate profits amid economic and recessionary concerns.
Analysts largely viewed GM’s decision as positive, saving the automaker more than $1 billion in capital annually, which they expect could be used for additional share buybacks, including a target to lower its outstanding shares to under 1 billion.
“It has been apparent for some time now that most investors have removed Cruise from their GM valuations, so today’s news comes as less of a surprise,” Wells Fargo analyst Colin Langan wrote in a Tuesday investor note.
The automaker earlier this year folded its BrightDrop EV commercial vans into Chevrolet amid lackluster sales. It’s also failed to announce any meaningful plans for fuel cells for tie-ups with boats, trains and airplanes, and it’s shuttered several prior “mobility” businesses.
Not all of GM’s noncore businesses that were launched in recent years have failed. GM Energy and the BrightDrop commercial EV unit continue to operate under the automaker’s” Envolve” fleet business.
GM’s financial arm, meanwhile, continues to operate an insurance business that was launched in late 2020 as part of its growth initiatives with its OnStar telematics and data unit. GM on Friday said the operations are now in 12 states, and remain “well positioned for long-term success.”
GM also continues to operate a military defense unit and fuel cell business that have both recently announced new contracts or partnerships. That includes hundreds of millions of dollars in contracts for GM Defense.
GM was the first automaker to offer such a hands-free system in 2016. However, it was an infamously slow ramp up until recently, when the automaker began rolling it out across its lineup. That started in 2021 and has continued to expand to more than 20 models, including high-volume vehicles such as its full-size pickup trucks and SUVs.
Interior of the 2025 Cadillac Optiq with GM’s Super Cruise hands-free driver-assistance system.
GM
“The strategy shift demonstrates that GM continues to believe in the potential of AV technology for personal vehicles. Going forward, GM will focus on improving the capabilities of SuperCruise, which will be further enabled by ongoing technological advancements including in artificial intelligence (AI),” BofA Securities’ John Murphy said in a Wednesday investor note.
On the other side of the coin, Murphy also points out that the move could imply that other companies such as Waymo and Tesla “have better tech and/or that the market may not be appealing for later entrants.”
The National Highway Traffic Safety Administration fined Cruise $1.5 million after the company failed to disclose details of the crash, which included a pedestrian being dragged 20 feet by a Cruise robotaxi after being struck by a separate vehicle.
A third-party probe into the incident ordered by GM and Cruise found that culture issues, ineptitude and poor leadership fueled regulatory oversights that led to the accident. The probe also investigated allegations of a cover-up by Cruise leadership but found no evidence to support those claims.
The report outlines multiple instances in which then-CEO and co-founder Kyle Vogt, who resigned from the company in November 2023, made the final calls to withhold information, specifically regarding media.
Vogt was not enthusiastic about GM’s decision to kill the robotaxi operations. He posted on X after the announcement, “In case it was unclear before, it is clear now: GM are a bunch of dummies.”
Vogt earlier this year pointed out GM’s history of having a first-mover advantage with technology, as it did with Cruise and Super Cruise, and squandering it. GM had a similar path with EV tech, like the EV1 — a battery-electric vehicle produced in the 1990s — and the Chevrolet Volt plug-in hybrid-electric vehicle in the 2010s, which were both abandoned by the company.
GM follows several other companies in abandoning robotaxis, including its closest crosstown rival Ford Motor, which shut down its Argo AI autonomous vehicle unit with Volkswagen in 2022.
The robotaxi leader in the U.S. remains Waymo, which continues to expand operations for its publicly available fleet in Los Angeles, Phoenix, and San Francisco, and will soon debut in Miami, Atlanta and Austin, Texas.
“In many ways this announcement highlights the economic challenges of scaling a robotaxi network and the role rideshare platforms can play as AVs attempt to commercialize (a bullish indicator), but we think the more tangible impact right now is on the partnership ecosystem given Waymo is already scaling despite the costs and Tesla has ambitions to do so as well,” Bernstein analyst Daniel Roeska said in an investor note last week.
Mary Barra, chair and chief executive officer of General Motors Co., during a news conference at the Hudson’s building in Detroit, Michigan, US, on Monday, April 15, 2024.
Jeff Kowalsky | Bloomberg | Getty Images
DETROIT — General Motors is proving it’s a standout among automakers this year as it continues to consistently outperform Wall Street’s earnings expectations and its competitors.
Shares of the Detroit automaker have risen 54.7% ahead of Monday’s opening, outperforming legacy competitors, Tesla, and U.S. electric vehicle startups Lucid Group and Rivian Automotive.
“You may still not believe it, but it’s true, GM keeps on trucking,” BofA Securities analysts John Murphy wrote in an investor note in October after the automaker beat Wall Street’s third-quarter expectations.
GM has done so with the assistance of $12.4 billion in stock buybacks since last November, which the automaker said will continue for the foreseeable future. But it’s also proving itself to be operationally better than its crosstown rivals Ford Motor and Chrysler parent Stellantis, as well as other sector peers.
General Motors vs. Ford Motor stock
CEO and Chair Mary Barra has touted that kind of differentiation for years, but it has largely fallen upon deaf ears. For the most part, GM stock has traded in lockstep with Ford due to their histories and the cyclical nature of the automotive industry.
But not this year. Ford stock is off 10% as of Friday’s close. Others, including Ferrari, which has been among Wall Street’s top auto performers, are also trailing GM.
Even with shares of Tesla surging more than 30% during the past week following President-elect Donald Trump winning the U.S. presidential election, the electric vehicle maker continues to trail GM. Tesla CEO Elon Musk heavily campaigned for Trump.
Rivian (RIVN): down 54.9% * Over-the-counter shares
GM, unlike many competitors, has not lowered its 2024 guidance or underperformed Wall Street’s quarterly earnings expectations. Instead, it’s actually raised key financial targets despite facing ongoing market challenges in the U.S. and its Chinese operations losing hundreds of millions of dollars amid increased competition.
While GM has said it’s cutting costs, it has not had to be as aggressive as other automakers this year. Nissan, Volkswagen and Stellantis are conducting massive business restructurings that include layoffs, production cuts and other cost-saving measures.
Shares of GM under Barra, who started leading the automaker in January 2014, have been lackluster for investors for most of her tenure. The stock’s average closing price under her tenure is $38 per share — lower than the $40.02 per share closing price before she became CEO, according to FactSet data.
Cumulative, as of Friday’s close, shares are up 38.9% under Barra’s tenure. That compares with a nearly 300% increase for the S&P 500 during that time frame. GM’s all-time high stock price under Barra was $67.21 on Jan. 5, 2022, as Barra presented GM’s EV ambitions and growth plans.
Whether GM can continue its hot streak going into next year is yet to be seen, but the automaker has advised it expects the 2025 performance of the company to be in line with this year, including signaling a weaker fourth quarter.
Barra, when discussing quarterly earnings Oct. 22, reiterated her stance that GM will continue to “build on our competitive strength and deliver the performance that differentiates us from others in the industry.”
“We’re going to be disciplined and we’ll be resilient, and we’ll make adjustments to the extent that we can to continue to drive growth and profitability,” Barra said. “In the weeks and months ahead, you’ll see more clearly than ever how we intend to leverage the tailwinds that are within our control to deliver strong results in 2025 that are in a similar range to 2024.”
GM stock on average is weighted overweight with a price target of $59.85 per share, according to average Wall Street estimates compiled by FactSet.
GM CEO and Chair Mary Barra speaks during an “EV Day” on March 4, 2020, at the company’s tech and design campus in Warren, Michigan, a suburb of Detroit.
GM
General Motors‘ goal of being capable of producing 1 million all-electric vehicles in North America by the end of 2025 in heavily in doubt, following comments Monday by CEO Mary Barra.
The production capacity target for next year was one of the last EV targets the automaker hadn’t lowered or withdrawn as demand for EVs has not materialized as quickly as many companies such as GM previously expected.
“We won’t get to a million just because the market is not developing, but it will get there,” Barra said Monday at a virtual CNBC CEO Council event. “We’re going to be guided by the customer.”
For more than two years, GM has said it would have production capacity of 1 million in EVs in each China and North America by 2025. Even after it changed or withdrew several EV targets and product plans in the last year, the company continued to say it would install the North American capacity for EVs.
A GM spokesman initially said Barra did not say the company wouldn’t meet the production capacity target. He referenced the question was about producing 1 million EVs, which was not the goal.
The spokesman later said the company would no longer reiterate the EV production capacity plans for 2025. The company has continually said its EV plans will be flexible to meet demand.
More details about the automaker’s EV plans could come when GM reports second-quarter results on July 23.
Although consumer demand for EVs hasn’t shown up in the way executives had expected, sales of the vehicles are still predicted to increase in the years to come.
Andrew Merry | Moment | Getty Images
DETROIT — The buzz around electric vehicles is wearing off.
For years, the automotive industry has been in a state of EV euphoria. Automakers trotted out optimistic sales forecasts for electric models and announced ambitious targets for EV growth. Wall Street boosted valuations for legacy automakers and startup entrants alike, based in part on their visions for an EV future.
Now the hype is dwindling, and companies are again cheering consumer choice. Automakers from Ford Motor and General Motors to Mercedes-Benz, Volkswagen, Jaguar Land Rover and Aston Martin are scaling back or delaying their electric vehicle plans.
Even U.S. EV leader Tesla, which is estimated to have accounted for 55% of EV sales in the country in 2023, is bracing for what “may be a notably lower” rate of growth, CEO Elon Musk said in late January.
The broad return to a more mixed offering of vehicles — with lineups of gas-powered vehicles alongside hybrids and fully-electric options — still assumes an all-electric future, eventually, but at a much slower pace of adoption than previously expected.
“What we saw in ’21 and ’22 was a temporary market spike where the demand for EVs really took off,” said Marin Gjaja, chief operating officer for Ford’s EV unit, during a recent interview with CNBC. “It’s still growing but not nearly at the rate we thought it might have in ’21, ’22.”
Ford is significantly increasing its production and sales of hybrid models, which can help ease the transition to electrified vehicles for drivers who may not be ready for fully electric models. They can also help companies meet tighter federal standards for carbon emissions.
GM, which was the first traditional automaker to go all in on EVs, plans to roll out plug-in hybrid electric vehicles for consumers alongside EVs and gas cars. Others, such as Hyundai Motor, Kia, Toyota Motor and, potentially, Volkswagen, plan to offer different levels of electrification across their lineups.
“I think the balanced approach is the best way,” VW of America CEO Pablo Di Si told CNBC last month, adding he is in discussions to bring hybrid vehicles to the U.S. The automaker currently sells hybrid vehicles in Europe, but none stateside.
A VW ID.BUZZ EV vehicle
Scott Mlyn | CNBC
“These technologies exist within the VW group, whether it’s hybrids or plug-in hybrids,” he said. “I think it’s just a matter of time until we bring it here.”
To be clear, although consumer demand for EVs hasn’t shown up in the way executives had expected, sales of the vehicles are still predicted to increase in the years to come.
U.S. EV sales were a record 1.2 million units last year, representing 7.6% of the overall national market, Cox Automotive estimates. That share is expected to increase to between 30% and 39% by the end of the decade, according to analyst forecasts.
“The market was never going to make a smooth transition to EVs, and we expected a slowdown in this shift as early adopters were satisfied,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “Moving on to less tech-savvy buyers will slow the EV market share growth over the next few years.”
Automakers wanted to emulate Tesla’s success, with some promising to exclusively offer EVs in the not-too-distant future.
Five-year stock comparison between Tesla,and the “Big Three” automakers.
Among those targets: Stellantis-owned Alfa Romeo said its vehicle lineup would be all-electric by 2027. Jaguar Land Rover and Volvo said the same but by 2030. GM said it would offer only electric consumer vehicles by 2035, with its brands Buick and Cadillac aiming to exclusively offer EVs five years sooner. Honda Motor set its target to exclusively sell EVs and fuel-cell-powered vehicles in North America by 2040. Other, more specialized brands such as Lotus and Bentley have also announced EV-exclusive targets.
While none of those automakers has officially announced changes to its long-term goals, there’s been a notable shift in tone and messaging around their goals. Companies are monitoring consumer adoption, global emissions regulations and EV charging infrastructure to determine future plans, officials have said.
Since first adopting an all-electric deadline, of sorts, in January 2021, GM CEO Mary Barra and other executives have more recently said customer demand will steer its efforts. They maintain that the 2035 goal remains its guiding plan. Cadillac now says it will offer a full lineup of EVs, but not necessarily end production of all gas-powered models by 2030.
“We have the best of both worlds right now,” Cadillac Vice President John Roth said last month during an interview. “We’ll see where it heads here in the future, but we are still committed to offering a full EV portfolio by the end of the decade.”
Ford, for its part, has never stated plans to exclusively offer EVs globally, but it did set targets to be all-electric in Europe by 2030, for 50% of its sales in North America to be electric by that same year and to achieve an 8% EV profit margin by 2026. It has since backed off many targets and is cranking out hybrids — specifically trucks — along with EVs and plug-in hybrid electric vehicles for the U.S.
“We’ve always had a freedom-of-choice kind of approach,” Gjaja said. “Some of that was to protect ourselves against going too far in one direction, because the market right now, as we’ve seen, is very uncertain.”
Ford Motor Co., CEO Jim Farley gives the thumbs up sign before announcing Ford Motor will partner with Chinese-based, Amperex Technology, to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan February 13, 2023.
Rebecca Cook | Reuters
CEO Oliver Blume during Porsche’s annual media event Tuesday said the German sports carmaker is “in a flexible position” regarding its vehicle manufacturing. He said the company is monitoring EV adoption and regulations but still has a goal of EVs making up 80% of its global sales by 2030.
“We have to keep tabs on it … although the ramp-up is slower than planned last year, we are always in a position to respond flexibly,” he said, adding the company will “have to see in 2026 and 2027” regarding its plans to significantly reduce spending on gas-powered vehicles.
The widespread shift in sentiment brings more automakers closer to the ethos of Toyota. Led by Chairman and former CEO Akio Toyoda, the world’s top-selling automaker has argued for years that a diversified lineup was the right strategy to meet all customer needs and reach its goal of being carbon-neutral by 2050.
The Japanese automaker is now expected to reap the benefits of its strategy, which includes hybrids, plug-in hybrids, EVs and hydrogen fuel cells.
“Toyota is almost completely absent from the [battery electric vehicle] market yet will gain more U.S. market share than any other car company this year. Let that sink in,” Morgan Stanley analyst Adam Jonas wrote in an investor note last week. “EVs may be ‘the future’ but are struggling in the present. Hybrid sales are growing 5x faster than EVs in the US.”
U.S. President Joe Biden gestures after driving a Hummer EV during a tour at the General Motors ‘Factory ZERO’ electric vehicle assembly plant in Detroit, Michigan, November 17, 2021.
Jonathan Ernst | Reuters
The adoption curve of EVs rapidly went through first adopters and some “EV curious” consumers, but has been a tougher sell with mainstream buyers.
“The expectations for EV growth in the U.S. market have shifted from ‘rosy to reality’ as sales increase, but customer acceptance of EVs isn’t keeping pace,” Cox Automotive said in its 2024 forecast report.
The available inventory of EVs in the U.S., measured in days’ supply, has ballooned to 136 days, according to Cox. That compares to the overall U.S. industry at a 78 days’ supply of new vehicles. The data excludes Tesla, Rivian and other automakers that sell directly to consumers rather than through franchised dealers.
“A few years ago, there were wildly ambitious ideas of how EV sales would go and it seemed like nobody was thinking about bumps in this road,” said Michelle Krebs, an executive analyst at Cox. “Now they’re here, and so reality has set in.”
The slower adoption of EVs has led to price cuts or discounts on several models such as the Ford Mustang Mach-E, Tesla Model Y and, most recently, the Nissan Ariya.
Trisha Jung, senior director of Nissan U.S. EV strategy and transformation, said the cuts of up to $6,000 will “improve the model’s competitiveness and ensure we are delivering maximum value to our customers.”
Proposals currently under review by the Biden administration to hike fuel economy standards through 2032 could cost automakers more than $14 billion in fines based on the fuel efficiencies of their current fleets, according to the Alliance for Automotive Innovation, which represents the largest automakers operating in the U.S.
Cars make their way in traffic on a Los Angeles freeway on January 25, 2024.
Frederic J. Brown | AFP | Getty Images
A separate letter to federal regulators last year by the American Automotive Policy Council estimated such regulations would cost GM $6.5 billion in fines and Jeep parent Stellantis $3 billion. The council, which represents the Detroit automakers, said Ford’s penalties would total about $1 billion.
Shifting strategy comes with its own costs: Automakers that invested heavily in EV infrastructure and have since changed course could face write-downs or higher capital needs to shore up different production lines. But without consumer sales, they’re left with little option.
It’s unclear how much hybrids and plug-in hybrids would help automakers to meet the potential regulations, given the standards were crafted with a fast EV adoption in mind. But the automakers’ product mix will need to satisfy federal guidelines to remain a viable path forward.
Automakers’ fuel economies are based on a fleetwide mix of vehicles sold. The better fuel economy and fewer emissions a vehicle produces, the better it is for the automaker’s overall score.
“It all depends on what the final regulation looks like,” said Matt Blunt, president of the American Automotive Policy Council.
Blunt said the trade group hopes the Biden administration listens to the industry’s concerns and “understands that a part of transitioning to electric vehicles is having a reasonable fuel economy regulation in place.”
Biden is reportedly expected to dial back certain targets amid the slower-than-expected pace of EV adoption, which was a major piece of his plans to combat climate change.
Looming in the distance, too, is the U.S. presidential election in November. If former President Donald Trump is reelected, he’s expected to scale back or remove the fuel economy mandates, as he did during his first term in office.
A reversal of those standards come January could pave the way for an even longer era of gas-powered and hybrid models.
Automakers operating in Europe face strictergovernmental EV regulations, which currently aim to ban sales of traditional, fossil-fuel vehicles by 2035. However, changes have already been made to the regulations and conservative groups such as the European People’s Party have called for dropping the ban.
General Motors reveals the new 2016 Chevrolet Volt to the media at the 2015 North American International Auto Show on January 12, 2015 in Detroit, Michigan.
Getty Images
DETROIT – General Motors is changing its product lineup strategy to include plug-in hybrid electric vehicles, CEO Mary Barra told investors Tuesday.
Barra did not disclose specific details of the plans other than that PHEVs, which include an internal combustion engine along with battery technologies, will be rolled out on “select vehicles” in North America to assist in meeting more stringent federal fuel economy regulations.
More companies are reconsidering the viability of hybrid vehicles to appease consumer demand and avoid costly penalties related to those federal fuel economy and emissions standards. Most of GM’s main competitors offer traditional hybrids as well as plug-in hybrid electric vehicles.
“Let me be clear, GM remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035, but, in the interim, deploying plug-in technology in strategic segments will deliver some of the environment or environmental benefits of EVs as the nation continues to build this charging infrastructure,” Barra said during the automaker’s quarterly and 2023 earnings call.
Barra alluded to the automaker using plug-in hybrid technology that the company has already adopted overseas in countries such as China. The only hybrid GM currently offers in the U.S. is a traditional hybrid version of the Chevrolet Corvette.
GM led the way for plug-in electric vehicles with the Chevrolet Volt during the 2010s. The company discontinued the vehicle in early 2019, citing demand and cost concerns.
The Detroit automaker previously planned to forgo plug-in hybrid vehicles and move all of its traditional cars and trucks with internal combustion engines to all-electric models for consumers.
The shifting strategies are counterintuitive to the industry’s recent messaging on EVs. Many auto companies have begun to invest billions of dollars in all-electric vehicles, and the Biden administration has made a push to get more EVs on U.S. roadways as quickly as possible.
Culture issues, ineptitude and poor leadership at General Motors’ Cruise autonomous vehicle unit were at the center of regulatory oversights and coverup concerns that have plagued the company since October, according to the findings of a third-party probe.
The report addresses, in part, controversy that has swirled around Cruise since an Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by a Cruise robotaxi after being struck by a separate vehicle. Results of the investigation, which reviewed whether Cruise representatives misled investigators or members of the media in discussing the incident, were published Thursday in a 105-page report.
Despite the findings, which pointed to widespread issues with company culture, the third-party probe found that the evidence to date “does not establish that Cruise leadership or personnel intended to deceive or mislead regulators” during briefings a day after the accident, according to a summary of the report released by Cruise.
Cruise remains under investigation by several entities, including the U.S. Department of Justice and the U.S. Securities and Exchange Commission.
Several Cruise leaders and employees — most of whom are no longer employed by the company — attempted to show regulators a video of the incident, according to the findings, but were only able to do so in one of several initial meetings due to connection or “video transmission issues.” Although the intent to share the information had been there, the report found, the Cruise representatives subsequently failed to properly inform some regulators or officials of everything that occurred.
“The problem is that when the video froze, literally and figuratively, the Cruise employees froze in the moment, and nobody thought to speak up and fill in the detail,” a person close to the investigation told CNBC.
Some employees also failed to update or correct company statements that omitted such information and attempted to deflect blame on the human hit-and-run driver who initially struck the pedestrian.
The report outlines multiple instances in which then-CEO and co-founder Kyle Vogt, who resigned in late November, made the final calls to withhold information, specifically regarding media.
Cruise co-founder Kyle Vogt shows off the push-button opening of the laterally opening doors on the new Cruise Origin, a fully autonomous passenger vehicle, in San Francisco, Jan. 21, 2020.
Carlos Avila Gonzalez | Hearst Newspapers | Getty Images
“This conduct has caused both regulators and the media to accuse Cruise of misleading them,” the report said. “The reasons for Cruise’s failings in this instance are numerous: poor leadership, mistakes in judgment, lack of coordination, an ‘us versus them’ mentality with regulators, and a fundamental misapprehension of Cruise’s obligations of accountability and transparency to the government and the public.”
Quinn Emanuel Urquhart & Sullivan, the business law firm that GM and Cruise retained to conduct the three-month investigation, interviewed 88 Cruise employees and reviewed more than 200,000 documents, including emails, texts, Slack messages and more.
The investigation was led by former federal prosecutor John Potter, a San Francisco-based partner and co-lead of Quinn Emanuel’s corporate investigations group. The firm is known for representing high-profile celebrities and business owners, including Tesla CEO Elon Musk.
Cruise said it “accepts” the conclusions found in the report. The San Francisco-based company, of which GM owns about 80%, said it will “act on all” recommendations and is “fully cooperating” with investigations by state and federal agencies following the Oct. 2 accident.
The company said Thursday that investigations or inquiries into the incident include those by the California DMV, California Public Utilities Commission, National Highway Traffic Safety Administration, U.S. Department of Justice and U.S. Securities and Exchange Commission.
“It was a fundamentally flawed approach for Cruise or any other business to take the position that a video of an accident causing serious injury provides all necessary information to regulators and otherwise relieves them of the need to affirmatively and fully inform these regulators of all relevant facts,” the Quinn Emanuel findings said.
A separate investigation by engineering consulting firm Exponent Inc. found the Cruise autonomous vehicle involved in the Oct. 2 incident “incorrectly classified the collision with the pedestrian as a side-impact collision, which led the AV to perform a subsequent pullover maneuver (to the outermost lane) instead of an emergency stop,” according to the report.
Exponent’s results, which also found a semantic mapping error, were consistent with Cruise’s analysis of the incident, according to the company.
Cruise said it updated the software to address the underlying issues and filed a voluntary recall with the NHTSA in November.
After purchasing Cruise, GM brought on investors such as Honda Motor, SoftBank Vision Fund and, more recently, Walmart and Microsoft. However, in 2022, GM acquired SoftBank’s equity ownership stake for $2.1 billion.
GM CEO and Chair Mary Barra, who leads Cruise’s board, said in December that the Detroit automaker is “very focused on righting the ship” at Cruise. The Quinn Emanuel report does not directly reference Barra. GM is mentioned several times.
GM said in a statement the Quinn Emanuel report “confirms Cruise’s actions following the incident on October 2 were not consistent with the company’s values and fell far short of the justifiable expectations of regulators and the public.”
“We know that in order to successfully move forward, Cruise must do so in full partnership with regulators and the communities it serves. We remain committed to Cruise’s vision and know this transformative technology will ultimately save lives,” the company said Thursday.
Mary Barra, CEO of General Motors, at the New York Stock Exchange, Nov. 17, 2022.
Source: NYSE
DETROIT — Monday marks 10 years of Mary Barra’s tenure as CEO of General Motors, ushering in a crucial year for the Detroit automaker and for her legacy.
Over the past decade, Barra has been a dynamic executive, guiding the company through high-profile crises as the first female leader of a major automaker. Under her stewardship, GM has seen record profits, cultural changes and major achievements, including beating Wall Street earnings forecasts in 34 of the last 35 quarters, according to FactSet.
She’s regularly ranked as one of the most powerful business leaders in the world, with former and current executives describing her as a “visionary” and “inclusive” leader who has always remained focused on the task at hand.
That task, for much of Barra’s time at GM, has been to push the envelope and transform the largest U.S. automaker for sustained success. But her main business plans of late have failed to meet internal or external expectations, including her own.
Initiatives involving electric vehicles and autonomous vehicles have come under pressure, with EV rollout and demand slower than expected and GM majority-owned Cruise in crisis. The EV and AV businesses, along with emerging software initiatives, were major parts of lofty financial targets earmarked for 2025 and 2030.
GM says it can still achieve its goals — among them to double revenue by 2030 — by shifting focus, but it’s yet to detail how, without the help of its stated growth drivers.
GM’s stock under CEO Mary Barra’s 10-year tenure.
“I always thought the EV and AV strategies were awfully ambitious and were more to show Wall Street that they were becoming a ‘tech company’ more than an auto company, trying to imitate Tesla too much in many ways,” said Michelle Krebs, an executive analyst with Cox Automotive, who previously covered GM as a reporter starting in the 1980s.
Public criticism of Barra has been scant, but Wall Street and investors are speaking through the company’s stock price.
Famed investor Warren Buffett’s Berkshire Hathaway, which took a major stake in GM in 2012, sold all its shares in the company without explanation during the third quarter of 2023.
GM stock closed Friday at $35.26 per share, down 10.5% under Barra’s tenure and off by nearly 50% from a high of more than $67 on Jan. 5, 2022.
Barra surprised many in 2021 by announcing that GM would end production of traditional internal combustion engine vehicles and exclusively offer consumers EVs by 2035. At the time, GM promised to transform the company and automotive industry through what Barra called “visionary investments,” including what would become $35 billion toward electric and autonomous vehicles by 2025.
She touted GM’s growth opportunities, including its next-generation “Ultium” EV architecture, and many other major automakers followed suit and announced similar electrification goals.
But GM has rolled out its next-gen EV models at a snail’s pace amid production snags. And its most recent model — the Chevy Blazer EV — has paused sales due to significant software problems.
GM’s EV sales last year totaled 75,883 units, or 2.9% of the company’s overall sales. It was third in EV sales behind Tesla, and Hyundai Motor, which includes Kia, according to Cox Automotive. However, a vast majority of GM’s EV sales were from its now-discontinued Chevrolet Bolt models.
Broad consumer demand for EVs hasn’t materialized the way GM or others had hoped, and many automakers have withdrawn or walked back the EV ambitions they set just a few years ago.
Mary Barra, GM chair and CEO, speaks during the unveiling of the Cadillac Celestiq electric sedan in Los Angeles, Oct. 17, 2022.
Frederic J. Brown | AFP | Getty Images
Barra said in December that while there’s still a path to exclusively offer EVs by 2035, customer demand will ultimately determine the pace of the company’s EV transition.
“We still have a plan in place that allows us to be all light-duty vehicles by 2035. But again … we’ll adjust based on where the customer is and where demand is,” she said. “But I do believe this transition will happen over a period of time.”
As early as 2017, GM’s EV focus was on getting as many electric vehicles to market as possible, promising to launch a mix of at least 20 new all-electric and hydrogen fuel-cell vehicles globally by 2023. Then, in November 2020, that goal post shifted, and the automaker said it would introduce at least 30 new EVs by 2025 and spend $27 billion — an amount that was later upped to $35 billion — on electric and autonomous vehicles.
GM has not released exact details about that spending, but executives last year confirmed the automaker was pushing back or cutting EV spending by billions.
In October, GM pulled its near-term EV targets that included selling 400,000 electric vehicles in North America between 2022 and mid-2024 as well as producing 100,000 EVs in North America during the second half of 2023.
The Detroit automaker and Honda Motor also canceled plans to jointly develop affordable EVs, which would have been a $5 billion capital project, and GM opted to instead revive the canceled Chevrolet Bolt as a new model in 2025.
GM maintains it will achieve low profit margins on EVs by 2025 as well as increase North American capacity for the vehicles to 1 million units by then. The automaker expects to maintain an 8% to 10% adjusted profit margin in North America through the transition.
Cruise, of which GM owns more than 80% and which Barra chairs, has confronted a wave of problems and investigations sparked by an Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by one of the unit’s self-driving cars after the person was struck by another vehicle.
Investigations into the incident are ongoing, GM said Friday.
Since the incident, Cruise’s robotaxi fleet has been grounded, pending the results of independent safety probes. Local and federal governments have launched their own investigations. Cruise leadership has been gutted: Its cofounders resigned and nine other leaders were ousted. And the venture laid off 24% of its workforce.
Beyond all of that, GM is massively cutting spending and growth plans for the business, including pausing production of a new robotaxi.
Mary Barra, chair and chief executive officer of General Motors, during an Automotive Press Association event in Detroit, Dec. 4, 2023.
Jeff Kowalsky | Bloomberg | Getty Images
Barra said during an Automotive Press Association meeting in Detroit in December that GM is “very focused on righting the ship” at Cruise.
Cruise was considered to be among the leaders in autonomous vehicles alongside Alphabet-backed Waymo, outlasting many other companies that have abandoned the segment.
The turmoil at Cruise also calls into question GM’s own plans to offer personal autonomous vehicles by as early as mid-decade, as well as the company’s next-generation driver-assistance system Ultra Cruise.
The Ultra Cruise system was initially planned to debut in 2023 and eventually be capable of driving itself in 95% of scenarios, but progress has been unclear.
Two sources familiar with the system told CNBC that the automaker is ending the Ultra Cruise program. One source said GM has decided to instead focus on the current Super Cruise system and expanding its capabilities rather than having two different, similarly named systems.
Darryll Harrison Jr., GM vice president of global technology communications, declined to comment on specifics of Ultra Cruise but said: “GM continues to expand access to and increase the capability of Super Cruise, our advanced driver assistance technology. Our focus remains on safely deploying this technology across GM brands and more vehicle categories while expanding to even more roads.”
And, she fended off two activist-shareholder campaigns, including from David Einhorn’s Greenlight Capital, which pushed for seats on GM’s board and to initiate a split of GM’s common stock into two classes to help boost its share price.
Einhorn declined to comment through a spokesman on those efforts, Barra or GM, which the firm exited in 2020.
General Motors CEO Mary Barra testifies during a House Energy and Commerce Committee hearing on Capitol Hill in Washington, April 1, 2014.
Getty Images
The more recent challenges facing GM — Cruise, EV uncertainty, shifting priorities — play to Barra’s strengths. She’s discerning in the face of crisis and swift to cull where needed.
“She’s a good leader, and she’s a good listener. But she’s also tough when it comes to making difficult decisions for the shareholders. So far, what I’ve seen, she’s done an outstanding job,” former GM executive Gary Cowger, a mentor of Barra’s who died last year, previously told CNBC.
But as the headwinds compound and some on Wall Street lose confidence, 2024 is shaping up to be either the cherry on top of Barra’s career or an unexpected dent in her track record.
“The shift to EV and autonomous is one that’s just not that simple,” Brinley said. “It’s going to be a struggle for awhile and the success or failure on that is probably not really going to be known very well until well after her tenure.”
When asked in December about her tenure and legacy, Barra, 62, said she doesn’t think about it too much. She’s more focused on what’s in front of her.
“I’m an engineer, problem solver, let’s move forward,” she said. “I’m humbled and it’s a privilege to lead General Motors at this point in time. We’re in the midst of this really once-in-a-generation transformation and there’s so much that can be done.”
DETROIT — General Motors‘ plans to diversify its business through trendy industries such as ridesharing and other “mobility” ventures or startups have largely fallen flat since the automaker started investing in such growth areas in 2016.
Cruise, its majority-owned autonomous vehicle subsidiary, is increasingly looking like it might be next.
The unit has quickly gone from one of GM’s greatest business opportunities to a growing liability. Cruise, of which GM owns more than 80%, has confronted a wave of problems and investigations sparked by an Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by a Cruise self-driving vehicle after the person was struck by another vehicle.
Since the incident, Cruise’s robotaxi fleet has been grounded, pending the results of independent safety probes. Its leadership has been gutted, including its cofounders resigning and nine other leaders being ousted. GM is massively cutting spending and growth plans for the business, including pausing production of a new robotaxi. Local and federal governments have launched their own investigations. And the venture is laying off 24% of its workforce.
GM, like other companies, has quickly shifted from attempting to impress Wall Street with growth initiatives, including generating $80 billion in new businesses by 2030, to refocusing efforts on core business to generate profits amid economic and recessionary concerns.
Despite all that, GM appears to believe it can eventually move forward with Cruise. GM CEO Mary Barra said Dec. 4 during an Automotive Press Association meeting in Detroit that the automaker is “very focused on righting the ship” at Cruise.
“We are confident in the team and committed to supporting Cruise as they set the company up for long-term success with a focus on trust, accountability and transparency,” GM said Thursday in a statement related to announced layoffs at Cruise.
The automaker also has discussed personal autonomous vehicles as early as mid-decade and evaluating “flying cars” for the mid-2030s, among other things that have been de-emphasized more recently. In 2021, the company said it had about 20 initiatives in its pipeline that targeted $1.3 trillion in new total addressable markets.
“Cruise has been both vastly more ambitious and vastly more costly than any of those other programs,” Abuelsamid said. “It certainly could end up on the trash heap. … They’ve got to take a long hard look at what they want to prioritize.”
Not all of GM’s noncore businesses that were launched in recent years have failed. GM Energy and the BrightDrop commercial EV unit continue to operate; however, GM recently brought BrightDrop in-house from being a wholly owned subsidiary.
GM’s financial arm continues to operate an insurance business that was launched in late 2020 as part of its growth initiatives.
“It’s about reprioritizing … and making sure that you’re reducing what you don’t need to do anymore,” GM CFO Paul Jacobson told media Nov. 30 about the company’s overall cost-cutting measures, including “considerably” scaling back its energy and BrightDrop units.
Brightdrop EV600 van
Source: Brightdrop
Jacobson said the change in Brightdrop was to reduce redundancies and cut costs, as business cases have changed. BrightDrop was expected to generate $1 billion in revenue this year; it’s unclear where that stands.
Jacobson declined to disclose whether GM could bring Cruise into the automaker, which has its own autonomous vehicle unit and recently appointed Anantha Kancherla from Meta Platforms to the newly created position of vice president of advanced driver-assistance systems.
GM continues to operate a military defense unit and fuel cell business that have both recently announced new contracts or partnerships. The company does not report revenue or earnings for these units.
GM says it remains bullish on its software initiatives and investments in joint ventures for EVs — for example, an investment projected to exceed $1 billion with POSCO Future M to increase production capacity of key battery elements in North America.
But commercializing autonomous vehicles didn’t pan out for most, and it’s been far more challenging than many predicted even a few years ago. The challenges have led to a consolidation in the sector after years of enthusiasm touting the technology as the next multitrillion-dollar market for transportation companies.
Cruise was considered one of two front-runners left when it comes to robotaxis in the U.S., along with Alphabet-backed Waymo, which is also operating limited self-driving fleets for consumers. Amazon-backed Zoox also continues to test autonomous vehicles in several states.
Renderings from GM of the “Cadillac halo portfolio” that includes concepts of an autonomous shuttle (right) and an electric vertical take-off and landing (eVTOL) aircraft, also known as a flying vehicle.
Screenshot via GM
Others competitors such as Lyft, Uber and Ford Motor/Volkswagen-backed Argo AI have ended their autonomous vehicle programs, citing the massive investments needed for an unprofitable and untested industry. Stellantis has announced partnerships with BMW and Waymo, but nothing along the lines of Cruise and Argo.
“I want to know what needs to be done to get Cruise back running commercial services for consumers in a safe manner,” said Morningstar analyst David Whiston. “And then by not operating the consumer operations and, perhaps, not growing in other cities for the time being, how much costs can you save? Because the losses have gotten pretty big.”
GM’s investment in Cruise and its share of the company’s losses have cost the automaker more than $8 billion since 2016, according to annual public filings. The losses have been increasing, including $1.9 billion through the third quarter of this year.
GM has said it will significantly cut spending on Cruise. Barra, who leads Cruise’s board of directors, declined to say at the Dec. 4 press association meeting how much money the automaker is willing to spend on Cruise going forward until it completes its assessments and has a plan to move ahead.
Cruise had $1.7 billion in cash to end the third quarter, enough to last through a majority of next year at the current cash burn rate.
Barra and other proponents of autonomous vehicles have consistently touted that self-driving cars have the ability to significantly reduce crashes and roadway fatalities, while also providing transportation for those who may not be able to drive themselves.
“We’ll work through the challenges we have right now at Cruise,” Barra said Dec. 4. “We have to have the right plan.”
