UAW Local 5960 member Kimberly Fuhr inspects a Chevrolet Bolt EV during vehicle production on May 6, 2021, at the General Motors Orion Assembly Plant in Orion Township, Michigan.
Steve Fecht for Chevrolet
DETROIT – General Motors plans to stop production of its electric Chevrolet Bolt models by the end of this year, CEO Mary Barra told investors Tuesday when discussing the company’s first-quarter earnings.
The Chevy Bolt EV and EUV, a larger version of the car, make up the vast majority of the company’s electric vehicle sales to date. However, the battery cells in the cars are an older design and chemistry than the automaker’s newer electric vehicles such as the GMC Hummer and Cadillac Lyriq, which utilize GM’s Ultium architecture.
Barra said a suburban Detroit plant that has produced Chevy Bolts since 2016 will be retooled in preparation for production of electric Chevy Silverado and GMC Sierra trucks scheduled for next year.
There’s irony in the timing of the Bolt getting axed. It comes amid record production and sales of the vehicle for mass-market consumers, which was GM’s initial goal.
General Motors CEO Mary Barra unveiled the Chevrolet Bolt electric vehicle during the 2016 Consumer Electronics Show in Las Vegas.
Patrick T. Fallon | Bloomberg | Getty Images
The company plans to produce more than 70,000 Bolt models this year, as it targets to sell over 400,000 EVs from early 2022 through mid-next year in North America.
GM pushed the Bolt out ahead of the Tesla Model 3 in 2016. The two were considered to be the first long-range EVs designed for mainstream drivers, starting at around $35,000.
But Bolt sales never caught on as well as many executives hoped, as EV sales overall remained minuscule outside of Tesla. The Bolt also suffered a major setback more recently, as GM recalled all of the Bolts ever produced due to a supplier-related battery issue that caused several fires.
“When the Chevrolet Bolt EV launched, it was a huge technical achievement and the first affordable EV, which set in motion GM’s all-electric future,” Chevy spokesman Cody Williams said in a statement. “Chevrolet will launch several new EVs later this year based on the Ultium platform in key segments, including the Silverado EV, Blazer EV and Equinox EV. “
The Vermont State Police released this photo of the 2019 Chevrolet Bolt EV that caught fire on July 1, 2021 in the driveway of state Rep. Timothy Briglin, a Democrat.
Vermont State Police
GM expects to launch its upcoming EVs far faster than it has its high-end Hummer models and Cadillac Lyriq, which have been rolling out at a snail’s pace compared with its traditional vehicles.
Barra said when the Orion, Michigan, plant, which currently produces the Bolts, reopens and reaches full production, employment will nearly triple, and the company will have capacity to build 600,000 electric trucks annually.
GM has set a target to reach production capacity of 1 million EVs annually in the U.S. and in China, each, as it attempts to catch up to industry leader Tesla.
The Bolt models, starting under $30,000, are the least expensive new electric vehicles on sale in the U.S. GM’s upcoming Equinox EV is expected to have a similar starting price when it arrives this fall.
GM will expand its Chevrolet EV lineup in fall 2023 to include the Equinox EV, starting at about $30,000.
A worker checks the quality of a vehicle before rolling off the assembly line at the production workshop of SAIC General Motors Wuling in Qingdao, East China’s Shandong province, Jan. 28, 2023. (Photo credit should read
CFOTO | Future Publishing | Getty Images
General Motors is losing ground in China, its top sales market for more than a decade and one of two main profit engines for the Detroit automaker.
The company’s market share in the country, including its joint ventures, has plummeted from roughly 15% in 2015 to 9.8% last year — the first time it has dropped below 10% since 2004. Its earnings from the operations also have fallen by nearly 70% since peaking in 2014.
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The coronavirus pandemic, which originated in China, is partially to blame. However, the declines started years before the global health crisis and are growing increasingly more complex amid rising economic and political tensions between the U.S. and China.
There’s also growing competition from government-backed domestic automakers fueled by nationalism and a generational shift in consumer perceptions regarding the automotive industry and electric vehicles.
Take, for example, Will Sundin, a 34-year-old science teacher who told CNBC he never envisioned buying a Chinese-branded vehicle when he moved to thecountry in 2011.More recently Sundin purchased a Nio ET7 electric vehicle as his daily driver in Changsha, the capital city of China’s Hunan Province.
“I wanted something big and comfortable, but I also wanted something that was a bit quick,” he said. “I like the look of it.”
Sundin, who moonlights as a YouTube car reviewer, knows the Chinese vehicle industry well. He purchased his Nio over models from rival Chinese automakers Xpeng, Li Auto and IM Motors. He said the vehicle’s ability to swap out the battery for a fresh one, rather than recharging, “put it ahead pretty quickly.”
Not on his consideration list? American brands such as GM’s Cadillac and Buick, which initially led the automaker’s growth in China.
“Cadillac has a good image in China, but it’s expensive,” said Sundin, who previously owned a 2012 Ford Focus. “I think the problem they face is that they have competition, new competition, a lot of new competition, from different directions that they weren’t expecting.”
Will Sundin, who lives in Changsha and is standing in front of his new Nio ET7 electric vehicle.
Source: Will Sundin
That competition is increasingly becoming a problem for GM, which has acknowledged such issues with its Chinese business. However, the company has not offered much assurance on how to reverse the trend other than the promise of new EVs and a new business unit called The Durant Guild that will import pricy vehicles with high margins from the U.S. to China.
While many U.S. brands aren’t performing well in China, GM’s decline is especially notable. GM’s operations in the country are much larger than those of its crosstown rival Ford Motor, for example. It also has a much smaller footprint globally after shedding its European operations and shuttering operations elsewhere to largely focus on North America, China and, to a lesser extent, South America.
Being overly reliant on only a few markets can be risky. But it has led to record earnings for GM, as the company under CEO Mary Barra has done away with underperforming operations. Electric vehicles could be a new opportunity for GM to grow globally, but experts say it would be an uphill battle compared with recovering in China in the years to come.
“With the changes that they put in place, with a refocus on North America and China, the pull out of Europe, essentially, that does create a risky scenario now that you have some issues, multiple issues, going on in the Chinese market,” said Jeff Schuster, executive vice president of LMC Automotive, a GlobalData company.
Downplaying results
GM has been downplaying the role of its operations in China in recent quarters, including CFO Paul Jacobson saying China is “not decisive” to GM’s financial performance when he discussed earnings in October.
Barra said in December that China is an important part of GM’s business but that the company also is paying attention to other issues, which then included the government’s now-defunct “zero Covid” policy and recent protests.
“We still see opportunity there … obviously, we also watch the geopolitical situation. We can’t operate in a vacuum,” she said during an Automotive Press Association meeting. “But we continue to see opportunity there and we’ll continue to evaluate the situation, but our plans are to be in a leadership position in EVs.”
A bright spot for GM in China has been its Wuling Hongguang Mini, made by a joint venture, which is the bestselling EV in the market. Since going on sale in mid-2020, the economy car has sold more than 1 million units.
SAIC-GM-Wuling Automobile Co. electric vehicles are plugged in at charging stations at a roadside parking lot in Liuzhou, China, on Monday, May 17, 2021.
Qilai Shen | Bloomberg | Getty Images
Still, Jacobson earlier this year said China’s handling of the coronavirus pandemic and surging Covid cases accounted for the nearly 40% drop in equity income for the operations in 2022.
GM reports its earnings from China as equity income because the country mandates joint ventures for non-Chinese automakers — other than Tesla, which was granted an exemption. GM has 10 joint ventures, two wholly owned foreign enterprises and more than 58,000 employees in China. Its brands include Cadillac, Buick, Chevrolet, Wuling and Baojun.
“We see a lot of Covid cases in China right now that slowed down the consumer. So we expect it’ll be a little bit of a slow buildup but hopefully, working its way back up to levels that we’re used to over time,” he told reporters on Jan. 31 during an earnings call.
Not just Covid
But it’s not just related to the pandemic. Equity income from GM’s Chinese operations and joint ventures has fallen 67% since its peak of more than $2 billion in 2014 and 2015. That includes a decline of about 45% from then to 2019 — prior to the coronavirus crippling China’s economy and vehicle production. In 2022, GM’s Chinese operations garnered equity income of $677 million for GM.
“This is not Covid. This started well before Covid,” Michael Dunne, CEO of ZoZo Go, a consulting firm focused on China, electrification and autonomous vehicles. “It also coincides with escalating tensions between the United States and China. There’s no question, and it’s impossible to measure, but it’s definitely a factor.”
Dunne, president of GM’s Indonesia operations from 2013-15, said the decline of GM and other nondomestic automakers comes alongside China’s market growth slowing, Chinese automakers becoming increasingly more competitive and the shift to all-electric vehicles — which has been massively subsidized by government agencies.
“They’ve all really taken it on the chin in the last five years as middle market brands. The Chinese consumers are increasingly buying Chinese brands,” he said. “That’s a seismic shift … the mindset has changed.”
Employees work on the assembly line of Buick Envision SUV at a workshop of GM Dong Yue assembly plant, officially known as SAIC-GM Dong Yue Motors Co., Ltd on November 17, 2022 in Yantai, Shandong Province of China.
Tang Ke | Visual China Group | Getty Images
Domestic startups and automakers have helped Beijing realize its goal of boosting penetration of new energy vehicles — a category that includes electric cars. More than one-fourth of passenger cars sold in China last year were new energy vehicles, according to the China Passenger Car Association, which predicts penetration will reach 36% this year.
Local companies rushed to grab a slice of that growth in an auto market that was slumping overall. Startups such as Nio helped promote the idea of electric vehicles as part of an aspirational lifestyle and status symbol in China. And the rising quality of domestic-made electric vehicles helped support — and tap — growing nationalistic pride among China’s consumers.
Chinese brands have grown market share by 21% since 2015 to roughly half of all passenger vehicles sold in China last year, according to the China Association of Automobile Manufacturers. For comparison, sales of American brands in the U.S. during that time have been level at about 45%.
“Obviously the market has just been in a different place; a lot of it is policy-driven,” Schuster said.
The impact of Chinese nationalism
LMC Automotive reports Chinese companies accounted for half of the top 10 automakers in sales in the country last year, up from only three in 2015. The most notable is BYD Auto, an electric automaker that has skyrocketed from sales of roughly 445,000 units since then to nearly 2 million last year, making it one of the top five automakers by sales in China.
“I think the No. 1 reason for GM’s decline is this tilt toward Chinese nationalism,” Dunne said. “That takes the form of China has declared that it wants to be the global dominator in electric vehicles and it’s doing everything in his power to cultivate national champions like BYD.”
Aside from GM, America’s other legacy automakers — Ford and Chrysler-descendent Stellantis — have not fared much better. Both have experienced significant downturns in sales; however, neither has communicated any plans on giving up on the market.
In February, Ford named Sam Wu, a former Whirlpool executive who joined the automaker in October, as president and chief executive of its China operations, starting March 1.
Ford’s market share in China has been about 2% since 2019, down from 4.8% in 2015 and 2016, according to the company’s annual filings.
Ford’s problems in China aren’t just overseas. The company said in February it will collaborate with Chinese supplier CATL on a new $3.5 billion battery plant for electric vehicles in Michigan. The deal has been criticized by some Republicans, including Sen. Marco Rubio of Florida, who requested the Biden administration review Ford’s deal to license technology from CATL.
Ford CEO Jim Farley on Feb. 13, 2023 at a battery lab for the automaker in suburban Detroit, announcing a new $3.5 billion EV battery plant in the state to produce lithium iron phosphate batteries, or LFP, batteries.
Michael Wayland/CNBC
The joint venture between Stellantis and Guangzhou Automobile Group producing Jeep vehicles in China filed for bankruptcy in late 2022 following a decision to dissolve the partnership and import its SUVs into the country.
Stellantis CEO Carlos Tavares has said the company is pursuing an “asset-light” approach in the country, focused on boosting profits and not necessarily sales, which declined 7% in 2022.
“It’s also important that you realize that our financials in China have been improving significantly,” he told reporters during a call last month, saying the company is “cleaning up the place.”
While the American-focused automakers regroup, China’s local automakers continue to gain ground in their home market.
“People in China are proud,” said Nio owner Sundin.
“The same way as ‘American Made’ is in the USA and all the patriotism behind that, in China, [it’s] the same thing: ‘Finally, we can make a phone or we can make a car that’s as good or better than foreign automakers.’”
DETROIT – General Motors will offer voluntary buyouts to a “majority” of its 58,000 U.S. white-collar employees, as it aims to cut $2 billion in structural costs over the next two years, according to a letter sent to workers Thursday from CEO Mary Barra.
The “Voluntary Separation Program,” or VSP, will be offered to all U.S. salaried employees who have spent five or more years at the company as of June 30. Outside of the U.S., the automaker will offer buyouts to executives with at least two years of time at the company.
GM expects to take a pretax charge of up to $1.5 billion related to the buyouts, according to a public filing Thursday. The majority of the charges are expected to be all-cash and occur during the first half of the year, the company said.
Barra, in the letter Thursday, said the program is “designed to accelerate attrition in the U.S.,” assisting the company in potentially avoiding “involuntary actions” in the future. The buyout offer comes after the Detroit automaker said last week it would terminate about 500 salaried positions globally.
The last time GM offered such a large buyout program for salaried employees was 2019.
“Employees are strongly encouraged to consider the program,” GM said in an emailed statement to CNBC Thursday. “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market.”
GM announced the $2 billion cost-cutting program in January, saying between 30% and 50% of the savings were expected during 2023. At the time, executives said they were planning head count reductions through attrition rather than layoffs.
GM CEO Mary Barra talks with media prior to the start of the 2017 General Motors Company Annual Meeting of Stockholders Tuesday, June 6, 2017 at GM Global Headquarters in Detroit, Michigan.
Photo by John F. Martin for GM
U.S. employees who are approved for the buyout will be granted one-month pay for every year they worked up to 12 months, as well as COBRA health coverage. They also will receive prorated team performance bonuses and outplacement services. Global employees will receive base salary, incentives, COBRA and outplacement services.
Eligible employees interested in the program must sign up by March 24. Those who elect to take a voluntary package and are approved will depart by June 30.
A company spokeswoman declined to disclose how many employees the company is targeting to accept the buyout packages. At the end of last year, GM employed about 81,000 salaried employees worldwide, according to public filings.
GM CEO and Chairman Mary Barra and LG Chem Vice Chairman and CEO Hak-Cheol Shin at the automaker’s battery lab in Warren, Mich., where the companies announced a new $2.6-billion joint venture on Dec. 5, 2019.
GM
DETROIT – General Motors and LG Energy Solution have indefinitely shelved plans to build a fourth battery cell plant in the U.S., as talks between the two sides recently ended without an agreement, a person familiar with the plans confirmed to CNBC.
The Detroit automaker is expected to continue with its plans to build the plant but is searching for another partner, according to the person who asked not to be named because the talks are private.
“We’ve been very clear that our plan includes investing in a fourth U.S. cell plant, but we’re not going to comment on speculation,” GM said Friday in an emailed statement.
The Wall Street Journal first reported Friday afternoon that talks had stalled between GM and LG in part because LG Energy executives in Korea were hesitant to commit to the project given the rapid pace of its recent investments with other automakers as well as the uncertain macroeconomic outlook.
The paper, citing unnamed sources familiar with the plans, said GM is in discussions with at least one other battery supplier to proceed with the fourth U.S. battery-cell factory.
The breakdown in talks comes after GM CEO Mary Barra and other executives have said they’ve been close to announcing details of the fourth plant, which was expected to be built in Indiana, for some time.
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GM and LG initially announced the joint-venture for a $2.3 billion plant in Ohio in December 2019, followed by other plants near GM operations in Michigan and Tennessee. Only the Ohio plant is currently operating, while the others are under construction. The joint venture is called Ultium Cells LLC.
A spokeswoman for Ultium referred questions to GM and LG Energy. In an emailed statement, LG Energy said discussions on a fourth Ultium Cells plant “remain ongoing between LG Energy Solution and GM, but no decision has been made.”
The relationship between GM and LG Energy is crucial to the automaker’s future plans for EVs, including topping Tesla and others to become the U.S. leader in all-electric vehicle sales. The Detroit automaker is expected to release a handful of new EVs this year, including mass-market vehicles such as the Equinox, Blazer and Silverado.
GM, in its Friday statement, said its second and third plants with LG are on track to open as scheduled in 2023 and 2024, respectively. The company also confirmed it is on track to hit 1 million EV production capacity annually in North America in 2025.
