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EV confidence remains high in GM sales, low in some states

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Legal | Market Trends
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In an interview last week with Bloomberg, General Motors CEO Mary Barra said despite Ultium manufacturing hiccups this year the company remains confident in its electric vehicle (EV) segment.

“We’re a bit disappointed this year that we were constrained by the automation to build modules so this is not something that is fundamentally an issue with Ultium; it was more a manufacturing automation issue that we’re working [on] and will be out of it by [the] middle of next year in making improvement every quarter,” she said.

While Barra noted that EV sales are slowing down but still growing, GM is scaling back production of the segment, as is Ford.

Paul Jacobson, GM’s chief financial officer, told investors during a Q3 earnings call that the OEM is dropping its previously-announced 100,000 EV target it had set for the second half of 2023. GM hopes to sell 400,000 EVs during the first half of 2024.

“We never thought that the EV adoption would necessarily be a straight line — we’ve seen this in other markets,” Barra told Bloomberg. “We’re seeing it now in the U.S. but I think the thing that everybody has to remember [is] if the growth is slowing, it is still growing… as we get more of the EV products that we have this year into next, we think we’re going to see strong adoption for our products and as the charging infrastructure continues to be more robust we think that’s going to drive adoption as well as having affordable EVs.”

New vehicle availability and affordability are also driving factors, the latter of which will be met with upcoming Equinox, Blazer, and Bolt EVs, Barra added.

“I don’t think it’s that American consumers just don’t want these cars,” she said. “I think there is still limited availability when you look at the choice that customers have today from an internal combustion engine vehicle perspective. I think a lot of EVs that are out right now are more expensive. You’ve got to look at where the sweet spot of the market is. When you really win in EVs, you’ve got to make sure that you are meeting the customer who only owns one vehicle — that’s the bulk of people who buy new vehicles today.

“When people realize how much fun they [EVs] are to drive, [with] the performance they’re not giving anything up, and that all-important charging infrastructure — I think we’re going to see them start to grow at a more rapid rate again.”

An S&P Global Mobility survey conducted earlier this year found the fuel type loyalty rate for mainstream EV households was 52.1% through July 2023. That figure represents those who remained true to EVs after buying their initial one.

S&P attributed the “loyalty struggle,” in part, to an overall decrease in consumer willingness to purchase an EV. S&P data indicates that overall consumer consideration for buying an EV dropped to 52% this year from an 81% high in 2021.

As for GM’s autonomous vehicle (AV) segment through robotaxi service, Cruise, Barra said recent collisions involving the vehicles have shown GM its AVs have to be significantly better than a human driver to grow adoption.

In November, Cruise said it would hire a third-party safety expert to perform a full assessment of the company’s safety operations and culture. Cruise previously hired Exponent, an independent and third-party engineering consulting firm, to conduct a technical root cause analysis of an Oct. 2 pedestrian-involved incident, and are working with the law firm Quinn Emanuel “to examine and better understand Cruise’s response, including our interactions with law enforcement, regulators, and the media.”

Barra referred to an independent review in her interview with Bloomberg but didn’t specify if it’s a separate review from the two above.

“We’ve already demonstrated that the Cruise vehicle can perform at a level that’s safer than a human driver,” she said. “We have to do a much better job of working with the regulators… As we do that, and we get the results of the independent review we’re doing, that will guide us on our path forward from an AV perspective.”

Barra said GM’s internal combustion engine (ICE) vehicle segment remains strong and the company’s strategy for both segments hasn’t changed.

“Our strategy is clear, it’s really based on four pillars of executing our strong internal combustion engine program vehicles and we see we’re performing very well in the market. We see that we’re below the average incentive and I think that speaks to our internal combustion engine products.”

However, several states are considering or have already approved an ICE vehicle ban in line with, or ahead of, the Biden Administration’s 2035 ban.

New Jersey’s new Advanced Clean Cars II rule requires automakers to produce 43% zero emissions vehicles annually, beginning with model year 2027, and bans ICE vehicles by 2035. However, Sen. Paul Sarlo (D-District 36) said last week it’s not going to happen. 

Sarlo questioned whether New Jersey’s electric grid could handle large EV demand and said significant federal government investment would be needed, according to New Jersey 101.5 FM Radio.

Connecticut Gov. Ned Lamont has also backpedaled on a proposed 2035 ICE ban in the state.

News 8 WTNH reports the state’s Legislative Regulation Review Committee planned to hold a hearing and vote on the ban last week, only to postpone it the day before.

“This is [a] victory for consumers who would have paid a big price tag for the state’s efforts to ban gas-powered cars and trucks in the future,” Chris Herb, Connecticut Energy Markets Association president, told News 8. “However, the battle may not be over. It’s unclear what could happen next but CEMA will continue to be vigilant in our opposition to this reckless policy. This is too much too fast and we are not ready for an EV-only future.”

In response to Lamont’s decision, Senate Republican Leader Kevin Kelly (R-District 21) said “common sense has prevailed.”

“The Governor’s decision to withdraw the regulations is a reasoned approach to address the growing concerns raised by working and middle class families,” he said in a written statement. “Adopting California emission standards which ban the sale of gas-powered cars is a substantial policy shift which must be decided by the General Assembly.

“There are too many questions regarding the capacity of our electric grid, the cost and location of grid improvements, and the negative impact on urban, rural, and working poor families. More than 90% of our pollution comes from outside the control of Connecticut. We need a national — and international — approach to improve our air quality. A state-by-state strategy will only prolong the attainment of cleaner air.”

Regulation Review Committee Co-Chair Sen. John A. Kissel (R-District 7) called it a “prudent step.”

“The people’s elected representatives are the ones who should be making this decision,” he said in a written statement. “Something so life-changing — something that will take our choice away — needs to be decided by the full state legislature. Ask anyone on a Main Street anywhere in Connecticut those questions. They will tell you that they — the people —should get to decide. It should be the people’s choice. The people of Connecticut deserve credit for speaking out. I thank my colleagues on the committee — and the governor — for withdrawing these regulations.”

California was the first state to announce a 2035 ICE ban with the passage of its Advanced Clean Cars II rule last year. The rule “establishes a year-by-year roadmap so that by 2035 100% of new cars and light trucks sold in California will be zero-emission vehicles, including plug-in hybrid electric vehicles.”

Since then, Vermont, New York, Washington, Oregon, Massachusetts, Virginia, Rhode Island, and Maryland have enacted similar bans. Several automakers, including Volvo, Cadillac, and Buick have as well. Most OEMs have plans to be emissions-free by 2040.

At the federal level, the Inflation Reduction Act (IRA) passed last year includes an EV tax credit of up to $7,500 for manufacturers and consumers but that may be taken away come Jan. 1.

Proposed regulation changes, open for public comment as of this morning, would provide guidance on excluded entities and clarity on definitions of eligible new clean vehicles, according to the Federal Register notice.

Vehicles purchased after Dec. 31 that contain any battery components manufactured or assembled by a “foreign entity of concern” — the People’s Republic of China, Russian Federation, Democratic People’s Republic of Korea, and Islamic Republic of Iran — will be excluded. The same goes for vehicles purchased after Dec. 31, 2024.


Featured image credit: Kameleon007/iStock

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