- The firm’s CFO confirmed the move while announcing $850 million in fresh investment for Cruise.
- GM says the market penetration of EVs in 2024 has been lower than expected.
- EVs from the brand will reach positive variable profit this year.
General Motors has been forced to slash its EV production forecast for this year and expects to end 2024 having built between 200,000 and 250,000 electric vehicles. This comes despite the car manufacturer previously estimating it would produce upwards of 300,000 EVs this year.
While speaking at the Deutsche Bank Global Auto Conference earlier this week, GM chief financial officer Paul Jacobson said the market penetration of EVs in 2024 has been lower than expected. He believes EVs will account for roughly 8% of new car sales in the U.S. this year and said GM’s production strategy should allow it to avoid having unnecessarily large inventories of vehicles it cannot sell.
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“We don’t want to end up in a position where we give out a production target and then we just blindly produce and end up with hundreds of thousands of vehicles in inventory because the market’s just not there yet,” he said. “We think that this is a really good blend of being able to drive the scale benefits that we need but still not get crazy with inventory levels, such that we have to start engaging in deep discounting to where customers who have already bought one start to see their residual values suffer.”
Jacobson added the firm’s portfolio of EVs remains strong and it expects to achieve positive variable profit – excluding fixed costs – for its EVs in the second half of this year. GM managed to sell more than 9,500 EVs in North America in May.
During the event, Jacobson also revealed GM will invest an additional $850 million into its Cruise self-driving subsidiary this month, despite well-publicized issues with the firm’s autonomous prototypes and robotaxis.
Last fall, Cruise paused its nationwide operations and only recently resumed testing in Phoenix and Dallas without its self-driving systems engaged. The new investment will fund Cruise through the rest of 2024.
“As Cruise continues to make positive progress towards returning to driverless operations with manual and supervised testing underway in Phoenix, Dallas and now Houston, we appreciate GM’s continued support in our shared mission to transform mobility and improve road safety,” a Cruise spokesperson told Auto News. “GM’s $850 million infusion will help with operational cash needs as we continue to advance our AV technology.”
