Why GM's Latest News Spells Trouble For Domestic EVs

General Motors (GM) just threw a curveball to the EV market, slashing its 2024 production forecast from 300,000 units to 200,000-250,000. Despite CFO Paul Jacobson’s assurances that demand remains strong, this cutback highlights a troubling disconnect between optimistic projections and the slower-than-expected EV adoption in the U.S. 

Is The Domestic EV Market In Trouble?

GM’s lowered production forecast suggests several challenges. Slower-than-anticipated EV adoption in the U.S. is a major factor, with GM’s EVs expected to make up only 8% of industry sales this year, lagging behind other analysts' forecasts of 10%. This reduction comes at a critical time as GM is launching key models like the Chevrolet Equinox EV and relaunching the Chevrolet Blazer EV. 

While GM's EV production is projected to be profitable by the fourth quarter, the current scale of production reflects cautious optimism. 

Why Is The US Slow to Adopt EVs?

Americans’ preference for large, gas-guzzling SUVs and trucks, driven by low fuel prices, creates a significant barrier. According to JATO Dynamics, the lack of financial incentives due to higher BEV retail prices and the low cost of running ICE vehicles discourages consumers from switching to electric. 

The U.S. lags in developing reliable charging infrastructure. In 2022, the growth rate of fast chargers in the U.S. was only 9%, compared to 90% in China and 55% in Europe. Although federal investments aim to boost infrastructure, current initiatives are insufficient to meet anticipated demand. 

Zooming Out

While GM’s news casts a shadow over its EV prospects, the broader market still shows promise. Europe’s stringent regulations pushing for zero internal combustion engine (ICE) cars by 2025 to 2030 indicate strong governmental support for EVs. This creates opportunities for investors in companies providing essential EV components or alternative energy solutions. 

GM's announcement of a new $6 billion share buyback plan underscores its short-term focus on profitability and shareholder returns. This decision, coupled with an $850 million investment in its Cruise autonomous vehicle unit, balances immediate financial performance with future technological advancements.

GM’s latest news suggests a conservative stance on EV production, focusing on immediate profitability and shareholder returns. This may create short-term volatility in GM’s stock, offering opportunities for day traders. However, the overall EV market outlook remains positive, driven by regulatory pressures and evolving consumer preferences.

Sean Kelland has no positions in GM. Stocks.News has no positions in GM.