As GM approves share buy backs, they are also adjusting EV sales targets downward

General Motors, Hyundai, Ford, etc. are all seeing significant year over year growth in EVs but are adjusting forecasts downward. Tesla is actually down this year and is carrying more inventory than they are accustomed to outside of their brand new Cybertruck.

It's newsworthy for GM because they need to move 200,000 units per year for their Ultium platform to be profitable.

There is another factor at play that is a bit more concerning.

Inventory is growing across all manufacturers. ICE vehicles are still the bulk of the market, but inventory is growing and manufacturers are putting cash on the hood to move slow selling models. EV's tend to be a little more expensive and a little smaller than most vehicles, and the target audience for these EV's are not pulling the trigger as rapidly as expected.

My hypothesis here is that the stagnation-like pressure in some aspects of the economy (slow/no job or wage growth + crushing inflation + the chilling impact of rising interest rates) are causing people to think twice about big purchases. EV's are still a "luxury item" and not a necessity. They are geared towards younger drivers in urban/suburban areas with disposable income. These younger buyers are "income statement" rich and not actually rich, so they are sensitive to inflation, borrowing costs, wage growth, and economic mobility. So EV are likely earlier indicators of real cracks in consumer sentiment.

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DETROIT – General Motors is trimming its expected sales and production of all-electric vehicles this year, as U.S. adoption of EVs occurs slower than expected.

GM Chief Financial Officer Paul Jacobson said the company now expects production of 200,000 to 250,000 EVs this year, down from a previously announced range of 200,000 to 300,000. The company has recently said it will produce volume to match demand, which is growing, but slower than many had forecasted.

“So at the lower end of that, and I think it reflects the momentum that we have in the business,” Jacobson said Tuesday during a Deutsche Bank investor event.

Jacobson said GM expects EVs to make up 8% of U.S. sales industrywide this year. That’s lower than many others, which expect EVs to represent around 10% of industry sales in 2024.

GM expects its EVs to be profitable on a production, or contribution-margin basis, once it reaches production of 200,000 units. That milestone is still expected in the fourth quarter of this year, he said.

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