GM Makes a Power Move, Shifting Focus from EVs Back to Gas Engines

General Motors deserves credit for turning itself into the second-largest electric vehicle seller in the United States earlier this year, with its 62,000 sales through May leapfrogging Ford’s and trailing only Tesla’s.

But the US electric vehicle tax credit, a major driver of growth, expired yesterday, and analysts expect sales to slide as a result. GM’s onetime ambition of going all-electric by 2035 is now best described as an object in the rearview mirror. The C-suite occupants of its downtown Detroit headquarters have already signaled they’re just fine with that, but will still take advantage of EV incentives while refilling the corporate gas tank.

Power Pivot

EVs accounted for 4% of GM’s sales last year, and 6% this year, with growth driven by the rollout of a fleet of new models and the now-defunct $7,500 federal tax rebate on EV purchases. The company has been signalling for months that it’s prepared for a pivot back to the days of combustion as environmental regulations are rolled back in Washington. A $4 billion plan to expand the production of gas cars and SUVs was announced in June, and executives pared EV production last month, citing expectations of weaker demand.

As The Wall Street Journal reported Monday, GM has also embarked on a heavy-handed lobbying campaign against emissions and fuel standards. California Governor Gavin Newsom alleged the company “sold us out” in backing a successful effort to nullify the state’s ability to set tougher emissions standards than national ones set by the Environmental Protection Agency. A simple look at the company’s moves at home and abroad suggests GM’s philosophy is to follow the bottom-line incentives, including any electric charge it can plug into:

• GM and Ford both launched programs where their financial arms made down payments on EVs in dealership inventories before the expiration of the federal EV tax credit. The programs allow GM Financial and Ford Credit to claim the credit, while dealers will be able to lease the cars to customers with the rebate factored into the rate.
• GM is also rebooting its EV business in China, the world’s largest battery-powered car market, with locally developed models after a suite of US-developed cars fell flat. This week, GM’s Buick brand launched the Electra LV, its first locally developed EV in China, ensuring it can take advantage of purchase tax exemptions that Beijing is expected to begin phasing out next year.

Bye Buy: Sales of new EVs fell 6.3% year-over-year in the second quarter, according to Cox Automotive analysts. But they expect the third quarter saw a record surge as consumers tried to take advantage of the tax credit, forecasting 410,000 EVs sold, a 21% year-over-year jump. That would also give EV sales a record 10% market share for the quarter, though that will no doubt prove highly combustible in the months to come.