General Motors (GM) has trimmed its electric vehicle (EV) production range for 2024 by 50,000 vehicles, fearing an oversupply because of softened demand.
While industry experts were expecting the EV market to make up 10 percent of total auto sales this year, GM estimates it at 8 percent, GM CFO Paul Jacobson said during the Deutsche Bank Global Auto Industry Conference on June 11. The company subsequently reduced its 2024 EV production target to 200,000 to 250,000 vehicles, from an initial target of 200,000 to 300,000. The decision to bring down the output forecast was “100 percent demand-driven,” he said, while pointing to oversupply issues facing the EV market.
“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 stated.
“We were on track to be able to produce, like we said, up to 300,000 [electric] vehicles this year. But what we don’t want to do is get in this trap of ... I think the market a few years ago or even more recently than that, had said, ‘You’ve got to produce more EVs if we’re going to ascribe any value to your company.’”
As a result, the EV industry saw an overproduction, which affected pricing, Mr. Jacobson noted.
On the plus side, the CFO feels that despite a slowdown in the market, the company still has seen a “pretty strong” growth in electric vehicles within its portfolio. In May, the auto firm sold more than 9,500 EVs in North America.
Mr. Jacobson promoted the “game-changing” Equinox EV that the company plans to put out in the market, which has a range of more than 300 miles. With $7,500 in tax credits, the retail price of the vehicles would come below $30,000.
Buying Interest in EVs
GM’s decision to lower production targets comes as EV consumer interest dipped over the past year, according to a recent study by automotive data and analytics firm J.D. Power.This year, 24 percent of surveyed shoppers said they were “very likely” to consider buying an EV, down from 26 percent a year ago. In addition, 58 percent said they were “overall likely” to purchase an EV, a decline from 61 percent in 2023.
Among shoppers who said they were “somewhat unlikely” or “very unlikely” to consider buying an EV, 52 percent cited a lack of charging-station availability. Other reasons for rejecting electric vehicles included high purchase prices, long charging times, limited driving distance per charge, and the inability to charge at home or at work.
GM aims to get its EVs to achieve price parity with internal combustion engine vehicles by the end of this decade, Mr. Jacobson said.
Cox Automotive notes that a “record” 1.2 million U.S. vehicle buyers chose an electric option last year. The share of EVs in the total U.S. vehicle market was 7.6 percent, up from 5.9 percent in 2022.
The firm is forecasting EV sales to continue registering a year-over-year increase, making 2024 “the best year ever for EV sales.”
President Joe Biden has set a goal of having 50 percent of all new vehicle sales be electric by the end of this decade.
In January, the Biden administration announced $623 million in grants to help build the EV-charging network in the United States. The government has set a target of building at least half a million publicly available chargers by 2030.
