General Motors hits record sales, but plans to let the Bolt go

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General Motors — Car manufacturing giant General Motors has endured a few lackluster years in terms of performance.

The company has also had to go through a fire-provoked recall recently, which might have dented its performance.

However, General Motors’ all-electric Chevrolet Bolt EV is finally gaining traction.

Recent success

The United States’ cheapest EV is going through significant price cuts, and US sales of the Chevy Bolt were up by more than 50% in 2022.

General Motors also said it would produce a record 70,000 units this year.

However, the company isn’t leaning into the vehicle’s recent success and improved production.

On Tuesday, General Motors CEO Mary Barra said the company would end production of the vehicle dubbed “a game-changer” later this year.

“We have progressed so far that it’s now time to plan to end the Chevrolet Bolt EV and EUV production, which will happen at the very end of the year,” said Barra during an earnings call.

Her comments regarding the vehicle’s canceled production spoke volumes when combined with the company’s plans to produce profitable electric vehicles in the coming years.

General Motors is looking to deliver single-digit profits from its EV portfolio by 2025. 

The company wants to hit a production capacity of 1 million EVs in North America by then.

To achieve the goal, General Motors needs the production capacity, profits, and market position of the upcoming next-generation EVs.

However, the company believes it needs the Bolt.

Production projections

The timing of the company’s decision caught experts off guard as many expected General Motors to produce the Bolt into at least 2024.

“It was more than I expected,” said Michelle Krebs, the executive analyst for Cox Automotive.

“I thought it would go away at some point when new batteries came on and they went to more body styles, but it struck me as rather abrupt.”

A company spokesman said the timing of the announcement aligned with the General Motors need to notify suppliers about the end of production.

It also coincides with progress linked to the $4 billion GM is spending to retool the Bolt plant in Michigan for the GMC Sierra and Chevrolet Silverado electric pickup trucks.

The decision is part of General Motors’ EV strategy to retool existing plants instead of building new ones, but it will likely be done in the future.

GM also said retooling would save time and capital, allowing the company flexibility to partially convert plants and build different gas-powered models.

Regarding the Orion plant that solely manufactures the Bolt, it doesn’t make sense as the company believes it needs the extra capacity.

Additionally, the Bolt doesn’t contribute to General Motor’s bottom line.

On Tuesday, Barra said when the Orion plant reopens in 2024, General Motors would have a total production capacity of 600,000 EV pickups annually.

“We’ll need this capacity because our trucks more than measure up to our customers’ expectation, and we’ll demonstrate that work and EV range are not mutually exclusive terms for Chevrolet and GMC trucks,” said Barra.

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Ultium and profits

General Motors promised investors that its next-generation EVs would be profitable.

The EVs will be built on a new architecture, Ultium.

The promise marks a milestone that the Bolt models were never believed to have achieved.

General Motors will cut starting prices by as much as $6,300 for the 2022 model year to increase interest for the Bolt and make it more affordable.

The Bolt EV will then start at $26,595, while the Bolt EUV at $28,195.

“Bolt is selling better than it ever has since the company dropped the price,” said Sam Abuelsamid, Guidehouse Insights principal analyst.

“So, they don’t want to keep it going longer. They’re losing money on it.”

General Motors is expecting to earn low to mid-single-digit adjusted profit with its EV portfolio in 2025.

The expectations exclude the positive impact of clean tax credits, like those included in the Inflation Reduction Act.

With those credits, the company said it expects the new EV portfolio to be profitable like its cars and trucks with traditional engines by 2025, years earlier than many anticipated.

While the credits would have boosted the profit margin on the Bolt, the car uses older battery technology from LG.

General Motors is now focused on scaling up most cost-effective in-house battery production through a plant that operates as a joint venture with a South Korean firm.

The Ultium ramp-up and cost efficiencies achieved with the new EV pickups allows for margin improvements the Bolt couldn’t have realized in the long-term.

“As we scale EVs, we will lower fixed costs and will continue to drive margin improvements,” said Barra.