Chevy Volt a Failure - GM to Layoff 1,300

The Thanksgiving mashed potato Tesla Truck. Not sure if it is more durable than the one they unveiled.

https://nypost.com/2019/12/02/man-molds-tesla-cybertruck-out-of-thanksgiving-mashed-potatoes/

 

This seems to be part of a bigger initiative which has GM putting an emphasis on 1) Electric pick-up trucks, Hummers / SUVs. 2) trying to break through with autonomous vehicles first when the technologies are ready.

I am curious how this will all work out for them. The thinking behind it seems to be that Americans love their big trucks and SUVs, but those big vehicles are contributing to global warming and that is starting to become an issue for more people. GM is all in on trucks and SUVs and focussing heavily on the American market, and they have all but gotten out of making passenger cars.

It seems like a bit of a gamble, but it may be more calculated for them than I am realizing. On the one hand, there is still a cost issue associated with EVs. It's just more expensive to produce one than it is a comparable gas-powered vehicle, and the owner doesn't save nearly enough over the lifetime of the vehicle with where gas prices still are to make it work from a pure cost perspective. Which is why EVs are still niche vehicles. The added expense still makes it a no-go for most people.

But say over the next 10 years, governments start outlawing cars with internal combustion engines or (more likely) they start trying to heavily subsidize electric vehicles to an even greater degree on global warming grounds, I am guessing that GM wants to be ahead of the other major car makers. And they may be anticipating that.

If EVs don't get that kind of preference, though, or somehow the price of the batteries doesn't come down dramatically, it could prove to be a poor capital expenditure on their part.

As an aside, the whole thinking behind this seems so "American" to me. Especially if you have spent time in Europe and are surrounded by people zipping around in tiny cars with bicycle tires. More people are becoming concerned about vehicle emissions here, but not so much that they'd consider driving a small car instead of a truck.

 

That Detroit-Hamtramck plant we were talking about is going to produce vehicles that will be sold in the US, not China. The plan is to produce electric trucks, SUVs and an autonomous taxi. The trucks and SUVs they are talking about are geared toward American tastes, and are more valuable sales to GM than its Chinese sales for a few reasons. GM does a ton of volume in China, but it makes quite a bit more money from its US sales. They are only allowed to operate in China if they partner with Chinese state-owned companies like SAIC, and they have to share the money (and their IP) with them. On top of it, the profit margins on the SUVs and trucks Americans love are much higher than they are on the cars they sell elsewhere, which is why the US remains the primary driver for GM.

As you pointed out also, their growth in Chinese sales has been dropping off a cliff. It's not just GM. Some of the smaller car companies lost money operating in China last year, and Volkswagen, which had banked a lot on China, is getting killed because of it. GM is still making a lot of money there, but it dropped off a lot last year, and they have said they aren't very hopeful for sales growth there this year. The explosive growth in China over the last couple of decades that was fueling growth in auto sales is likely a thing of the past. China will remain an important market, because of the volumes, but in terms of profits to GM, it is probably going to continue to rank well behind the US.

GM has said they plan to try to get more electric cars into China over the next few years, and they have already announced at least one new Chevy EV geared toward the Chinese market. They don't sell many EVs in China yet, but the government heavily subsidizes EV sales to a greater degree than the US has, and it is the largest EV market in the world because of it. So a lot of the EVs GM has talked about getting into production over the next few years will obviously be geared toward the Chinese market. The electric SUV / truck / Hummer thing that plant announcement revealed is really an American thing, though.