Why GM is killing off Chevy Bolt America’s cheapest EV amid record sales

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  • As America’s cheapest EV, U.S. sales of the Chevy Bolt jumped more than 50 percent last year, and GM said it would hit a record 70,000 units in 2023.
  • But GM CEO Mary Barra on Tuesday said the automaker would end production of the car by the end of the year.
  • To achieve these goals, GM needs the production capacity, profits and market positioning of its upcoming next-generation electric vehicles. He doesn’t think he needs the Bolt.

A Chevrolet Bolt EUV on display at the New York Auto Show, April 13, 2022.

Scott Mlyn | CNBC

DETROIT After years of lackluster performance and a fire-triggered recall, the all-electric Chevrolet Bolt EV was finally gaining traction for General Motors.

As America’s cheapest EV following significant price cuts, U.S. sales of the Chevy Bolt jumped more than 50 percent last year and the automaker said it would hit a record 70,000 units in 2023.

But instead of leaning further on the vehicle’s recent success and increased production, GM Chief Executive Mary Barra said on Tuesday the automaker would end production by the end of the year of the vehicle she once hailed as a “true game changer” for the industry and an “EV for everyone.”

“We have progressed so far that it is time to plan for the end of production of the Chevrolet Bolt EV and EUV at the end of the year,” Barra told investors on an earnings call.

Barra’s comments about the vehicle being axed came as quick as a butcher chopping the head off a chicken, but they speak volumes when combined with the company’s plans to churn out profitable EVs in the years to come.

GM is on track to make single-digit profits from its EV portfolio by 2025, when it aims to have production capacity of 1 million EVs in North America.

To achieve these goals, GM needs the production capacity, profits and market positioning of its upcoming next-generation electric vehicles. He doesn’t think he needs the Bolt.

For industry insiders, the writing was on the wall for the end of Bolt’s days. But the timing of the decision caught many experts off guard. Expectations were that GM would produce the vehicle at least in the next year.

“It was more sudden than I expected,” said Michelle Krebs, executive analyst at Detroit-based Cox Automotive. “I thought it would go away at some point when the new batteries arrived and they moved into more body styles, but it felt pretty abrupt.”

2024 Sierra EV Denali Edition 1

Source: General Motors

A company spokesman said the timing of the announcement coincided with GM’s need to inform suppliers of the end of production and progress associated with the $4 billion the company is spending to retool the Orion Township Bolt plant. , Michigan, for GMC Sierra and Chevrolet. Silverado electric trucks.

It’s part of GM’s EV strategy to retool existing plants rather than build new ones, although it may do so in the future. Others such as Ford Motor and Hyundai Motor have announced new plants in addition to the retooling of existing facilities.

GM said the retooling saves time and capital and also allowed the company the flexibility to partially convert plants and build several gas-powered models in tandem. But in the case of the Orion plant, which exclusively produces the Bolt, it made no sense to go that route, because GM believes it needs the additional capacity. Also, the Bolt doesn’t contribute to the company’s bottom line like plants that make gas-powered vehicles make money.

Barra said on Tuesday that once the Orion plant reopens next year, the company will have a total production capacity of 600,000 EV pickups annually, including a Detroit plant that has been slow to ramp up production of GMC’s electric vehicles. Hummers.

“We will need this capability because our trucks more than live up to our customers’ expectations and we will demonstrate that EV business and lineup are not mutually exclusive for Chevrolet and GMC trucks,” Barra said Tuesday.

GM promised investors that its next-generation EVs, built on a new architecture known as Ultium, would be profitable. This is a milestone that the Bolt models, including a larger “EUV” version, never thought they’d achieved.

To spur interest and make the Bolt more affordable, GM has cut starting prices down to $6,300 for the 2022 model year. The Bolt EV would start at $26,595, followed by the Bolt EUV at $28,195.

“Bolt is selling better than it ever has since the company dropped the price. On the other hand, that also probably means they’re losing more money than they ever had on that car,” said Sam Abuelsamid, Guidehouse principal analyst. Insights. “So, they don’t want to keep doing it any longer. They’re losing money on it.”

U.S. President Joe Biden with General Motors CEO Mary Barra looks at a Chevrolet Silverado EV as they visit the 2022 North American International Auto Show at the Huntington Place Convention Center in Detroit, Michigan on Sept. 14, 2022. – Biden sta visiting the auto show to highlight the production of electric vehicles.

Mandel Ngan | afp | Getty Images

GM expects to achieve low-to-mid-single-digit adjusted profit margins on its electric vehicle portfolio in 2025, excluding any positive impact from clean energy tax credits such as those included in the Inflation Reduction Act.

Taking these credits into account, the company said it expects its new EV portfolio to be as profitable as its traditionally powered cars and trucks by 2025, years earlier than many thought was possible.

While those credits likely would have boosted the profit margin on the Bolt as well, the car uses older battery technology purchased from LG, and GM is currently focused on ramping up cheaper domestic battery production through a plant it operates as a joint venture. with the South Korean company.

Ultium’s acceleration, plus the cost-efficiency gained with the new EV pickups, means margin improvements that Bolt couldn’t have realized, especially in the long run.

“As we scale EVs, we will reduce overhead costs and continue to improve margins,” Barra said on Tuesday.

The Bolt will leave behind a mixed reputation. It was the first ‘affordable’ long-range EV on the market, but it never achieved its claimed potential.

The Bolt brand was also harmed after the company in 2020 and 2021 recalled all vehicles it ever produced due to fire issues stemming from supplier-manufacturer battery defects. At least 13 Bolts spontaneously caught fire as a result of the problem.

A 2019 Chevrolet Bolt EV caught fire in a home in Cherokee County, Georgia on September 13, 2021, according to local fire departments.

Cherokee County Fire Department

Still, GM has been touting the Bolt EV as a proof of concept for its electric future. The company said the vehicles have attracted new customers, with 75% of Bolt owners making the switch from non-GM vehicles.

Now, the company will need a new entry-level EV and is looking for the next Equinox EV, starting at around $30,000, to fill that gap.

“We think this is our big opportunity here to really start getting massive adoption, and we have that expectation with price; volume that we expect to do,” said Scott Bell, global vice president of Chevrolet, during a briefing. with the media last year. “This is a game-changer for us and for the industry.”

Whether the Equinox EV, to be produced at a plant in Mexico, can be more of a “game changer” than the Bolt, could really be determined later this year when the car goes on sale.

Barra told CNBC’s Phil LeBeau last year that GM plans to ramp up production of the Equinox EV much faster than its current EVs. He said the vehicle should be close to full production by the first quarter of next year.

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