So you‘re interested in learning more about GM‘s transition to electric vehicles? As an experienced industry analyst, I‘ll offer an in-depth overview of GM‘s ambitious EV goals, the current obstacles they face ramping up production, and questions around the continuation of affordable models like the Chevy Bolt EV alongside upcoming launches like the Equinox EV. Stick with me through all the twists and turns in the road ahead.
An Electric Vision Facing Harsh Realities
GM made waves in 2021 by announcing an aspirational commitment to phase out all gas-powered passenger vehicles by 2035. With eyes toward an all-electric future, the automaker targeted selling 1 million EVs globally each year by that time based on a $27 billion investment in EV and autonomous vehicle development.
For the U.S. specifically, GM aims to manufacture 400,000 EVs annually by the end of 2023 and scale up to over 1 million per year by 2025. Powering these ambitious production volumes requires massive battery supply and manufacturing capacity growth.
However, the rosy targets soon crashed into supply chain realities. During Q3 2022 earnings calls, CEO Mary Barra admitted they must push back the 400,000 cumulative U.S. production benchmark, spreading it over 2022, 2023, and into early 2024. The delay stems directly from battery availability falling short of the blistering production ramp-up pace.
This battery bottleneck already impacted rollout timelines for EVs like the hotly anticipated GMC Hummer lineup…
Battery Supply Crunch Thwarts Production Scale-Up
Strong preorder demand for the resurrected, all-electric GMC Hummer line resulted in over 90,000 reservations by September 2022, per automotive site CarBuzz. Yet GM chose to pause taking new orders around that time. Most existing Hummer EV reservations aren‘t expected to materialize until 2024 models at this point.
Slow or halted production clearly links back to the battery shortfall. During Q3 earnings calls, Mary Barra specifically cited battery assembly processes taking longer than expected. This highlights that drastically expanding output relies not only on battery availability but manufacturing expertise and quality control.
In the short term, the battery supply chain hurdles forced GM to walk back U.S. production goals:
| Year | Original EV Production Goal | Revised EV Production Range |
|---|---|---|
| 2022 | 240,000 | 165,000 – 230,000 |
| 2023 | 400,000 (cumulative) | 235,000 – 275,000 |
| 2024 (Jan – June) | N/A | 400,000 (cumulative) |
Data compiled from GM executive comments during Q3 2022 earnings calls
With the initial 400,000 production benchmark now stretched over 3 calendar years rather than reached in 2023, GM‘s aggressive early targets clearly overlooked supply chain realities.
Digging deeper into the battery bottleneck…
Expansive Battery Plant Investment Attempts to Catch Up to Soaring EV Demand
GM‘s joint venture with LG Energy Solution represents a $7 billion investment to rapidly scale domestic battery supply and manufacturing. By the end of 2025, the partners plan to open:
- 2 battery plants in Tennessee
- 1 plant in Ohio
- 1 additional U.S. site still pending
Each facility aims for 35+GWh capacity annually, adding massive battery resources for powering GM‘s ambitious EV portfolio expansion.
The first Tennessee plant should launch in late 2023, followed by each subsequent factory coming online annually through 2025. However, with EVs like the Hummer already facing pre-order backlogs based on battery availability, the long lead time for new plants means supply will trail demand for several years.
*EV battery production ramps up steadily through new plants launching but lags behind GM‘s EV sales goals for the next couple years
For context,Mary Barra also announced during the earnings call that GM expects over 200,000 total Chevy Bolt EVs on U.S. roads by end of 2023. With 2023 Bolt production doubled to 70,000 units, those volumes alone necessitate substantial battery resources, not to mention 10 other EV models promised globally by 2025.
While the battery plants in the pipeline aim to eventually enable manufacturing 1 million + EVs per year, near-term battery supply represents the chief bottleneck in accelerating production.
Delayed Access to EV Tax Credits Due to Battery Supply Chain
Battery availability isn‘t just slowing production timelines. Sourcing restrictions around battery components and minerals also impacts GM‘s ability to qualify for the full $7,500 EV tax credit newly revived under the Inflation Reduction Act.
The law aims to spur domestic manufacturing by requiring final assembly in North America. Battery component production and critical mineral/material sourcing must also come from either the U.S. or a handful of close treaty partners.
With China currently controlling over 70% of the world‘s lithium-ion battery manufacturing and even higher share of lithium production, no automakers yet meet the battery portion criteria. GM CEO Mary Barra expects this to initially limit its EVs to just $3,750 in federal tax credits during 2023.
However, she predicted full $7,500 eligibility by 2025 when the new LG-partnered U.S. battery plants begin operating. This indicates GM‘s battery supply chain does not yet source from qualifying origins but that the future domestic production will unlock the full incentives.
In the interim, GM and all EV automakers face slightly muted consumer demand until manufacturing inputs align with regulations intended to spur domestic sourcing. Until then, buyers will have to absorb several thousand more in costs than the law ultimately intends.
Surprise Bolt EV Production Increase Defies Expectations
With strong battery supply crucial to GM hitting EV production targets, news around the compact Bolt EV puzzled industry watchers. The launch of the very similar Chevrolet Equinox EV with its 300-mile range and attractive $30,000 price point appears poised to replace the Bolt as GM‘s affordable EV offering.
However, during earnings calls, Mary Barra announced plans to actually double Chevy Bolt EV and EUV production from around 35,000 units in 2022 to 70,000 in 2023.
Rather than fading into obscurity, Barra expects over 200,000 total Bolts on the road domestically within the next year. September 2022 Bolt sales even managed to double those of the notable Ford Mustang Mach-E. All signs point to the Bolt remaining a key part of GM‘s EV lineup even after the Equinox enters the chat.
Reviewing historical data, the Bolt‘s importance and fanbase becomes clearer:
| Year | Total U.S. Chevy Bolt Sales | Avg. Annual Sales Growth |
|---|---|---|
| 2017 | 23,297 | – |
| 2018 | 18,019 | -23% |
| 2019 | 16,418 | -9% |
| 2020 | 20,754 | +26% |
| 2021 | 24,828 | +20% |
| 2022YTD | 22,012 | – |
Chevy Bolt sales dipped after initial launch but regained steam with consistent growth since 2020 even amid recalls
The modest EV seen sales rebound steadily in recent years even following battery fire troubles. With engineers resolving the recall issues, the tried-and-true Bolt has many fans. And EV interest only accelerates nationwide.
GM seems ready to leverage the growing Bolt owner base as brand loyalists who could upgrade to a Equinox EV in the future.
Rather than full replacement, the two EVs may target similar audience segments given comparable size and pricing. Early views position the Equinox as a more premium offering on the same compact platform.
Time will tell whether the two models can complement one another or if overlapping appeal results in cannibalized sales. But for now, the Bolt EV appears here to stay.
The Long Road Ahead Still Leads to An All-Electric Future
For GM and the auto industry overall, pivoting to EVs requires navigating supply uncertainties, evolving regulations, and fickle customer demand across vehicle segments and price points.
Recent developments showed GM‘s aggressive early production targets failing to account for global battery supply chain constraints and manufacturing ramp-up realities. This forced pushbacks to 2023 and 2024 goals for U.S. EV production volume.
Yet the underlying transformation continues through major battery plant investments and already strong demand for upcoming models like the GMC Hummer EV and Chevy Equinox. Plus GM indicated renewed commitment to the pioneering Chevy Bolt EV with a surprise doubling of output.
Setbacks are inevitable on the long, complex road to fully electrified vehicle offerings spanning affordability to luxury. But GM‘s sheer scale and resources position it to power through temporary battery supply squeezes to eventually capitalize on soaring EV preference.
The journey holds unavoidable bumps and turns but still trends unambiguously toward electric for GM and the wider auto industry. Major manufacturers plan to continue steering into the all-EV future with tenacity through headwinds until the zero emissions horizon clears.
