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Why GM is killing the Chevy Bolt EV amid record sales

The Chevrolet Volt EUV on display at the New York Auto Show on April 13, 2022.

Scott Mullin | CNBC

DETROIT — After years of lackluster performance and a fire recall, the all-electric Chevrolet Volt EV finally made headlines. general motors.

As the cheapest EV in the U.S. after big price cuts, U.S. sales of the Chevrolet Volt rose more than 50% last year, with the automaker saying it will make a record 70,000 units in 2023.

But instead of leaning more heavily on the car’s recent success and increased production, GM CEO Mary Barra said Tuesday that the automaker will end production Later this year, she once hailed the industry’s “true game changer” and “EV for everyone.”

Barra told investors on the earnings call:

Barra’s comments about the car being phased out were as quick as a butcher chopping off a chicken’s head, but when combined with the company’s plans to mass-produce profitable electric vehicles in the next few years, told many things.

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

To meet these goals, GM needs the capacity, profits, and market positioning for its upcoming next-generation EVs. I don’t believe you need bolts.

production forecast

For industry professionals, this article marked the end of the Bolt era. But the timing of the decision caught many experts off guard. There was hope that GM would produce the vehicle at least next year.

Michelle Krebs, Executive Analyst at Detroit-based Cox Automotive, said: “I thought it was going to go away once the new battery came out and more body styles were adopted, but it happened pretty suddenly.”

2024 Sierra EV Denali Edition 1

Source: General Motors

A company spokesperson said the timing of the announcement coincided with GM’s need to notify suppliers about the end of production and related progress. at $4 billion The company is investing in a retrofit of its Bolt factory in Orion Township, Michigan, for GMC Sierra and Chevrolet Silverado electric pickup trucks.

That could happen in the future, but it’s part of GM’s EV strategy of retrofitting existing factories rather than building new ones.others ford motor and Hyundai have announced a new plant in addition to a retrofit of their current facility.

GM says the retrofit saves time and capital, and also gives it the flexibility to retrofit parts of the plant and build different gasoline-powered models in parallel. But for the Orion plant, which makes only bolts, GM believes it needs additional capacity, so it didn’t make sense to go that route. Moreover, the Volt does not contribute to the company’s bottom line the way a factory that produces profitable gasoline vehicles does.

Barra said on Tuesday that when the Orion factory reopens next year, the company will have a total capacity of 600,000 EV pickups per year. GMC Hummer EV.

“We need this capacity because our trucks fully meet customer expectations. We also demonstrate that work and EV range are not mutually exclusive terms for Chevrolet and GMC trucks. ,” Barra said on Tuesday.

Benefits related to Ultium

GM promised investors next-generation EVs built on new architecture called Altium would be beneficial. This is a milestone not thought to have been achieved by the bolt model, including the larger ‘EUV’ version.

To generate interest and make the bolt more affordable, GM lowered the starting price Up to $6,300 for the 2022 model. The Bolt EV starts at $26,595, followed by the Bolt EUV at $28,195.

“Volt is selling better than ever since the price cut, which probably means it’s losing more money than ever,” said Guidehouse principal analyst Sam Abuelsamid. said. insight. “So they don’t want it to last long. They’re losing money on it.”

U.S. President Joe Biden views the Chevrolet Silverado EV with General Motors CEO Mary Barra during a tour of the 2022 North American International Auto Show at the Huntington Place Convention Center in Detroit, Michigan, September 14, 2022. Emphasis on the production of electric vehicles.

Mandel Gunn | Afp | Getty Images

GM expects to earn low to mid-single-digit adjusted margins on its EV portfolio in 2025. Inflation control law.

In view of these credits, the company Said The company expects its new EV portfolio to be as profitable as cars and trucks with conventional engines by 2025.

Those credits may have also boosted Bolt’s profit margins, but the cars use older battery technology purchased from LG, a joint venture with a South Korean company.

That Ultium increase and the cost efficiencies achieved with its new EV pickups mean margin improvements that Bolt has failed to deliver, especially in the long run.

“As we expand our EVs, we will continue to reduce fixed costs and drive improved margins,” Barra said on Tuesday.

various reputations

A 2019 Chevrolet Volt EV caught fire on September 13, 2021 at a home in Cherokee County, Georgia, according to the local fire department.

Cherokee County Fire Department

Still, GM pitched the Bolt EV as a proof-of-concept for the future of electrification. The company says 75% of his Bolt owners have switched from non-GM vehicles, and the vehicle has attracted new customers.

Now the company needs a new entry-level EV, Upcoming Equinox EVstarting at about $30,000 to fill that void.

Chevrolet global vice president Scott Bell said in a media briefing: last year. “This is a game changer for us and the industry.”

Whether the Equinox EV, which is due to be produced at a plant in Mexico, can serve as more of a “game changer” than the Bolt could be determined when the car launches later this year.

Barra told CNBC’s Phil LeBeau last year that GM plans to start producing Equinox EVs much sooner than the current EVs.she has a car close to full production By the first quarter of next year. Why GM is killing the Chevy Bolt EV amid record sales

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