- General Motors and Honda have canceled plans to produce affordable electric vehicles (EVs) due to rising interest rates and decreased demand.
- The joint venture between the two automakers aimed to use GM’s Ultium battery to bring under-$30,000 EVs to the market by 2027.
- The slowing growth in EV sales, with only a 51% increase in the first nine months of 2023 compared to 69% in the same period in 2022, has led car companies to reconsider their EV initiatives.
- GM has postponed the opening of its second all-electric truck plant and dropped its goal to build 400,000 EVs by mid-2024.
- Ford has also pushed back its EV output goals and delayed the construction of a $3.5 billion Michigan battery plant.
- Electric vehicles have become a divisive issue, with Democrats prioritizing environmental friendliness while Republicans do not.
- President Biden’s support for EVs has made them a target for his opponents in the 2024 presidential election.
- Red states are building more EV battery plants, potentially altering the landscape for EV adoption.
General Motors and Honda have officially cancelled their joint venture plan to produce affordable electric vehicles (EVs), joining an increasing list of automakers who have scaled back EV expansion. GM’s Ultium battery technology was intended to bring sub-$30,000 EVs onto global markets by 2027; however, due to changing market conditions and rising interest rates these plans must now be reconsidered; once their demand was strong but now consumers seem less interested in green vehicles due to rising car loans costs and slow sales growth rates.
Automotive industry players have closely been monitoring EV sales, which have recently shown signs of deceleration. According to data provided by Wall Street Journal, in 2023 EV sales saw only 51% growth – significantly lower than 69% seen during 2022 – prompting automakers such as General Motors and Ford to adapt their strategies accordingly to respond to this changing landscape.
General Motors, parent of Buick, Cadillac, Chevrolet, and GMC vehicles, has made significant adjustments to its EV plans. GM postponed opening its second all-electric truck plant as it dropped plans of producing 400,000 EVs by mid-2024. Ford followed suit and has pushed back its output targets and postponed construction of its $3.5 billion Michigan battery plant as they carefully navigate the changing dynamics of the EV market. These adjustments demonstrate automakers’ cautious approach while they adapt accordingly.
Beyond market forces, the growth of EVs has become embroiled in political discussions. Car-buying preferences in the US have increasingly diverged along party lines; Democrats tend to prioritize environmental friendliness when purchasing cars while Republicans tend to prioritize less eco-friendly options when purchasing vehicles – this disparity reflected by ownership figures from research firm Strategic Vision which found that Democrats outnumber Republicans when it comes to owning electric vehicles.
President Biden’s advocacy of electric vehicles (EVs) has added further political relevance. Critics and opponents have taken note, making EVs a focal point in their 2024 presidential election campaigns – even suggesting buyers of such cars suffer from “psychological insecurity,” while raising fears among auto workers that switching over will mean job loss.
However, the landscape for EV adoption could change when red states that traditionally favor Republicans invest in building more battery plants for electric vehicles (EVs). This development could alter political support and open up opportunities for growth within the industry.
General Motors and Honda’s decision to cancel their plans for affordable EVs reflects shifting market dynamics and challenges facing the industry. Rising interest rates, declining EV sales growth, political considerations surrounding EVs and red states investing in battery plants all create additional complications that must be considered when planning future EV adoption strategies.