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GM CFO Jacobson Puts Brakes on Hybrid Hysteria

by | December 1, 2023

In recent days, several automotive executives have discussed scaling back their EV and battery production plans and started talking up the advantages of hybrids. Much of this was tied to thoughts that company’s overestimated the demand for electric vehicles, especially in light of the flattening of sales in recent months. GM CFO Paul Jacobson pumped the brakes on that notion.

GM CFO Paul Jacobson speaking REL

GM CFO Paul Jacobson told analysts Thursday the company was not readying for a shift away from EVs to hybrids.

During GM’s third quarter earnings call, the company revealed it plans to slow the cadence of its new electric vehicles, pushing back their introduction. Many thought it was tied to the recent slowdown in EV sales.

A slowdown comes despite plenty of recent research showing more and more people are interested in EVs and the numbers of buyers contemplating purchasing one continues to rise. Currently, battery-electrics comprise about 8.5% of all new vehicle sales. It was less than 1% just a few years ago, and there was a steep rise in 2022 and the first half of this year.

Not only that, some automakers are revisiting their shift away from pure electrics, warming back up to the idea of new hybrid models as development continues. The only hybrid currently offered by GM is the Chevrolet Corvette E-Ray — so not a major part of the portfolio unlike Toyota, Honda and a few others.

Not what you think it is

Jacobson, speaking Thursday at the Barclays Global Automotive and Mobility Tech Conference, essentially told a room of analysts to relax. There is no shift in GM’s commitment — and likely that of other automakers — to EVs.

He said he believes EV sales success isn’t going to be simple, but come in spurts, calling it “choppy,” and that’s what the industry is in the midst of right now.

GM Orion Assembly - Bolt EV and Sonic

GM is putting off production of some EV models produced at the Orion Assembly plant to update some tooling and the equipment.

“Across the board, we’ve we see EVs as a growth story, we really do. And we believe that we’re going to get there, the first thing we’ve got to do is create the vehicle foundation, do it profitably, with the types of margins that we expect in our portfolio going forward, and forever from there, the business builds.”

He noted the company still expects to be capable of producing 1 million EVs annually by 2030. More importantly the costs of EVs continues to fall. He estimated that  60% of the savings in the production of battery-electrics will come from scale — so making a lot of them is important to the company’s long-term plans.

He also noted that fixed costs per unit will come down by $20,000 per vehicle in 2024 compared to 2023. That will fall another $5K in 2025.

Sales lull represents an opportunity

The dialing back of EV production, particularly the company Orion Assembly plant, an hour north of Detroit, seemed like a response to slowing EV sales. The reality is, he said, the slowdown provided an opportunity to make some necessary changes at the plant now rather than a year or two down the line. The tooling and other updates will make for more efficient production at scale and improved EV profitability.

Since the company’s Factory Zero site was underutilized, it can produce its new Silverado EV there until demand necessitates a move to Orion. The delayed introduction of the GMC Sierra EV and Chevrolet Equinox will be a few months as the company makes the updates.


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