Why GM is Killing the Chevy Bolt EV Amid Record Sales
A Chevrolet Bolt EUV on display at the New York Auto Show, April 13, 2022.
Scott Mill | CNBC
DETROIT – After years of lackluster performance and a fire-provoked recall, the all-electric Chevrolet Bolt EV is finally gaining traction General Motors.
As America’s cheapest electric vehicle after significant price cuts, U.S. sales of the Chevy Bolt rose more than 50% last year, and the automaker said it will make a record 70,000 units in 2023.
But instead of continuing to bank on the vehicle’s recent success and increased production, GM CEO Mary Barra said Tuesday the automaker will ramp up production of the vehicle it once called a “real game changer” for the industry and an “EV.” designated hire later this year for each.”
“We are so advanced that now is the time to plan for the cessation of Chevrolet Bolt EV and EUV production, which will happen at the very end of the year,” Barra told investors during a conference call.
Barra’s comments about the vehicle’s cancellation were as quick as a butcher cutting off a chicken’s head, but they spoke volumes when combined with the company’s plans to produce profitable electric vehicles in the years to come.
GM is on track to achieve single-digit profits from its EV portfolio by 2025, when it targets 1 million EV production capacity in North America.
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To meet those goals, GM needs the manufacturing capacity, profits, and market positioning of its upcoming next-generation electric vehicles. It doesn’t think it needs the bolt.
For industry experts, the writing was on the wall for the end of Bolt’s days. But the timing of the decision caught many experts unprepared. Expectations were that GM would produce the vehicle at least into the next year.
“It was more sudden than I expected,” said Michelle Krebs, executive analyst at Detroit-based Cox Automotive. “I thought it would eventually go away as new batteries came along and they transitioned to more body shapes, but it struck me as pretty abrupt.”
2024 Sierra EV Denali Issue 1
Source: General Motors
A company spokesman said the timing of the announcement coincided with GM’s need to update suppliers on the end of production and on progress related to the $4 billion the company is spending to convert Bolt’s plant in… Orion Township, Michigan, for GMC Sierra and Chevrolet to issue Silverado electric pickup trucks.
It’s part of GM’s EV strategy to convert existing plants rather than build new ones, although it might be possible in the future. Others such as Ford engine and Hyundai Motor have announced new plants in addition to upgrading existing facilities.
GM has said the conversion saves time and capital, and it’s also given the company the flexibility to partially convert plants and build different gas-powered models in tandem. But in the case of the Orion plant, which exclusively makes the Bolt, it didn’t make sense to go that route because GM believes it needs the extra capacity. Also, the Bolt doesn’t contribute to the company’s bottom line like plants that produce money-making gas-powered vehicles.
Barra said 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 Hummer EVs.
“We will need this capacity because our trucks exceed our customers’ expectations, and we will show that work and EV range are not mutually exclusive concepts for Chevrolet and GMC trucks,” Barra said Tuesday.
Gains linked to Ultium
GM has promised investors that its next-generation electric vehicles, based on a new architecture called Ultium, would be profitable. This is a milestone that the Bolt models, including a larger “EUV” version, would never have achieved.
To generate interest and make the Bolt more affordable, GM slashed entry prices by up 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 ever since the company lowered the price. On the other hand, that probably means they’re losing more money on this car than ever before,” said Sam Abuelsamid, a senior analyst at Guidehouse Insights. “So they don’t want to keep it going any longer. You lose money with it.”
U.S. President Joe Biden looks at a Chevrolet Silverado EV along with General Motors CEO Mary Barra while touring the 2022 North American International Auto Show at the Huntington Place Convention Center September 14, 2022 in Detroit, Michigan. – Biden attends auto show to highlight electric vehicle manufacturing.
Almond Ngan | AFP | Getty Images
GM expects to achieve low- to mid-single-digit adjusted profit margins for its EV portfolio in 2025, excluding the positive impact of clean energy tax credits as included in the Inflation Reduction Act.
Taking those credits into account, the company expects its new EV portfolio to be as profitable as its conventionally powered cars and trucks by 2025 – years earlier than many thought possible.
While those loans likely would have increased the Bolt’s profit margin as well, the car uses older battery technology purchased from LG, and GM is currently focused on expanding lower-cost internal battery production through a plant it operates as a joint venture with the company South Korean company.
That Ultium ramp-up, plus the cost savings realized with the new EV pickups, mean margin improvements the Bolt couldn’t have realized, especially over the long term.
“As we scale electric vehicles, we will reduce fixed costs and continue to improve margins,” Barra said Tuesday.
The Bolt will leave a mixed reputation. It was the first “affordable” long-range EV on the market, but it never reached its stated potential.
The Bolt brand name was also damaged after the company recalled all vehicles ever produced in 2020 and 2021 due to fire concerns stemming from defects in supplier-manufacturer batteries. Due to the problem, at least 13 bolts spontaneously caught fire.
A 2019 Chevrolet Bolt EV caught fire at a home in Cherokee County, Georgia on September 13, 2021, according to the local fire department.
Cherokee County Fire Department
Still, GM has touted the Bolt EV as proof of concept for its electric-powered 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 needs a new entry-level EV, and it’s looking to the upcoming Equinox EV, which starts at around $30,000, to fill that gap.
“We think this is our big opportunity here to really get massive adoption, and we have that expectation with the price, the volume, that we’re anticipating,” Scott Bell, Chevrolet’s global vice president, said during a recent media briefing Year. “This is a game changer for us and for the industry.”
Whether the Equinox EV, which is being produced at a plant in Mexico, can really be more of a “game-changer” than the Bolt could be determined later this year when the car goes on sale.
Barra told CNBC’s Phil LeBeau last year that GM expects to ramp up production of the Equinox EV much faster than its current EVs. She said the vehicle should be near full production by the first quarter of next year.