Boldly pioneering new ground in the EV world with upcoming releases, GM and Chevrolet may have hit a few speed bumps in their ambitious plans. Cold, hard reality intruded in the form of supply chain issues, Inflation Reduction Act tax credit uncertainty, and other factors. While GM and Chevy will overcome these hurdles, the problems might slow the process of getting shiny new EV toys into the garages of eager drivers.
General Motors CEO Mary Barra gave a look at the electrified vistas ahead during the company’s recent third quarter (Q3) earnings report. Besides the problems with batteries and tax credits, she also revealed some other interesting details about GM’s way forward. One possible curve ball comes from continued support for the Chevy Bolt despite the Chevy Equinox EV’s upcoming launch. Here’s a closer look at what’s going on in GM’s and Chevrolet’s near-future electric vehicle plans.
Battery Bottlenecks and Delayed Production
GM is working hard to reach its total electrification goal, but real-world production snags are slowing it slightly. It originally intended to hit the 400,000 EV production mark next year in 2023, as PC Magazine reports. However, it’s unable to ramp up battery production as quickly as it originally thought. This manufacturing bottleneck seems to be pushing back its schedule.
During the GM Q3 earnings conference call GM CEO Mary Barra said the 400,000 EV goal will take longer to reach. The production will be spread over 2022, 2023, and 2024’s first six months, according to the executive’s statements. Answering analyst questions at the call’s end, she said proper working training and ensuring proper quality caused the delay. She also said battery assembly was taking longer than originally expected.
However, with three battery plants to start operating in the coming years, she expects GM to reach its 2025 manufacturing target. Barra said the company still thinks it can produce 1 million EVs annually in the USA starting in 2025. She says the company is learning valuable lessons from its current low-key struggle with battery production. This should give it the experience to significantly expand production in the next few years.
Halted Hummer Reservations and More
Once a famously wasteful gas guzzler, the GMC Hummer has rolled back onto the scene as a clean-energy EV SUV. The vehicle is still massive and has plenty of off-road capability, but now runs exclusively on battery electric power. The giant’s upcoming trims include a relatively “affordable” $86,645 variant available in pickup and SUV formats. This EV2 model is slated for 2024 launch or was before the latest battery squeeze modified GM’s plans. Other trims have base prices in the $90,000 or over $100,000 range.
Buyers continued reserving new Hummers at a rate of about 5,000 vehicles a month through summer and early autumn 2022, CarBuzz reported. The EV was expected to rake in more than 100,000 total reservations by November. However, GM halted new reservations in September at the 90,000 mark, per the Detroit Free Press. The company says reserved Hummers probably won’t be delivered until 2024. This suggests the pre-order halt at 90,000 may be related to the “battery bottleneck.”
It remains to be seen how the battery situation affects the planned release of the Equinox EV and Blazer EV. GM and Chevrolet are launching many new electric vehicles right when supply is throttling back production. All the new EVs may well be on schedule, but supply may take some time to catch up to demand.
Chevy and the Inflation Reduction Act
The Inflation Reduction Act introduced complex new rules related to EV buyers’ federal tax credit for their clean-energy vehicle purchases. The bill created sweeping changes to how EVs qualify for a tax credit to make them more affordable. Many EVs, formerly qualifying for tax credits to encourage choosing electricity over gasoline, are left out in the cold. There’s even debate about whether the Clean Vehicle Credit system will speed up EV adoption or slow it down.
The possible maximum credit, $7,500, remains the same. Now, however, it’s not dependent on the battery’s kWh capacity or how many EVs the company has sold. Instead, it calls for final EV assembly in the USA and sourcing and manufacturing battery materials and batteries locally or in a closely allied country.
General Motors says its EVs will probably only qualify for about 50% or $3,750 of the tax credit next year. The fact that China produces most batteries and most of the world’s lithium is a hurdle for GM and all other American EV makers. The Inflation Reduction Act is intended to break EV manufacturing’s dependence on China and Russia.
Mary Barra says she expects GM’s vehicles to qualify for $3,750 “out of the gate,”. The CEO also says the vehicles should fully qualify within two to three years, or sometime around 2025. This is probably when the four battery factories GM is building in partnership with LG within America will be complete.
The Chevy Bolt and Chevy Equinox
With the upcoming release of the Chevrolet Equinox EV SUV, the compact and affordable Chevy Bolt almost appeared likely to become obsolete. The Bolt uses the older BEV2 chassis, while the Equinox is based on GM’s new Ultium EV platform. Standardizing on the Ultium chassis seems like potential cost savings for GM. Ultium underlies the Hummer EV, the Equinox, the soon-to-be-released Blazer crossover EV, and the Silverado EV pickup. Switching over to all Ultium-based EV models seems as though it would simplify manufacturing. Maintaining a separate chassis for the Bolt requires separate machinery, production lines, tooling, and research.
Additionally, the Equinox is a solid replacement for the Bolt as the ultra-affordable EV in GM’s lineup. Its expected $30,000 base price is only $4,400 more than the 2023 Bolt’s $25,600 base MSRP. The Equinox’s interior space may be larger, and its 300-mile range outdoes the Bolt’s 259-mile range. It costs a little more and fills the same compact, thrifty EV role as the Bolt with a better range.
Some sources, like GM Authority, speculated Chevrolet would retire the Bolt, replacing it with the Equinox. The Bolt’s major recalls made it look like even more of a candidate for the scrapheap for a while. However, Chevrolet intends to continue making the Bolt alongside the Equinox.
Two EVs for One Niche?
GM and Chevy have no intention of replacing the Bolt with the Equinox. During the Q3 earnings call, Mary Barra said that “thanks to their range, technology, and value,” both the ordinary EV and the EUV are reaching never-before-seen sales. She pointed out Bolt sales were twice Ford Mustang Mach-E sales during September. The company expects to manufacture 44,000 Bolts in total during 2022.
Far from throwing the Bolt in the dustbin of history, GM plans to double its production next year. Construction of the chunky little EVs is accelerating to approximately 70,000 units in 2023 to meet robust demand. Barra added that GM expects the total number of active Chevrolet Bolt owners to climb above 200,000 by December 31st, 2023. The company intends to keep supporting the vehicle in all its trims for at some years.
The question remains if the very similar Equinox EV and the Chevy Bolt will end up cannibalizing sales off each other. The Bolt is slightly cheaper, and the Equinox is slightly roomier and has a longer range. But the two vehicles appear almost interchangeable and likely to appeal to precisely the same kind of buyers.
General Motors seems confident it can sell both models. It expects sales of the Bolt to lead to more Equinox sales. Barra said public reaction to Equinox is “overwhelmingly positive” even before it hits showrooms. She said GM plans to “use our industry-leading loyalty to move Bolt customers” into buying an Equinox as a follow-up. Regardless of how these plans work out, the sun hasn’t set on the Chevy Bolt yet.
What’s Next for GM and Chevy
GM and its Chevrolet subsidiary look to still be on track to electrify, just not quite as fast as planned. Battery production is slower than expected. This factor prevents GM from reaching its manufacturing goals as quickly as desired and interferes with tax credits. The supply of GMC and Chevy EVs may not meet the demand for several years. Nor will these electric vehicles be quite as affordable as they would be with the full Clean Vehicle Credit.
GM’s decision to keep the Chevy Bolt EV and EUV in production after the Equinox EV’s launch is slightly odd, given the models’ similarity. However, in the end, it’s good for the EV buyer. More choices, and more granularity in size, price, and exact role, is a good thing for people looking to switch to EVs. Both are affordable vehicles that encourage widespread EV adoption among ordinary drivers. The upcoming midsize crossover Blazer SUV EV will add another layer just above the Equinox. GM is building a whole “ecosystem” of EVs, from the thrifty Bolt to the premium, flashy, powerful Hummer. The future is looking electrifying for both Chevrolet and GMC and their customers, regardless of a few minor hang-ups in the near term.
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