by Brad Anderson
- GM reports sharp EV demand decline after federal tax credit removal.
- Company expects market to stabilize once incentives fade completely.
- CEO Mary Barra calls EVs GM’s “North Star” amid political pressure.
Under the Biden administration, carmakers enjoyed four years of predictable policy and a clear push toward electrification. Since 2005, some form of tax credit has existed to reward buyers of low-emission vehicles. Then came January.
Donald Trump’s return to the Oval Office promptly threw a wrench into that setup, with his administration scrapping the EV tax credit, lifting penalties for exceeding emissions targets, and generally adopting an anti-EV posture that left automakers recalibrating overnight.
Now, car manufacturers are facing an uphill climb. Following the removal of the federal EV tax credit at the end of September, General Motors says it has already seen a “significant” decline in demand. Even so, the company expects things to settle into a more predictable rhythm soon enough, lbeit at a lower pitch than before.
Read: EV Tax Credit Loss Will Cost GM $1.6 Billion
“EV demand is going to be pretty choppy for the near future, we think, as we come out of the $7,500 and what we’ve already seen in October with some pretty significant pullback in demand,” GM chief financial officer Paul Jacobson said during a recent earnings call. “We do think that the EV market is going to stabilize from a supply standpoint.”
Jacobson added that emissions regulations had turned parts of the EV market into a clearance aisle, with some brands practically giving away electric cars just to rack up environmental credits.
“We had a number of competitors out there that really were selling EVs for whatever they could get for them because they really wanted to get the credits on the environmental side,” he said.
While he didn’t call anyone out by name, Jacobson was referring to the regulatory credits automakers could earn from selling EVs under the previous scheme. If they failed to bring about enough credits or didn’t purchase them from a brand like Tesla, they faced fines.
GM’s EV Future
Moving forward, GM appears confident in the future of EVs. Chief executive Mary Barra refers to them as the company’s “North Star” and said the company won’t “know what true EV demand is” until early next year.
Despite the uncertainty, GM doesn’t plan to discontinue any of its current models and will focus on reducing costs over the coming years. For example, it’s working on reducing complexity and commonizing parts across its dedicated EV platform.
“We’re [also] investing in new battery technologies, LMR (lithium manganese rich), that will allow us to take cost out of the vehicle in a significant fashion,” said Barra.