General Motors (GM) has adjusted its electric car production target for 2024 and shifted its profit goals due to lower-than-expected demand for electric vehicles (EVs). The company’s Chief Financial Officer, Paul Jacobson, revealed that GM will now aim to produce between 200,000 to 250,000 new EV units in 2024, down from the initial target of 200,000 to 300,000 units.
Despite the demand challenges, Jacobson expressed optimism about the profitability of GM’s EVs at lower production levels. He mentioned that GM still believes its EVs can be “variable profit positive” at these levels, with variable profit being achieved when the revenue from vehicle sales exceeds the direct production costs, excluding fixed expenditures.
Speaking at the Deutsche Bank Global Automotive Industry Conference, Jacobson also announced GM’s plan to invest 0 million in Cruise, its self-driving car company, to aid in its relaunch. This investment is set to begin this month.
While demand for EVs has not grown as rapidly as anticipated, GM reported strong EV sales in May, with approximately 9,500 EVs sold. Jacobson attributed the adjustments in production and profit targets to factors driven by demand in the overall industry. While industry analysts predict that the EV market will represent more than 10% of total auto sales this year, GM expects it to be around 8%.
Jacobson emphasized the importance of aligning production with market demand to prevent overproduction and the need for deep discounts to move excess inventory. By maintaining a focus on meeting customer expectations and ensuring a sustainable growth strategy for EVs, GM aims to navigate the evolving landscape of the electric vehicle market.
