Why GM Is Slamming the Brakes on EV Ambitions

0:04In the early 2020s, General Motors really got behind the idea of electric vehicles. and politicians across the country saw the automotive giant as an ally to EV-friendly policies. Famously, in 2021, President Joe Biden thanked GM CEO Mary Barra at the opening of the company's new EV factory in Michigan. You changed the whole story, Mary, wherever you are. There you are. You did, Mary. You electrified the entire automobile industry. I'm serious. You led, and it matters. But in the last few years, and especially after Donald Trump was re-elected, the company has dramatically changed its tune. And now, some Democrats accuse GM of betrayal.

0:50GM sold us out. Mary Barra sold us out. That's Democratic California Governor Gavin Newsom at a press conference last month after Republicans in Washington passed a law that stripped California of its ability to regulate car emissions. The Republicans rolled that back this year, Donald Trump's leadership. But the American automobile manufacturers allowed that to happen. GM led that effort. So why would a company that seems so committed to an EV future now work so hard to lobby against it?

1:27Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Wednesday, October 29th.

1:40Coming up on the show, why GMs slam the brakes on EVs.

2:06for you. So you can buy your credit as easy as you can. Hol also you now your credit on auxmoney.com. Auxmoney. Credit. Just online.

2:23In 2021, GM said that it was going all in on electric vehicles. At General Motors, our vision for the future is a world with zero crashes, zero emissions and zero congestion. The key to unlock that vision is electrification. That's GM CEO Mary Barra. All of this advanced technology puts GM in an incredible position to help accelerate the adoption of electric vehicles. We're spending more than$27 billion on our electric vehicles. The company committed billions to launching a slate of new EVs and phased out gas cars entirely by 2035. Here's our colleague Sharon Turlop, who covers the automotive industry.

3:01General Motors in the last five years or so has made just a really huge push. And not just a PR push, but they have invested billions of dollars, tons of infrastructure. They're hiring their corporate structure all around the idea of replacing gasoline engines with electric vehicles and within a decade or so. Sharon says GM presented this decision as being about more than just business. Mary Barra, the CEO, talked about GM not just as a huge company that, you know, wants to make money and sell the best cars, but as a force to help fight global warming. She talked about GM's commitment to electric vehicles and autonomous vehicles and rolled out some pretty ambitious goals and, you know, and really made a really big splash with that.

3:55At first, Wall Street reacted positively. At the end of 2021, GM's stock was up by some 50%. At the time, the country's biggest EV producer, Tesla, was seeing runaway growth. And GM wanted to compete for the same customers. But switching from gas to electric, of course, isn't as easy as flipping a switch. When you switch from gasoline to electric, it's not like you just, you know, pluck out the gas engine and stick a battery there. Like the entire supply chain needs reworking. So they had to work on this. They worked on a battery called the Altium battery that would essentially be kind of like plug and play so they could use the battery across the whole lineup.

4:34And that in itself was a big project. And they wanted to not be dependent on suppliers in China or suppliers elsewhere for their battery. GM took some of its old gas car factories and converted them into modern electric car plants.

4:53One of their more famous factories, it's partially in Detroit and partially in a town called Hamtramck. They made those old Cadillacs. But that factory was really on the cusp of shutting down. And they decided that they were going to overhaul this factory. They now call it Factory Zero. And that's where they make some of these really big electric trucks and pickups. That overhaul of Factory Zero cost$2.2 billion. Everything GM built was brand new. A new body shop, a new paint shop, a new automation. And when it opened, that's when President Biden took the podium to cheer the company's progress.

5:30God, it's good to be back in Detroit.

5:38And that Hummer's one hell of a vehicle, man. Many of the early modern electric vehicles GM launched stayed true to the type of vehicle GM is known for. big trucks and SUVs. So think the Cadillac Escalade. It's a really big SUV. They actually revived, if anyone remembers, the Hummer. Oh, yeah. Yeah, as both an electric SUV and they made a Hummer pickup truck. And then they did electric versions of their Silverado pickup truck. You know, and some of these vehicles are just coming out because of the automotive, you know, the product cycle. It takes time. Yeah, I remember a lot of TV ads from around that time that were like, this awesome new electric vehicle and it's going to be out in like three years or something.

6:21Like what? Like why are you pitching me this now when I can't even buy it forever? And that speaks to the urgency that GM felt to have these vehicles not just to sell but also to fight the image that they were just kind of sitting still while everybody else, you know, moved forward and innovated. GM was all in on EVs. But there was a problem. Customers weren't. You started to see signs of electric vehicles piling up on dealer lots, more and more deals to move the vehicles. One reason? The infrastructure for EVs was slow to emerge. Charging stations were being built, but unevenly, and consumers had range anxiety.

7:03The other factor? EV policies became more strongly associated with Democrats, and the cars became a political football. During the Biden administration, it was a really big priority of the Biden administration and before President Biden, President Obama, to use federal regulations to push automakers toward vehicles that were more fuel efficient and emitted fewer toxins. And so then it became the debate of government intervention and they became kind of a, you know, seen as a bit of a democratic cause. Then President Trump was reelected. That's when things really just, I mean, it's dramatic to say the bottom fell out because these cars are, you know, these vehicles are still selling.

7:48But I mean, it was really a switch. I mean, President Trump mentioned in his inaugural address that he was going to try to end the regulations that were pushing people toward EVs. We will end the Green New Deal and we will revoke the electric vehicle mandate. saving our auto industry and keeping my sacred pledge to our great American auto workers. So how did GM navigate the changing landscape? That's next.

8:36Today, we're 10 years away from Mary Barra's ambitious goal of having 100 % of GM's vehicles be electric. But the company hasn't made much progress. This year, only 6 % of GM's sales have been EVs. And as the political climate changed, GM started to walk back its bold pledge. It started with little things, like language. So GM said, you know, they proudly spoke of their goal to be all EV by 2035. You'd see in their language, they would just say, we're going all EV. And then, you know, if they were asked or you could read in their comments, well, when are you going all EV? And it was kind of a, you know, you weren't getting really a specific answer.

9:16And then Mary Barra particularly started to say, well, this is, you know, yeah, this is still happening. It will play out over decades. And by the beginning of this year, GM didn't say we're not going to meet this goal anymore. but they were no longer arguing or kind of pushing back at the assertion that they weren't going to make the goal. And then they were just saying this is going to play out over decades. But GM just didn't pull back its company strategy. It also became a leading opponent of stricter government emissions rules, mostly through political lobbying. And one of the company's targets was California.

9:51So California had the ability to set stricter emissions regulations than the federal government. So California had this leeway and there were more than a dozen other states that were able to attach themselves to California's higher emission standards. And so California was essentially driving the national industry through state regulations, which was a particular point of contention. In 2022, California put in place a strict vehicle emissions rule that would have effectively outlawed the sale of gas-powered vehicles by 2035. And GM largely supported it. Shortly after President Biden took office, GM came out and said, hey guys, you know, let's not fight this.

10:34Let's get on board. It's in everyone's interest to meet this goal, and we think it's doable. And so GM was then behind California's rule-setting ability. But this year, along with a lot of other carmakers, GM started fighting the state's power.

10:55What GM did instead was get behind the effort in Congress to strip California of its ability to set these regulations at all. So to take away California's ability, which they've had for many years, to set stricter air quality standards. And one way GM did this was to lobby lawmakers in states that were considering following California's lead. GM, they were aggressive in their lobbying. They sent a message to all their employees that were in states that would have adopted these regulations and encouraged them to please lobby their lawmaker. They used really strong language about how these regulations would be devastating to General Motors.

11:35GM this year has spent more to lobby the federal government than any company other than Meta, using the money to fight clean air and fuel economy rules, weigh in on tariffs and other issues. And the effort has been successful. This spring, Congress passed a law that stripped California of its right to set emission standards. And that mandate that would have effectively required car companies to sell only EVs by 2035 is toast. Why do you think Mary Barra is doing all this lobbying? I think Mary Barra is looking at the landscape. She's looking at the fact that she needs to keep plants running. She needs to sell cars that are profitable.

12:14And the market has changed dramatically. So, you know, it's a pragmatic approach. Has she been asked directly, you used to be talking about this and now you're doing something different? Yeah. And she said she goes back to the customer. She said, we're focused on our customer. We thought, you know, the customer wasn't ready for what we were trying to do. And so we're making what our customers want.

12:43And it seems like it's what investors want, too. After GM announced a few weeks ago that it was taking steps to quickly downsize some of its biggest EV bets and other moves, the company's stock shot up 15%. And today, GM said it was laying off thousands of workers at factories that make electric vehicles and EV batteries. Looking back, was Mary Barra's original goal of all EV cars by 2035, was that just too ambitious? I mean, it certainly seems like it. I've talked to several people who've said, well, yeah, this is, you'll hear the term hype cycle. Well, it's just what happens, you know, things get hyped up and people get excited about it.

13:19And then, you know, everyone comes down to earth and this is just like what happens. But that certainly wasn't the prevailing opinion when the industry was kind of blowing up. This thing was starting to really show cracks well before President Trump took office and well before these regulations changed. Companies like Ford have also lost billions and are rethinking their plans when it comes to electric vehicles. And Rivian, the EV company, recently laid off 600 employees in the face of weaker demand.

13:53How consequential are Mary Barra's decisions on the future of this industry? GM is the biggest player, the biggest traditional player. They span the globe. If GM succeeds at something, the industry has to respond. So where GM goes from here very much matters. And where GM appears to be going is down a much slower road toward an all-electric future. It seems like, you know, what's happening now is this is going to be like, this is going to be slow. It's going to be incremental. It's not going to be this dramatic change that it once looked like it was going to be.

14:50That's all for today, Wednesday, October 29th. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.