Why GM Kills Chevy Bolt EV Amid Record Sales

- As America’s cheapest electric car, sales of the Chevy Bolt in the U.S. rose more than 50% last year, and GM said it would hit a record 70,000 units by 2023.
- But GM CEO Mary Barra said Tuesday that the automaker would end production of the car later this year.
- To achieve these goals, GM needs the production capacity, profits and market positioning of the upcoming next-generation electric vehicles. It doesn’t think it needs the bolt.
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-prompted recall, the all-electric Chevrolet Bolt EV is finally gaining traction for General Motors.
As America’s cheapest electric car after significant price cuts, sales of the Chevy Bolt in the US jumped more than 50% last year, and the automaker said it would hit a record 70,000 units by 2023.
But instead of leaning further into the vehicle’s recent success and increased production, GM CEO Mary Barra said Tuesday that the automaker would end production later this year of the vehicle she once hailed as a “real game changer” for the industry and an “EV for all.”
“We have come so far that it is now time to plan to end Chevrolet Bolt EV and EUV production, which will happen at the very end of the year,” Barra told investors on an earnings call.
Barra’s comments about the vehicle being axed were as quick as a butcher cutting a chicken’s head off, but spoke volumes when combined with the company’s plans to bring out profitable electric vehicles in the coming years.
GM is on track to deliver single-digit profits from its electric vehicle portfolio by 2025, when it aims to have a production capacity of 1 million electric vehicles in North America.
To achieve these goals, GM needs the production capacity, profits and market positioning of the upcoming next-generation electric vehicles. It doesn’t think it needs the bolt.
For industry experts, the writing was on the wall for Bolt’s final days. But the timing of the decision caught many experts off guard. Expectations were that GM would produce the vehicle at least into next year.
“It was more sudden than I expected,” said Michelle Krebs, executive analyst for Detroit-based Cox Automotive. “I thought it would go away at some point when new batteries came on and they went to more body styles, but it struck me as pretty abrupt.”
2024 Sierra EV Denali Edition 1
Source: General Motors
A company spokesman said the timing of the announcement coincided with GM’s need to notify suppliers about the end of production and about progress related to the $4 billion the company is spending to rebuild the Bolt plant in Orion Township, Michigan, for the GMC Sierra and Chevrolet . Silverado Electric Pickups.
It is part of GM’s EV strategy to remodel existing plants rather than build new ones, although it may do so in the future. Others such as Ford Motor and Hyundai Motor have announced new factories in addition to remodeling current facilities.
GM has said the utility saves time and capital, and it has 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 produces the Bolt, it didn’t make sense to take that step, because GM believes it needs additional capacity. Additionally, Bolt does not contribute to the company’s bottom line as a facility that produces cash-generating gas-powered vehicles.
Barra said Tuesday that when the Orion plant reopens next year, the company will have a total production capacity of 600,000 electric cars annually, including a Detroit plant that has been slow to ramp up production of GMC Hummer electric cars.
“We need this capacity because our trucks more than measure up to customer expectations, and we want to demonstrate that work and EV range are not mutually exclusive terms for Chevrolet and GMC trucks,” Barra said Tuesday.
GM has promised investors that its next-generation electric cars, built on a new architecture known as Ultium, would be profitable. It’s a milestone that the Bolt models, including a larger “EUV” version, were never thought to have achieved.
To stimulate interest and make the Bolt more affordable, GM cut starting prices by as much as $6,300 for the 2022 model year. The Bolt EV would start at $26,595, followed by the Bolt EUV at $28,195.
“The Bolt is selling better than ever since the company dropped the price. On the other hand, it probably also means they’re losing more money than they ever had on that car,” said Sam Abuelsamid, a principal analyst at Guidehouse Insights. “So, they don’t want to keep it going anymore. They’re losing money on it.”
US President Joe Biden, with General Motors CEO Mary Barra, looks at a Chevrolet Silverado EV while touring the 2022 North American International Auto Show at the Huntington Place Convention Center in Detroit, Michigan on September 14, 2022. – Biden visits the auto show to highlight production of electric vehicles.
Almond Ngan | Afp | Getty Images
GM expects to earn low to mid-digit adjusted profit margins on its electric vehicle portfolio in 2025, excluding any positive impact from clean energy tax credits such as those included in the Inflation Reduction Act.
Taking those credits into account, the company has said it expects the new EV portfolio to be as profitable as its cars and trucks with traditional engines by 2025 — years earlier than many thought possible.
While those credits would also likely have increased profit margins on the Bolt, the car uses older battery technology purchased from LG, and GM is currently focused on scaling up more cost-effective in-house battery production through a facility it operates as a joint venture with the South Korean company.
That Ultium step-up, plus cost efficiencies gained with the new EV pickups, means margin improvements that the Bolt couldn’t have realized, especially in the long term.
“As we scale EVs, we will lower fixed costs and will continue to drive margin improvements,” Barra said Tuesday.
The Bolt will leave behind a mixed reputation. It was the first “affordable” long-range EV on the market, but it never achieved its stated potential.
The Bolt brand name was also damaged after the company recalled in 2020 and 2021 all of the vehicles ever produced due to fire problems resulting from supplier-manufacturer battery failures. At least 13 bolts spontaneously caught fire as a result of the problem.
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 touted the Bolt EV as proof of concept for its electric future. The company said the vehicles attracted new customers, with 75% of Bolt owners switching from non-GM vehicles.
Now the company will need a new entry-level EV, and it’s looking to the upcoming Equinox EV, which starts around $30,000, to fill that void.
“We think this is our big opportunity here to really start to get massive adoption, and we have that expectation with the price; the volume we expect to do,” said Scott Bell, global vice president of Chevrolet, during a media briefing last year. “This is a game-changer for us and for the industry.”
Whether the Equinox EV, which will be manufactured at a plant in Mexico, can serve as more of a game-changer than the Bolt can truly 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 far faster than its current EVs. She said the vehicle should be close to full production by the first quarter of next year.