Deep Looks: GM ending Chevy Bolt EV

 

1 During its earnings call, General Motors announced it will stop production of the Chevrolet Bolt EV and EUV by the end of the year. The automaker said it will focus instead on manufacturing the Silverado EV truck, which GM plans to begin delivering to fleet customers in Q2; the Blazer EV SUV, expected this summer; and the Equinox EV SUV, scheduled to launch in the fall.  Earlier this month, GM became the second-best seller of electric vehicles in the U.S. with 20,670 EVs in Q1, ahead of Ford's 10,866 units (Tesla delivered ~170,000 vehicles in the U.S. in Q1). Bolt EV sales comprised 95.3% of all electric sales for GM, which leads to questions about the shift in strategy. The Bolt's success shows Chevy made strides in selling this EV, but the model's end ultimately underscores a wider macro trend toward cutting production costs in the auto industry.  Chevy Bolt EV sales had also been gaining traction with business fleets, including the order for 800 vehicles by Domino's in November. The Bolt EV was also among the vehicle models to be included in the Hertz order of 175,000 EVs over five years from GM. However, the decision to halt the Bolt EV is consistent with the slowdown in production of the GMC Hummer EV, delivering just two units in Q1, to prioritize the Silverado EV and its Ultium battery cells. The automaker had also previously announced a $7B refactoring of its Orion plant in Michigan to produce the Silverado EV and the electric GMC Sierra. GM hopes to improve issues involving Chevy Bolt batteries, including its winter range loss — which has been overlooked in favor of tackling its obviously more urgent fire risk issues. The Bolt EV originally had a 65 kWh lithium-ion battery pack manufactured by LG, which experienced fire risk issues believed to be caused when a torn anode and a folded separator are present within the same pouch cell. This led to a nine-month production pause and the safety recall of 142,000 units (which included vehicles dating back to its launch in 2017). The company's pricing strategy to reduce the sticker price by $6,000 enabled the automaker to surpass pre-recall sales levels; yet, it ultimately came down to the cost of production as Ultium batteries were down to $100 per kWh versus the Chevy Bolt batteries, which were estimated above $246 per kWh (based on replacement price). Thus, the strategy for GM seems to be focused on producing larger EVs (which means higher sticker prices) as the cost of production has decreased, aiming at widening margins, which decreased from 8.2% in Q1 2022 to 6% in Q1 2023. The Silverado EV will enter a competitive market, including the Ford F-150 Lightning (which sold 4,291 units in Q1) and the upcoming Tesla Cybertruck (expected in H2). To maintain its revenue ($39.98B in Q1), GM would be highly dependent on the Silverado EV carrying its sales, which would not be an issue at a 33% higher pricing versus the Bolt EV if it manages to scale production on time.

2 Stellantis announced it will begin giving voluntary buyouts for up to 33,500 U.S. employees, including 31,000 full-time with at least one year of employment and 2,500 non-union employees with more than 15 years with the company. The automaker attributes the decision as a result of a plant to refocus resources on electric vehicles. The buyouts would be in addition to the 1,200 layoffs from February due to the Jeep Cherokee SUV factory pause in Illinois. Unlike some other cost-cutting measures among automakers, Stellantis' buyouts are a direct result of its EV production goal. The buyouts announcement comes within a month of General Motors revealing that 5,000 white-collar workers accepted buyout packages out of 58,000 to whom buyouts were offered. GM's decision was part of a $2B cost-reduction program that also included buyouts to Buick dealers that did not want to invest at least $200,000 into upgrading their locations to carry EVs. The move also follows Ford's announcement that it would cut 3,800 (2,300 in Germany) product development and administration jobs in Europe to focus on EVs.  Stellantis set a goal of 100% of its European and 50% of its U.S. sales to be electric by the end of 2030, aiming at offering a lineup of 75 BEV models. In 2022, the automaker sold 288,000 BEV units globally across 23 models. In contrast, Tesla sold 1.31 million vehicles last year, out of which 95% were Model 3 and Model Y. Chinese vehicle manufacturer BYD sold 911,141 BEVs in 2022. Stellantis announced last year its plan for a 23GWh lithium-ion battery plant in Kokomo, Indiana, to scale up to an output of 33 GWh. The Kokomo site was originally a transmission and casting site for vehicles such as the Dodge Durango and the Dodge Charger, which will shift focus to electric drive modules to attain the 50% EV sales goal by the end of the decade.

3 Top News Stories: Cruise announced it will begin offering self-driving rides to paying members of the public between 10 pm and 5:30 am in the Northwest part of San Francisco; while keeping day hours for power users and employees in the city. Tesla plans to install Powerwalls for a virtual power plant collaboration with energy company Transnet BW in Germany. UPS reported a net income of $1.9B in Q1, down from $2.66B during the same period in 2022 driven by a decrease in volume in the U.S. and demand weakness in Asia. The Environmental Protection Agency is earmarking $400M in grants for "cleaner" school buses, including those running on propane, compressed natural gas, or electric motors.  Boeing is planning to increase production of the 737 Max from 31 to 38, despite a previously reported quality issue involving parts supplier Spirit AeroSystems.