Trump's plan to kill EV subsidies would test GM's EV momentum

DETROIT: General Motors has spent billions over decades trying to blaze an electric trail, releasing pioneering EVs and hybrids that ultimately failed to achieve mass-market sales before being scrapped. This time might be different.

Last year, the U.S. auto-sales leader boosted electric vehicle sales and seized market share from the likes of Tesla despite slowing demand as its customers increasingly chose EVs over comparable GM gas-powered models.

The progress - driven by an expanding EV lineup that will soon include a dozen models - signals that GM could for the first time convince more mainstream buyers to go electric, four industry analysts said.

GM's fourth-quarter share of U.S. EVs hit 12% - double a year earlier and second only to Tesla at 44.4%, according to auto services specialist Cox Automotive.

Sales of GM's Cadillac Lyriq EV tripled last year to 28,402, outpacing each of its XT4, XT5 and XT6 gasoline SUVs. Sales of its lower-priced Chevrolet Equinox and Blazer EVs accounted for 22% and 40% respectively of total fourth-quarter deliveries under the same model name.

The growth underscores GM's stubborn commitment to EVs, despite heavy losses and a trend among rivals including Ford and Toyota to prioritize gas-electric hybrids.

Analysts credited GM's EV surge to its growing number of competitive models - from entry-level to premium - giving its customers more electric options than rivals. Tesla, for example, has five models and only two volume sellers.

GM global markets chief Rory Harvey cited the same reason in an interview with Reuters.

"We've got the broadest lineup out there, and we definitely have momentum," he said. "And we all know that the automotive industry is a momentum game."

ACID TEST

Aggressive pricing also played a role in the form of low-payment leases that often made GM EVs cheaper than its comparable fuel-powered vehicles, according to industry analysts and two GM dealers.

Such cheap EV leases, common industry-wide, were made possible largely by a $7,500 subsidy that U.S. President Donald Trump is expected to end along with a host of other pro-EV policies.

GM would also be vulnerable to Trump's threatened 25% tariffs on Canada and Mexico because it makes hundreds of thousands of cars in Mexico - including the Blazer and Equinox EVs.

Industry experts said political and EV market headwinds will make 2025 an acid test for whether GM can sustain its momentum and hit a tipping point in its long and expensive history of electrification efforts.

One pivotal moment will come later this year as GM launches the next-generation Bolt, expected to be its most affordable EV at about $30,000.

"This year is critical for them," said Paul Waatti, industry analysis director at research firm AutoPacific.

GM has historically been first out the gate with innovative electrified cars only to stumble in launches dating back to its 1997 EV1, a futuristic pill-shaped two-door.

GM also introduced the first mass-produced plug-in hybrid, the 2011 Volt, and followed up with the all-electric 2017 Bolt, the only relatively affordable EV at the time. All were discontinued without achieving volume sales.

Despite its recent progress, GM still faces immense challenges in delivering on CEO Mary Barra's past pledge of an all-electric fleet by 2035.

EVs only comprised about 6% of GM's overall fourth-quarter sales, which continue to rely on large trucks and SUVs that are among the hardest vehicles to electrify, industry experts say.

PROGRESS TOWARD PROFIT

Instead of just one Volt or Bolt, GM now offers 10 models, from the affordable Equinox crossover to six-figure SUVs.

Cadillac just launched its Optiq compact electric SUV, which will be followed soon by a three-row Vistiq and lower-priced electric pickups.

GM says it's also getting closer to making EV profits. CFO Paul Jacobson has said GM plans to narrow EV losses by about $2 billion in 2025, without disclosing total annual losses.

That estimate, however, depends on continued EV sales growth, which could prove hard if Trump guts EV purchase and lease subsidies.

Losing the $7,500 incentive could tank EV sales unless automakers cut prices, said Ivan Drury, director of insights for automotive research firm Edmunds.

"We know what happens if you don't provide it," he said of EV subsidies and discounts. "You don't sell."

GM said it had not decided whether to lower prices if the subsidies end and that it would wait to assess consumer and competitor reactions. GM nonetheless takes a "very long-term view" of its EV commitment, said spokesman Jim Cain.

A $7,500 EV lease incentive has been key to low-payment deals to persuade skeptical EV shoppers. More than 70% of EVs were leased last year at dealerships, including 55% of GM's electric vehicles, Edmunds data shows.

"It's really the lease offer that makes the big difference," said Jeff Laethem, at Detroit's Ray Laethem Motor Village, which includes a Buick and GMC store. For some premium models, it's a $700 monthly payment for a $100,000 vehicle, he said. - By Kalea Hall