A Chevrolet Bolt EUV on display at the New York Auto Show, April 13, 2022.
Scott Mlyn | CNBC
DETROIT — After years of lackluster performance and a fire-provoked recall, the all-electric Chevrolet Bolt EV was finally gaining traction for General Motors.
As America’s cheapest EV following significant price cuts, US sales of the Chevy Bolt were up more than 50% last year and the automaker said it would make a record 70,000 units in 2023.
But instead of leaning further into the vehicle’s recent success and increased production, GM CEO Mary Barra on Tuesday said 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 everyone.”
“We have progressed so far that it’s now time to plan to end the Chevrolet Bolt EV and EUV production, which will happen at the very end of the year,” Barra told investors during an earnings call.
Barra’s comments about the vehicle getting axed were as swift as a butcher cutting the head off a chicken but spoke volumes when combined with the company’s plans to churn out profitable electric vehicles in the years ahead.
GM is on a path to deliver single-digit profits off its EV portfolio by 2025, when it aims to have a production capacity of 1 million electric vehicles in North America.
To reach those goals, GM needs the production capacity, profits and market positioning of its forthcoming next-generation EVs. It doesn’t believe it needs the Bolt.
To industry experts, the writing was on the wall for the Bolt’s end of days. But the timing of the decision caught many experts off guard. Expectations were 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 rather abruptly.”
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 associated with the $4 billion the company is spending to retool the Bolt plant in Orion Township, Michigan, for the GMC Sierra and Chevrolet Silverado electric pickup trucks.
It’s part of GM’s EV strategy to retool existing plants rather than building new ones, although it could do so in the future. Others such as ford engine and Hyundai Motor have announced new plants in addition to retooling current facilities.
GM has said retooling saves time and capital, and it’s also allowed 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 solely manufactures the Bolt, it didn’t make sense to take that tack, because GM believes it needs the additional capacity. Plus, the Bolt doesn’t contribute to the company’s bottom line like plants that produce money-making gas-powered vehicles.
Barra on Tuesday said once the Orion plan reopens next year, the company will have a total production capacity of 600,000 EV pickups annually, including a Detroit plan that’s been slow to ramp up production of the GMC Hummer EVs.
“We’ll need this capacity because our trucks more than measure up to our customers’ expectation, and we’ll demonstrate that work and EV range are not mutually exclusive terms for Chevrolet and GMC trucks,” Barra said Tuesday.
Profits tied to Ultium
GM has promised investors its next-generation EVs, built on a new architecture known as Ultium, would be profitable. That’s a milestone that the Bolt models, including a larger “EUV” version, were never believed to have achieved.
To spur interest and make the Bolt more affordable, GM cut the 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.
“Bolt is selling better than it ever has since the company dropped the price. On the other hand, that probably also means that they’re losing more money than they ever have on that car,” said Sam Abuelsamid, a principal analyst at Guidehouse insights “So, they don’t want to keep it going longer. They’re losing money on it.”
US President Joe Biden, with General Motors CEO Mary Barra, looks at a Chevrolet Silverado EV as he tours the 2022 North American International Auto Show at Huntington Place Convention Center in Detroit, Michigan on September 14, 2022. – Biden is visiting the auto show to highlight electric vehicle manufacturing.
Almond Ngan | Afp | Getty Images
GM expects to earn low to mid-single-digit adjusted profit margins on its EV portfolio in 2025, excluding any positive impact of clean energy tax credits such as those included in the Inflation Reduction Act.
Taking those credits into account, the company has said it expects its new EV portfolio to be as profitable as its cars and trucks with traditional engines by 2025 — years earlier than what many thought was possible.
While those credits likely would have boosted the profit margin on the Bolt as well, 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 plant it operates as a joint venture with the South Korean company.
That Ultium ramp-up, plus cost efficiencies achieved 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 to market, but it never achieved its stated potential.
The Bolt brand name also was damaged after the company in 2020 and 2021 recalled all of the vehicles ever produced due to fire concerns resulting from defects with supplier-manufacturer batteries. At least 13 Bolts spontaneously caught fire as a result of the issue.
A 2019 Chevrolet Bolt EV caught fire at a home in Cherokee County, Georgia on Sept. 13, 2021, according to the local fire department.
Cherokee County Fire Department
Still, GM touted the Bolt EV as proof of the concept for its electric-powered future. The company said the vehicles attracted new customers, with 75% of Bolt owners making the switch from non-GM vehicles.
Now, the company will need a new entry-level EV, and it’s looking to the upcoming Equinox EV, starting at around $30,000, to fill that void.
“We think this is our big opportunity here to really start to get a massive adoption, and we have that expectation with the price; the volume that we expect to do,” Scott Bell, global vice president of Chevrolet, said during a media briefing last year “This is a game changer for us and for the industry.”
Whether the Equinox EV, which will be produced at a plant in Mexico, can serve as more of a “game-changer” than the Bolt truly could 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 more quickly than its current EVs. She said the vehicle should be close to full production by the first quarter of next year.
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