General Motors Co. will delay the opening of its second electric-truck plant in Michigan to preserve capital amid a slowdown in sales growth for electric vehicles.
The company said Tuesday that the conversion of its Orion Assembly plant will move back by a year to late 2025 “to better manage capital investment while aligning with evolving EV demand.” It also plans to make improvements to its electric trucks that could increase profitability, GM said in a statement.
The move comes as the automaker grapples with both slowing demand for electric models in the US and the prospect of higher labor costs in the next four years stemming from current union contract negotiations. The United Auto Workers has been striking for more than a month despite an offer for a 20% pay increase.
While EV sales are still growing, volume expanded just 6% sequentially in the third quarter after a 14% jump in the prior three-month period, according to researcher Kelley Blue Book. Sales are up almost 50% in the first nine months of the year over last year, but the growth rate is declining and more companies are offering competing models.
At the end of September, automakers had 88 days worth of EV inventory, compared to 56 days for conventional models, said researcher Cox Automotive.
GM will continue making the electric Chevrolet Silverado, which went into production in June, alongside the Hummer EV and SUV and Cruise Origin robotaxi. GM also plans to expand to a second shift at its Factory Zero plant that straddles Detroit and Hamtramck. The company will start building the GMC Sierra EV in 2024 and the electric Cadillac EscaladeIQ after that.
GM is expanding production of the Cadillac Lyriq crossover SUV, which is built at a plant in Tennessee, and the Chevy Blazer EV, which is built in Mexico.
Rival Ford Motor Co. has also taken production down for its F-150 Lightning pickup and it has lowered prices along with Tesla Inc., which has tried to keep sales going with smaller sticker prices and lower margins.
“The market is getting saturated and we’re looking at a transition in the market from early adopters to regular car buyers,” said Sam Fiorani, vice president global forecasting for AutoForecast Solutions. “All car companies are now realizing it, not just GM.”
GM has a goal to have installed capacity to build 1 million EVs in North America by the end of 2025. That has not changed, said company spokesman Kevin Kelly.
Its shares rose less than 1% at 1:57 p.m. in New York.
(Updates with additional context, details throughout)