General Motors GM announced a significant delay in the launch of its electric vehicle (EV) drive production at the Toledo Propulsion Systems plant, a notable setback in the company's EV strategy. Originally slated to begin in early 2024, the production of the electric drives is now rescheduled for the end of 2024, a delay of nine months.
Last year, GM committed $760 million to transform the Toledo plant into its first U.S. facility dedicated to EV drive production. The Toledo Propulsion Systems plant, located on Alexis Road, was gearing up to commence building the EV units in the first quarter of 2024. However, this timeline has been pushed to the fourth quarter of the year. This delay directly impacts approximately 75 temporary workers who were terminated following the plant's cessation of 6-speed transmission production in April to accommodate the new EV drive line.
This delay, while a setback for GM's ambitious EV plans, offers the Toledo plant's management and workforce additional time to prepare for a crucial transition in automotive manufacturing. As the industry navigates real-world challenges in the EV market, GM's strategy reflects a cautious yet adaptive approach to a rapidly changing automotive landscape.
This latest development follows GM's October announcement of postponing the production of its electric trucks, including the Chevy Silverado RST and GMC Sierra Denali EVs, to late 2025. The Orion assembly plant in Michigan, currently producing the Bolt EV, will see a delayed conversion to EV truck production.
The postponement in EV truck production, attributed to slower-than-expected consumer demand for EVs, is directly influencing the delay at the Toledo plant. Ivan Drury, director of insights at Edmunds.com, points out that the automotive industry has overestimated consumer demand for electric pickup trucks.
Initially, EV pickups were expected to revolutionize the market by replacing traditional gas-powered trucks with zero-emission alternatives boasting impressive towing capabilities. However, challenges such as higher pricing, charging issues and reduced range during towing have led to consumer hesitation.
This has resulted in GM and Ford F recalibrating their EV strategies. Notably, Ford also announced a reduction in the production of its Lightning Pro model by half.Ford plans to bring down its average weekly production volume at Rouge Electric Vehicle Center in Dearborn, MI, to 1,600 trucks, down from the current production volume of 3,200 per week.
Zacks Rank & Key Picks
GM currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the auto space include Toyota TM and Stellantis STLA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TM’s fiscal 2024 sales and EPS implies year-over-year growth of 11% and 45.4%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by $1.98 and 5 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for STLA’s 2023 sales and EPS implies year-over-year growth of 12.3% and 11.2%, respectively. The earnings estimate for 2023 and 2024 has been revised upward by 6 cents and 20 cents, respectively, in the past 30 days.
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