A year ago, General Motors (GM) was facing a daunting uphill battle in its quest to dominate the electric vehicle (EV) landscape. The beloved Chevrolet Bolt had been scrapped, the Chevy Blazer EV stumbled out of the gate, leaving one of our reporters embarrassingly stranded, and software glitches were giving the Cadillac Lyriq a rough ride. It seemed like the ambitious Ultium plan had hit a major derailment, casting doubt over GM’s electric future.
Fast forward to today, and GM has not only weathered the storm but has emerged as an electric vehicle powerhouse. It rolled out the Equinox EV, a game-changer that clinched our inaugural Breakthrough EV Of The Year award, making waves in the affordable EV segment. It’s no surprise that consumers have taken notice; GM’s EV sales skyrocketed 94%, nudging the company towards the title of the second-largest EV manufacturer in the United States.
However, this success story comes with a significant caveat. While GM is crushing it with electric sales, there’s a reliance on its two most popular models—the Equinox EV and the Blazer EV—being manufactured in Mexico. With impending tariffs of 25% set to hit tomorrow, the company is on the brink of a complicated challenge. The older, gas-guzzling models have prompted GM to pivot toward more affordable EV options for the everyday consumer. Now, with tariffs looming large, GM has a monumental task ahead to keep its EV momentum alive as these cheaper models stand to lose price competitiveness against the rising costs.
The Equinox EV starts at around $35,000, but being manufactured in Mexico means potential tariffs could add as much as $8,750 to its price tag. The situation is even bleaker for the Blazer EV, which will face even steeper tariffs. In the latest quarter, Chevy sold a mere 6,187 Blazer EVs and 10,329 Equinox EVs, making them pivotal to GM’s current success in the electric realm. To put it into perspective, here’s how the sales figures stack up for GM’s other electric models last quarter:
– Cadillac Escalade IQ: 1,956 sales
– Cadillac Lyriq: 4,300 sales
– Cadillac Optiq: 1,716 sales
– Chevy Bolt EV/EUV: 13 sales
– Chevy Silverado EV: 2,383 sales
– GMC Hummer EV: 3,479 sales
– GMC Sierra EV: 1,249 sales.
When you add up the sales for the Equinox, Blazer, and Optiq—also made in Mexico— you get 18,232 units, whereas all other GM-made models, produced in the U.S., collectively sold only 13,380. Clearly, affordability drives sales, opening up the EV experience to a wider audience. In fact, I personally chose to lease a Chevy Blazer precisely because it was the most reasonably priced EV on the market, fitting my needs and budget perfectly.
While GM’s truck lineup comes with pretty hefty price tags right now, there is a silver lining on the horizon. A new Bolt EV is slated for a U.S. production run this year, potentially easing some of the pricing woes. But even for models manufactured domestically, their parts are a concern. According to federal filings, only 36% of the parts value in the Silverado, Sierra, and Hummer EVs are sourced from America and Canada, meaning a significant chunk—about 64%— will be subjected to tariffs. This reality translates to a scenario where prices for nearly all GM EVs could increase significantly.
GM isn’t alone in grappling with these tariff-induced challenges; the entire automotive sector is feeling it. No one has a crystal ball to predict what will happen, but as GM is trying to kick its EV revolution into high gear, it faces a daunting challenge. GM claims that its EVs are “variable profit positive,” a term that might sound like corporate jargon, but essentially means they’re profitable if you set aside one-time costs and account for incentives like ZEV credits. However, this rosy picture might not hold as it depends heavily on continued government incentives and those enticing price points that customers love.
What has been fueling the growth of the Equinox and Blazer EVs are aggressive incentives. For example, my own lease for a Blazer cost significantly less than what you’d typically pay for a Honda Civic, making it an appealing option. But with these tight profit margins that GM operates under, absorbing a 25% tariff is going to be difficult, if not impossible.
As for GM’s trucks, they could see price hikes too, although to a lesser extent; it remains to be seen how these adjustments will stack up against the competition, particularly against EVs like the Hyundai Ioniq 5, Volkswagen ID.4, and Tesla Model Y, which are produced stateside with varying levels of U.S.-sourced materials.
On top of all this, economic uncertainties loom large with former President Trump hinting at possible changes to tax credits and shifting fuel economy standards. Such factors could introduce more headwinds for GM as it navigates its future in the EV market.
Ultimately, the path ahead looks rocky. While GM has managed to address its initial EV dilemmas, the imposition of tariffs and a potential dip in consumer demand could mean the hardest battles are still on the horizon. Anyone tracking this space knows that staying competitive amid rising prices and changing regulations will not only test GM’s resolve but its innovative spirit as well.
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