Latest / Elon Musk Podcast / GM Writes Down $1.6B on EVs Amid Slower Demand

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GM Writes Down $1.6B on EVs Amid Slower Demand · Elon Musk Podcast

• 0:01
  Hey everybody. Welcome back to the Elon Musk
• 0:04
  Podcast. This is a show where we discuss
• 0:07
  the critical crossroads that shape SpaceX, Tesla X, The
• 0:11
  Boring Company, and Neurolink. I'm your host, Will Walden.
• 0:16
  General Motors is taking a $1.6 billion charge tied to its
• 0:20
  electric vehicle business, cutting its near term
• 0:22
  expectations and slowing production as EV demand
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  continues to fall short of earlier projections.
• 0:28
  Now, GM revealed the impairment in a regulatory filing, stating
• 0:32
  that it no longer expects to meet its previous EV volume
• 0:35
  targets and is adjusting its investment pace accordingly.
• 0:39
  Now, the charges linked to slower product development and
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  reduce capital spending in areas like battery production and
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  vehicle assembly as the company assesses how aggressively to
• 0:49
  pursue its EV roll out. Now the cutback directly effects
• 0:54
  Altium sells G Miss battery manufacturing joint venture with
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  LG Energy Solution. The filing says GM now plans to
• 1:01
  reduce the scale and speed of planned battery plan expansions,
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  which were expected to support a fleet of future EVs with battery
• 1:09
  output tied closely to overall EV capacity.
• 1:12
  This decision forces GM to accept lower near term volumes
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  across several models. Now.
• 1:19
  These changes follow a series of delays and scaled back launches
• 1:23
  over the past year. The Chevy Silverado EV and
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  Equinox EV were both pushed back from earlier production dates,
• 1:31
  with updated schedules stretching well into 2025.
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  And in parallel, GM has shifted some of its plant retooling
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  investments away from EVs and toward hybrid vehicles, which
• 1:42
  have seen stronger demand in both US and overseas markets.
• 1:46
  Now, the $1.6 billion write down suggests GM no longer sees this
• 1:49
  EV strategy as immediately profitable or scalable without
• 1:53
  deeper restructuring that resets expectations for a company that
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  once promised to sell only 0 emission light duty vehicles by
• 2:00
  2035. It also follows A broader market
• 2:04
  trend where several automakers have admitted that the total
• 2:07
  cost of EV ownership, including higher interest rates in a
• 2:10
  weakening resale market, is affecting consumer adoption.
• 2:15
  Now, this shift is not a final decision.
• 2:17
  It directly effects how GM manages its supply chain,
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  though. Contracts with battery material
• 2:22
  suppliers, charging infrastructure providers, and EV
• 2:24
  specific parts manufacturers are now under review.
• 2:28
  GM is actively renegotiating some of these deals, especially
• 2:32
  those tied to the postponed battery plant build outs.
• 2:35
  And that's likely to ripple across multiple industries that
• 2:39
  had remapped up to support GM's earlier EV timelines.
• 2:45
  Now GM also cited ongoing challenges and software dev,
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  particularly with its in house Altify platform, which underpins
• 2:56
  many of the features in its newer EVs.
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  Software bugs and integration issues have already caused
• 3:02
  delivery delays and added costs. GM had hoped Altify would offer
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  a path to new revenue through subscriptions and vehicle based
• 3:11
  services, but those plans now look a little bit more distant
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  than before. But on the retail side, GM is
• 3:19
  facing increased pressure from Tesla new entrants, especially
• 3:23
  in the 40 to $60,000 price band where competition is
• 3:27
  intensifying. With lower production volumes,
• 3:30
  GM dealers are expected to carry fewer EV units in 2025 and 2026.
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  That could reduce consumer visibility, slower adoption even
• 3:39
  further, creating a feedback loop that weakens demand just as
• 3:42
  GM tries to contain its own costs.
• 3:46
  Now, if you're 1 of the 74% of the listeners of this podcast
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  who have not subscribed but also listen to the show every day, I
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  So we need all the help we can get to boost this signal.
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  And it's up to you, the community of this show, to show
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  your support for the show. And we're going to talk more, a
• 4:39
  little bit more about GM. But I also want to talk about
• 4:42
  the Flight 11 Starship real quick because Flight 11 went off
• 4:48
  without a hitch. It was a great flight and I'm
• 4:53
  very excited about it because this leads us into Flight 12
• 4:57
  now. The successful completion of
• 4:59
  Flight 11 mark the end of the Block 2 era for SpaceX Starship,
• 5:05
  and now SpaceX turns its focus to the revolutionary Block 3
• 5:09
  architecture that will debut with Flight 12.
• 5:13
  This upcoming mission represents far more than another test
• 5:16
  flight, though. It's the beginning of Starship's
• 5:19
  transformation from experimental prototype to completely
• 5:23
  operational spacecraft capable of lunar missions.
• 5:27
  Mars exploration in unprecedented orbital operations
• 5:32
  with massive payloads of Flight 12 will launch the first Block 3
• 5:37
  Starship and Super Heavy Booster featuring Ship 39 and Booster
• 5:41
  18. If all goes well now, this
• 5:43
  mission marks a huge shift in Starship's development
• 5:46
  philosophy, transitioning from iterative testing to operational
• 5:50
  capability demonstration. The Block 3 architecture
• 5:54
  incorporates years of lessons learned from previous flights
• 5:58
  while introducing revolutionary technologies that will enable
• 6:01
  Spacex's long term vision of making life multi planetary and
• 6:05
  sending people to Mars to live. The timeline for Flight 12
• 6:09
  remains fluid, but it's probably going to be around early 2026
• 6:13
  ish, maybe spring, following a longer development gap that
• 6:17
  previous missions due to the extensive changes required for
• 6:20
  Block 3 systems. Now, SpaceX has indicated this
• 6:24
  extended timeline reflects the need for more rigorous testing
• 6:28
  and validation of this new architecture before flight.
• 6:33
  This is a huge leap forward for Starship and this could be
• 6:37
  literally the vehicle that sends us to Mars, not Flight 12, but
• 6:43
  the vehicle architecture that sends us to Mars.
• 6:45
  That is a wild thing to think about.
• 6:50
  Now back here on Earth, GM insists it remains committed to
• 6:56
  an all electric future and the current financial disclosure
• 7:00
  show a pivot to a more kind of cautious execution.
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  Though hybrids, which were once viewed as a temporary bridge
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  tech are now becoming a core part of G miss medium term
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  strategy company is preparing to launch new plug in hybrid
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  variants across multiple brands including Cadillac and GMC.
• 7:22
  Now I want to know what your thoughts are on hybrid vehicles.
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  If you are full electric and you never want to see another ICE
• 7:31
  engine ever again in your life, leave it in the comments.
• 7:34
  I want to know what you think if you are like me and you see the
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  value in hybrids, I believe it's a really great in between
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  structure and foundational technology that will eventually
• 7:51
  shape the EV future into full electric of course.
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  And people are scared of moving over to EV.
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  They have range anxiety. But if you could use a hybrid to
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  get around town, you know, you charge it up at night and then
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  you go to work in the morning with a full charge.
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  You come back at night with, you know, a little bit less charge,
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  then you get charged up again, full charge.
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  You don't use your ICE engine until you absolutely need it,
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  maybe for a longer trip or you know what have you.
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  If you're going to be on the road for a long time, use your
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  ICE engine. So that would be a great use of
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  a hybrid technology. And I think that's where a lot
• 8:31
  of people are going to land. It's a jump from an ICE engine
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  to an EV. Everyone, even though Tesla has
• 8:40
  been working on this for a very long time, you would still be
• 8:44
  considered an early adopter of an EV at this point because even
• 8:49
  though you do see them on the road a lot, the majority of
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  vehicles are still ICE engines or hybrids.
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  So you're one of the early adopters.
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  You're one of those people that really believes in this
• 9:01
  technology. So with that being said, let me
• 9:06
  know what you think. Is it E, is it time for GM to go
• 9:10
  full EV? It's time for you to go full EV.
• 9:13
  Or is it the hybrid strategy to the future?
• 9:19
  Hey, thank you so much for listening today.
• 9:20
  I really do appreciate your support.
• 9:22
  If you could take a second and hit the subscribe or the follow
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  and each other and I'll see you tomorrow.