GM's Electric Dream Shattered? Multiple Battery and EV Manufacturers Plan Layoffs and Production Halts

As global competition in electric vehicles intensifies and domestic demand for electric cars in the United States continues to wane, General Motors, which a few years ago had ambitious plans for its electric vehicle business, now seems to be gradually giving up on its transformation.

On Wednesday, Eastern Time, General Motors announced a series of production halts and layoffs at its electric vehicle and battery plants. This marks a further contraction of the company's electric vehicle business.

Is GM giving up on the "electric" dream?

General Motors stated that, in light of the significant decline in demand for its electric vehicles and battery products in the United States, the company will reduce production of electric vehicles and batteries in the U.S., cutting 1,200 jobs at its electric vehicle plant in Detroit and 550 jobs at its battery plant in Ohio.

General Motors has announced that it will suspend production at its two U.S. joint venture battery plants in Tennessee and Ohio starting in January next year for approximately six months. Additionally, the company will temporarily lay off about 1,550 workers at these two battery plants.

Additionally, at a plant in Ohio, General Motors announced it will lay off 550 employees indefinitely. The plant is jointly operated by General Motors and South Korea's LG Energy Solution.

General Motors stated that the layoffs are a response to the "short-term slowdown in the adoption of electric vehicles in the U.S. and the changing regulatory environment."

In 2021, General Motors was ambitious and announced plans to convert all new vehicles to electric by 2035, increasing investments for this purpose. However, since then, the scale of its investments in electric vehicles has been continuously reduced.

Earlier this year, General Motors has reduced its sales expectations for electric vehicles, and other plans for electric vehicle production have also been consistently scaled back.

General Motors CEO Mary Barra said last week:

"With the continuous changes in the regulatory framework and the end of federal consumer incentives, it is clear that the adoption rate of electric vehicles in the short term will be much lower than originally planned."

She also added that General Motors expects to reduce the losses in its electric vehicle business in 2026 and beyond.

Demand for electric vehicles in the mainland United States is declining.

One of the changes in the regulatory environment commonly referred to is the cancellation of electric vehicle subsidies by the U.S. government. On September 30, the federal government’s policy of providing a $7,500 tax credit for electric vehicle purchasers officially expired. U.S. automakers generally expect that consumer demand for electric vehicles in the U.S. will significantly decline as a result.

This summer, electric vehicle sales in the U.S. had already reached 10% of the overall car market sales. However, some industry executives expect that electric vehicle sales may drop by half in the coming months.

Against this background, Nissan, Stellantis, and other automakers have canceled plans to launch electric vehicle models in the U.S. market in the future.

Sam Fiorani, vice president of AutoForecast Solutions, stated that he expects the number of electric vehicle jobs in the U.S. auto industry to decrease further, and that "the production of electric vehicles will be lower than in the past few years, while prices will also rise."

Shawn Fain, president of the United Auto Workers, criticized General Motors' layoffs.

He pointed out that the company has raised its expected annual profit to $13 billion this month, which is itself built on the cost of workers losing their jobs. Fain also stated, "The United Auto Workers will continue to push for increased investment by General Motors and other companies in the production of internal combustion and electric vehicles."

Last week, General Motors announced the layoff of about 500 white-collar positions in the company.