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July 24, 2024

GM Bows to Dealer Pressure, Announces New Hybrid Models Amid Slowing EV Sales

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Jan 30, 2024

General Motors has announced plans to introduce several new hybrid vehicles over the next 2 years, backtracking from previous commitments to transition fully to electric vehicles by 2035. The move comes following intense pressure from dealerships struggling with lackluster demand for GM’s early EV offerings.

GM’s Electric Vehicle Strategy Faltering

GM was an early industry leader in electrification, launching the all-electric Chevy Bolt back in 2016. However, the company has faced challenges scaling up its EV lineup to compete with the success of startups like Rivian and Lucid as well as established rival Ford.

Last year, GM CEO Mary Barra outlined an ambitious plan to launch 30 new EVs globally by 2025, on its way to eliminating gas-powered vehicles entirely by 2035. But dealers have warned that the strategy risks leaving them without competitive products to sell in the near-term as consumer appetite for EVs remains tentative.

GM Global EV Launch Timeline
2023 Cadillac Lyriq SUV
2024 GMC Hummer EV Pickup, Chevy Blazer EV, Chevy Equinox EV
2025 30 Models Launching Globally
2035 Eliminate Gas-Powered Vehicles

While early reviews have been strong for GM’s first two EVs from its new Ultium platform, the Lyriq SUV and Hummer pickup, low production volumes are preventing widespread adoption. And vehicles like the delayed Chevy Bolt have faced recalls due to battery fires, damaging confidence.

Dealers have warned that GM risks falling behind rivals in the crucial near-term transition period to electrification unless it also invests in popular hybrid models.

Dealers Plea for More Hybrid Options

Frustrated GM dealerships across the US have been vocally urging the company to expand its hybrid and plug-in hybrid offerings to complement its future EV lineup.

With gas prices high and charging infrastructure still inadequate in many areas, dealers say that mainstream car buyers aren’t yet ready to go fully-electric. Toyota and Honda hybrid models have surged in popularity, but GM lacks competitive options. The company discontinued most of its hybrids in 2020 to focus purely on EVs.

  • “Hybrids are critical right now as consumers deal with range anxiety and higher fuel prices,” said one Chevy dealer.
  • “We need options to remain relevant and drive traffic to showrooms,” said another GM dealer group.
  • “Toyota hybrids are flying off the lots but we have nothing to compete,” complained one Cadillac sales manager.

Many dealers also highlighted the risk of the US hitting recession in 2023. In that scenario, they expect luxury EV sales to plummet as cheaper hybrids gain share.

GM Announces New Hybrid Lineup

Faced with the prospect of losing more ground in the crucial hybrid segment, GM has now changed course and announced upcoming plug-in hybrid variants of several key models.

Speaking at a special press event on January 30th, 2024, GM President Mark Reuss said:

“We understand the transition period to full electrification carries challenges, and we must provide products that meet all customer needs during this progression.”

The company confirmed it will launch new plug-in hybrid versions of the following vehicles over 2024-2025:

  • Chevy Silverado Pickup
  • GMC Sierra Pickup
  • Chevy Tahoe SUV
  • Cadillac Escalade SUV
  • Buick Enclave SUV

These will join the existing plug-in hybrid Chevy Corvette sports car in GM’s electrified lineup.

Further models set to gain new hybrid variants include the Chevy Malibu sedan, Chevy Traverse SUV, and the Buick LaCrosse sedan.

Dealers Welcome News But Question GM’s Execution

GM dealerships welcomed the company’s change of direction in announcing new hybrid models. However, some still expressed doubts over whether GM can deliver on ambitious EV targets while also investing in hybrids.

“This is an encouraging step, but we’ve heard big promises before that haven’t materialized,” said the owner of a large Chevy dealership group.

Others warned GM risks spreading itself too thin across multiple powertrain options rather than fully optimizing its EV platform:

“Trying to do both EVs and hybrids runs the risk of mediocrity – they should focus investment where the real future lies with electric,” said a Cadillac sales manager.

Expert Analysis: Can GM Make Hybrids Profitably?

Industry experts have also questioned whether GM can deliver new hybrid models profitably after terminating most programs in 2020.

Engineering different power trains requires major investments. GM may be forced to sacrifice margins to make hybrids price competitive. The lower servicing requirements of hybrids also impact dealer revenue.

Analysts estimate GM’s cost to transition Silverado or Sierra pickups to plug-in hybrid power train could exceed $10 billion accounting for factory retooling. With development budgets still focused on EVs, delivering a breadth of new hybrids by 2025 appears extremely challenging.

Consumer Sentiment Split on Hybrids vs EVs

GM will be hoping its expanded hybrid lineup draws enough sales from Toyota and Honda to justify the strategy change away from its EV-only approach. But consumer opinions remain divided.

In a recent survey on power train preferences:

  • 43% said they would only consider a hybrid for their next vehicle purchase
  • 22% said they would only consider buying fully electric
  • 35% were open to either hybrids or EVs

With such a split, GM’s “all of the above” approach spanning electric, hybrid and gas-powered vehicles may turn out to be the right strategy. But execution will be key if they are to catch up with Toyota’s domination of the hybrid space.

Outlook: GM Must Balance Competing Demands

  • GM faces pressure to accelerate EV plans to hold ground against insurgent rivals
  • But limited EV model availability today risks losing sales without hybrid options
  • New plug-in hybrid variants provide a transitional solution to bridge the gap
  • However stretching development budgets across both EV and hybrids carries risks
  • Toyota’s ongoing hybrid success proves market demand exists if GM delivers

The coming 2-3 years will be a crucial period for GM to balance competing technological and commercial demands. Investors will watch closely how well it navigates the challenges. But if GM can launch promised hybrid models smoothly alongside optimized EVs, it may yet solidify its position as an electrification leader.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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