General Motors (GM) will invest around US$4 billion over the next two years in three US facilities located in Michigan, Kansas, and Tennessee.

This decision comes as the automaker shifts its focus back to gas-powered vehicle production due to slowing demand for electric vehicles (EVs).

At GM’s Orion Assembly plant in Michigan, production of gas-powered full-size SUVs and light-duty pickup trucks is set to begin in early 2027.

This facility was initially scheduled to produce electric trucks starting next year.

In Kansas, GM’s Fairfax Assembly plant will start building the gas-powered Chevrolet Equinox in mid-2027. The plant is already set to begin producing the all-electric Chevrolet Bolt by the end of this year.

There are plans for further investments to support affordable EV production in the future.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ GM’s EV strategy reversal reflects historical pattern of technology adaptation

GM’s reversal on electric vehicles continues a decades-long pattern of testing alternative technologies while maintaining traditional offerings.

As early as 1969, GM showcased experimental vehicles including the Electovair, Electovan, and hydrogen fuel cell concepts, demonstrating early exploration of alternatives to internal combustion engines 1.

Despite these innovations, GM consistently returned to gas-powered vehicles when market conditions proved challenging, just as they’re doing now by investing $4 billion in traditional powertrain production while delaying EV plans.

This parallels earlier cycles in automotive history, where new technologies face adoption hurdles despite technical promise. For example, GM pioneered catalytic converters and other emissions-reducing technologies in the 1970s while continuing to primarily sell conventional vehicles 2.

The company’s current strategy shift from its 2035 all-electric commitment demonstrates how automakers must balance long-term technological visions with short-term market realities, a recurring theme throughout the industry’s development.

2️⃣ The complex economic equation of the EV transition

GM’s investment shift highlights the complicated cost structures influencing both corporate strategy and consumer adoption of electric vehicles.

While EVs typically cost about $7,000 more upfront than comparable gas vehicles ($56,000 vs. $49,000 average price), research shows consumers can save between $6,000-$12,000 over the vehicle’s lifetime through reduced maintenance and fuel costs 3.

However, these economics vary dramatically by geography—a 2024 J.D. Power study found EV cost advantages differ significantly by state, with places like Colorado showing substantial savings while other regions show minimal benefit 3.

The accessibility of home charging creates approximately $10,000 in lifetime savings for EV owners, demonstrating how infrastructure accessibility directly impacts the financial equation 3.

This economic complexity helps explain GM’s strategic pivot—while smaller EVs have achieved cost competitiveness, larger vehicles (like the SUVs and trucks GM specializes in) still face challenges reaching price parity without incentives, making the company’s gas-vehicle investment a response to current market economics.

3️⃣ Regulatory environment shapes automotive investment decisions

GM’s US$4 billion investment decision comes amid significant political and regulatory uncertainty regarding emissions standards and EV mandates.

Just days before GM’s announcement, the Senate voted 51-44 to revoke California’s authority to set stricter vehicle emissions standards, including its rule banning new gas-powered vehicles by 2035 4.

This regulatory shift provides critical context for GM’s decision. California’s emissions battles date back to the 1960s, with automakers consistently negotiating compliance timelines while adapting business strategies to balance regulatory requirements against market conditions 5.

The timing reflects the auto industry’s longstanding push-pull relationship with environmental regulations; GM has shifted positions on California’s authority multiple times, supporting it in 2022 to qualify for government fleet purchases 6, but more recently lobbying against regulations they view as too aggressive 7.

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