- General Motors passed a major milestone in its efforts to make electric vehicles profitable.
- The Detroit automaker said EVs were "variable profit positive" in 2024.
- GM built 189,000 EVs last year and aims to build 300,000 this year.
General Motors is finally making some money in the electric vehicle business.
The automaker reported its EVs were "variable profit positive" in 2024, meaning that they earned more money than GM spent on manufacturing costs like labor and parts.
GM doesn't break out its EV earnings like Ford, so there are likely still other costs that it needs to overcome to achieve full EV profitability, including the cost of adding assembly lines. Still, the triumph over manufacturing costs marks an important milestone.
Despite the achievement — and overall results that topped analyst expectations for the quarter —shares fell more than 10% in trading Tuesday amid investor concern over the new Trump administration's effect on the automotive industry.
A long road to EV profitability with one major potential speedbump
GM has long been a leader in the transition to electric vehicles, with early offerings like the Chevrolet Volt plug-in hybrid and the Bolt battery-electric vehicle. GM committed to a fully electric future back in 2017, a promise executives have stood by even as EV sales hit a plateau.
It's not easy to profit from EVs, given the high costs associated with development and materials. In fact, GM's legacy competitors are still losing billions of dollars on EVs. Ford recorded losses of $1.2 billion in the third quarter alone. Ford reports fourth-quarter and full-year results next week.
So far, the only company to make money from electric vehicle sales in the US is Elon Musk's Tesla, which first turned a profit in 2020 after years of major losses. But even Musk's profitability has been threatened by an industrywide slowdown in EV sales over the past two years.
The automotive industry continues to struggle with a rapid change in demand for EVs, driven by a new cohort of shoppers who are less interested in the large, expensive EVs companies previously counted on to usher them into profitability.
GM took a risky approach to this shift last year, flooding the zone with more EV offerings aimed at average customers while its competitors pulled back on their EV offerings. In the end, GM fell just short of its 200,000 EV production goal for the year, producing 189,000 battery-powered cars.
The company has upped its production goal this year to 300,000 EVs, but GM CFO Paul Jacobson told reporters Tuesday morning that the company will continue to respond to changes in demand and economic policy.
The automotive industry faces a lot of uncertainty under the new Trump administration. The president has threatened tariffs on Canada and Mexico, which could be very costly for the automotive industry. And when it comes to electric vehicles, Trump has floated the idea of pulling back on government incentives that have been critical for EV adoption in recent years.