If the words of General Motors CFO Paul Jacobson are anything to go by, GM is ready if need be to adjust its electrification strategy. That includes its plan to bring plug-in hybrid models back to the lineups of certain North American models in 2027. “If need be”, of course, means if the incoming Trump administration relaxes environmental rules and eliminates the $7,500 rebate on purchase of an all-electric vehicle.
Jacobson said this week that the company maintains its long-term goal of offering an all-electric lineup within the next decade, but that depending on regulatory changes brought about by the new White House, it could alter its product offering in the short term.
“In a world where compliance is eased, you could see where you don’t necessarily need as much plug-in, you might not need as much (battery electric vehicles) as well," Jacobson said. "But we’ll cross that bridge.”
- Paul Jacobson, General Motors CFO
That's the challenge facing automakers right now, as policy changes in the White House force them to rethink their plans despite heavy investments in their electric transition. Manufacturers can adapt in one way or another and take the direction imposed, but it's the changes of course that are problematic. Product development takes place over a number of years, so a company may be working on a model and by the time it's ready, if policies have changed, it’s back to square one.
For now, Jacobson says GM is on track to meet its variable profitability target with its current vehicles. This means that revenues from sales of all-electric models cover the fixed costs of manufacturing them. He said achieving this goal was “a very important step” for the company.
He added that “the next step is (pretax) profitability, and as we said at investor day that’s going to be a function of where the adoption rates are, and obviously there’s a lot of uncertainty as to administrative priorities as we see turnover in the White House.”
President-elect Trump is expected to remove the $7,500 federal tax credit for the purchase of an EV, a measure that has helped boost their adoption to date. Jacobson said that, whatever the new administration does, GM is well positioned to meet short-term electric-vehicle targets.
GM sold 15,000 electric vehicles in November, second only to Tesla in the US. The company is outperforming the industry, needless to say. Said Jacobson, “As we get into the 2025 guidance, we still expect to have that $2 billion to $4 billion of profit improvement in EVs, and we’ll see where the volume settles out.”