General Motors (GM) has announced it will invest $888 million USD at its Tonawanda engine plant, located in Buffalo, New York. The investment will serve to increase the production of next-generation V8 engines.
What's striking about this news is that it comes only two years after a 2023 announcement by GM of a $300 million investment at the same Tonawanda plant – to build electric motors and components.
A shifting landscape
This decision reflects what's happening across the industry, but also on the political front. While it's true that EV sales (which continue to grow globally) are not progressing at the same pace as anticipated a few years ago, it's also true that the political climate in the U.S. is affecting growth in that sector, indeed hampering the all-electric transition in general. We recently learned that Congress is preparing to eliminate electric vehicle purchase credits, just one of many measures taken by the U.S. administration to steer away from electric mobility.
General Motors, in fact, has lobbied Congress to cancel rules regarding EV sales targets in California.
A new generation of V8s
The investment in the plant in Buffalo, NY will go to prepping it to manufacture GM's sixth generation of V8 engines, which primarily power the brand's large SUVs and full-size pickup trucks. GM promises the new engines will be more energy-efficient than those they replace.
New York State Governor Kathy Hochul said the project will support 870 jobs at the Tonawanda plant, including 177 that were considered at risk. The state plans to provide up to $16.96 million USD in tax credits in exchange for the commitment of investments in the plant.
Last week, New York State announced it will suspend for two years penalties associated with non-compliance with EV sales standards, gradual standards that had been established with the goal of 100 percent of new vehicle sales being zero-emission models by 2035.
General Motors is clear about its commitment to staying the course for the electric transition, but the company has also walked back some of its investments in electric vehicles.
GM CEO Mary Barra said the company still intends to sell only electric vehicles by 2035, but she added that the company will adapt to customer demand. GM, like all other automakers, must continue to make profits if it ever wants to succeed in its electric transition and achieve its targets.