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In a bold pivot reflecting the shifting tides of U.S. energy policy, General Motors (GM) has announced a major change at its Tonawanda Propulsion plant in New York. Previously slated to produce electric vehicle (EV) drive units, the facility will now focus on manufacturing a new generation of V-8 internal combustion engines for trucks and SUVs. The decision comes on the heels of Republican-led efforts to dismantle Biden-era EV mandates, signaling a pragmatic response to market realities and policy changes. However, GM’s EV journey has been far from smooth, with significant financial losses piling up in recent years as the automaker grappled with its ambitious electrification goals.
A Strategic Pivot in New York
GM’s Tonawanda plant, once earmarked for a $300 million investment to produce EV components, will now receive an $888 million infusion to support V-8 engine production, the company announced on May 27, 2025. This shift marks a departure from GM’s November 2023 commitment to EV production at the facility, which had aligned with the Biden administration’s push to phase out gas-powered vehicles. The decision reflects a broader recalibration of GM’s strategy as consumer demand for EVs softens and political headwinds reshape the automotive landscape.
The move coincides with significant policy shifts in Washington. On May 22, 2025, the U.S. Senate repealed waivers that enabled California’s Advanced Clean Cars II emissions rules, effectively dismantling a de facto national EV mandate. The Trump administration has also moved swiftly to roll back Biden-era regulations and subsidies, including fuel efficiency standards and EV tax credits, which had incentivized automakers to prioritize electric vehicles. GM, which lobbied for the Senate’s repeal, appears to be aligning with these changes, betting on continued demand for its profitable gas-powered trucks and SUVs.
CEO Mary Barra, while maintaining GM’s long-term goal of an all-electric light-duty fleet by 2035, emphasized flexibility in a December 2023 statement: “We will be responsive to where the customer is.” This pragmatic approach is evident in Tonawanda’s pivot, which prioritizes the immediate profitability of internal combustion engines over the uncertain timeline of EV adoption.
The Costly Road of GM’s EV Ambitions
GM’s retreat from EV production in New York underscores the financial challenges the company has faced in its electrification efforts. Despite doubling its U.S. EV market share in 2024 and achieving a 12% share of the EV market—second only to Tesla’s 44.4%—GM’s EV division has been a consistent money-loser.
In its most recent earnings reports, GM reported progress but significant losses. For the full year 2024, the company’s adjusted earnings before interest and taxes (EBIT) reached $14.9 billion, bolstered by strong sales of gas-powered vehicles. However, the EV business remained a drag on profitability. In Q4 2024, GM’s EV portfolio became “variable profit positive,” meaning revenue from EV sales and battery manufacturing credits covered production costs for the first time. Yet, this milestone excluded massive fixed costs, including investments in factories, research, and labor.
GM’s Chief Financial Officer, Paul Jacobson, estimated in December 2024 that EV losses could narrow by $2 billion to $4 billion in 2025, but the company has not disclosed precise total losses. Analysts suggest annual EV losses have likely exceeded $4 billion in recent years, driven by high battery costs, supply chain constraints, and lower-than-expected consumer demand. For context, in 2023, GM took a $1.7 billion charge related to high-cost battery cells for its Chevrolet Bolt, part of a broader recall settlement with LG Energy Solution that cost $800 million. These setbacks, combined with a 40-day United Auto Workers strike costing $1.1 billion, depressed Q4 2023 profits to $2.1 billion.
Earlier targets also fell short. GM scrapped its goal of producing 400,000 EVs by mid-2024 and delayed key launches, such as the reopening of its Orion Township plant for electric truck production, now set for mid-2026. In 2024, GM sold 114,432 EVs, a 60% annual increase, but far below its initial projections of 400,000 units. The company now aims to sell 300,000 EVs in 2025, contingent on stable consumer incentives—a prospect clouded by the potential elimination of the $7,500 federal EV tax credit.
Market and Policy Realities
The GOP’s rollback of EV mandates reflects skepticism about the feasibility of rapid electrification. Critics argue that Biden’s policies, including stringent EPA tailpipe rules and California’s 2035 gas-car ban, ignored consumer preferences and infrastructure limitations. Posts on X echo this sentiment, with users like
@FishmanLevine and @EnergyAbsurdity )David Blackmon, celebrating GM’s pivot as a rejection of “Democrats’ EV mandate.” – We recommend subscribing to both and here is David Blackmon’s Substack: https://blackmon.substack.com/
Meanwhile, GM’s competitors face similar challenges. Ford reported a projected $5 billion loss on its EV and software operations in 2024, while Toyota and Ford have leaned heavily on hybrids, which accounted for 40% of Toyota’s U.S. sales and 187,000 units for Ford in 2024. GM, by contrast, has focused on EVs and plans to introduce plug-in hybrids by 2027 but has no plans for traditional hybrids.
Looking Ahead
GM’s decision to prioritize V-8 engines at Tonawanda does not signal an abandonment of EVs but a strategic recalibration. The company’s $2.5 billion investment in its Factory Zero plant and partnerships with LG Energy Solution and Samsung SDI underscore its long-term EV commitment. However, with battery production constraints and the potential loss of federal incentives, GM faces an uphill battle to achieve EV profitability.
For now, GM is leaning on its profitable gas-powered portfolio, which drove a 9% revenue increase in 2024 and powered earnings despite EV losses. As Barra navigates a volatile policy landscape and shifting consumer preferences, GM’s ability to balance its ICE and EV strategies will determine its success in a rapidly changing industry.
As the CEO of a company, I would look at the state in which I was doing business and question why anyone would build a plant in New York. They are a massive tax machine draining corporations of earnings, and their workers have to pay huge state taxes, and do not receive any benefits from living in New York.
My real question is, why are we not running more down the hybrid road? Well, that sounds like my next article.
Energy News Beat will continue to monitor GM’s strategic shifts and the broader energy transition. Stay tuned for updates on how policy changes impact the automotive sector.
Note: Financial loss figures for GM’s EV division are estimates based on available data, as the company has not publicly disclosed precise totals. For the latest on GM’s performance, visit finance.yahoo.com. For details on EV policy changes, see dailycaller.com.
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