Speaker 1: Bloomberg Audio Studios, podcasts, radio news. President Trump's tariff announcements
Speaker 1: are still reverberating throughout the world, and new twists keep coming.
Speaker 1: On Friday, Trump announced there would be a temporary exception
Speaker 1: from tariffs for phones, computers, and popular consumer electronics, and
Speaker 1: today he indicated relief could be ahead for another sector,
Speaker 1: the auto industry. Trump told reporters he was exploring possible
Speaker 1: temporary exemptions to tariffs on imported vehicles and auto parts.
Speaker 1: While things could still change on a dime, the auto
Speaker 1: exemptions could be welcome news for one industry at a
Speaker 1: critical juncture, the electric vehicle industry. Since Trump took office
Speaker 1: for a second term in January, the US has started
Speaker 1: to do a complete one eighty on its investment in evs.
Speaker 2: The tariffs are making vehicles more expensive, and all of
Speaker 2: this is creating economic concerts to you and dropping consumer confidence.
Speaker 2: So you're talking about something that's by a lot of
Speaker 2: people still seen as kind of a luxury good, an
Speaker 2: electric vehicle.
Speaker 1: David Welch is Bloomberg's bureau chief in Detroit, where he
Speaker 1: covers the car industry. Lately, he's been looking into the
Speaker 1: switch away from electric vehicles by the federal government and
Speaker 1: by some of the biggest automakers, But David says one
Speaker 1: company has mostly held firm on its commitment to evs
Speaker 1: as others have ditched them, and that's General Motors.
Speaker 3: We have a very strong ED portfolio. We have the
Speaker 3: broadest in the key segments.
Speaker 1: That's GM CEO Mary Barra, who David spoke to earlier
Speaker 1: this month. GM developed what was essentially the world's first
Speaker 1: modern all electric car on the market in the nineteen nineties,
Speaker 1: and as its competitors steer away from them, GM is
Speaker 1: betting on their.
Speaker 3: Future over the long term. We think EED demand will
Speaker 3: grow from mid to long term. A lot of it
Speaker 3: is the consumer is very irrational, and it has to
Speaker 3: do with what's the cost to the vehicle, what's the
Speaker 3: range of the vehicle, what's the charging infrastructure. Those things
Speaker 3: are going to continue to improve.
Speaker 1: But there are huge hurdles ahead from a shaky market
Speaker 1: for the cars to uncertainty in Washington.
Speaker 2: So whoever's still in the game and a lot of
Speaker 2: companies and backed away. What whoever's still in the game.
Speaker 2: There are a lot of challenges that are either existent
Speaker 2: right now in terms of how consumers view electric vehicles
Speaker 2: or some potential big clouds here on the horizon.
Speaker 1: I'm Sarah Holder, and this is the big take from
Speaker 1: Bloomberg News today. On the show GM's Big bet on
Speaker 1: electric Vehicles? Can the company weather the EV downturn and
Speaker 1: come out on top? And what do its ambitions mean
Speaker 1: for electric vehicle owners and for the consumers who want them? Well?
Speaker 1: Spoke with my co host David gar here's that conversation.
Speaker 4: Just how hard is it to be in the electric
Speaker 4: vehicle business right now?
Speaker 2: It's kind of always been hard, but it's even tougher
Speaker 2: these days. Because you had this massive growth period that
Speaker 2: really started probably twenty eighteen when Tesla was starting to
Speaker 2: put out a lot of models, and that lasted until
Speaker 2: about twenty twenty two, and then there was still growth,
Speaker 2: but things started kind of ratcheting down in terms of
Speaker 2: the growth rates. The early adopters had their cars, the
Speaker 2: luxury buyers who wanted an EV, they wanted the latest thing,
Speaker 2: They got their cars, and you start to get among
Speaker 2: the mass market and people worry about how far the
Speaker 2: car can go before it has to be charged. They're
Speaker 2: more expensive, and so growth slowed, and now you do
Speaker 2: have President Biden's EV tax credits are still out there
Speaker 2: and still getting people to buy evs, but Trump is
Speaker 2: threatening them.
Speaker 4: Over the last year year and a half, what does
Speaker 4: this market look like? Has it been performing?
Speaker 2: We had the past year, so it's a twenty twenty four.
Speaker 2: There was growth. I think the total EV market was
Speaker 2: up seven percent, which is more growth than the regular
Speaker 2: vehicle market head But the year before that it was
Speaker 2: a fifty percent growth. So you can see that we're
Speaker 2: kind of hitting a critical mass where evs are roughly,
Speaker 2: let's call it, eight to ten percent of the US
Speaker 2: market at any given quarter, and that's kind of where
Speaker 2: it's settling in right now. And I think it's going
Speaker 2: to grow from here, but I think the growth is
Speaker 2: going to be harder fought.
Speaker 4: You mentioned that there are some companies that might still
Speaker 4: be in the game, but perhaps have reduced their dependency
Speaker 4: on electric vehicles, changed their timeline from when they planned
Speaker 4: to transition to electric vehicles. Why hasn't GM made that decision?
Speaker 4: Why is GM still, for all matter of things, still
Speaker 4: all in on electric vehicles.
Speaker 2: Yeah, Look, it's sort of the industry is divided into
Speaker 2: two groups. You've got companies like Ford, Honda, Toyota that
Speaker 2: have kind of pulled back to laid investment, canceled certain investments.
Speaker 2: And then you've got GM, Hyundai and of course Tesla
Speaker 2: because that's all they do, that are still pushing ahead.
Speaker 3: You know.
Speaker 2: For GM, they see this one as a growth area, right.
Speaker 2: The other part is long term, they see, we're ardles
Speaker 2: of what the Trump administration does, future administrations and governments
Speaker 2: in China, in Europe, in the US, other markets, pushing
Speaker 2: for cleaner transportation. And I think they also believe that
Speaker 2: very long term, one day all vehicles will be electric.
Speaker 2: So you may as well learn this, get platforms that
Speaker 2: can give you scale, get knowledge of battery, get your
Speaker 2: cost down, do it now rather than wait, and you know,
Speaker 2: all these things sort of make sense in the long term.
Speaker 2: Near term though, it's set them up for a struggle
Speaker 2: and they're probably going to lose money on these vehicles
Speaker 2: for a while.
Speaker 4: David, what kind of investment has GM made in inevs.
Speaker 2: They have invested about thirty five billion dollars. That's for
Speaker 2: the technology, the vehicles they've developed, the battery plants, the
Speaker 2: assembly plants that they've retooled to do this, and that
Speaker 2: includes vehicles that they sell in China as well, but
Speaker 2: it's a very big investment they got out there.
Speaker 4: With electric vehicles, the battery is everything. How is GM
Speaker 4: approaching battery design, battery manufacturing.
Speaker 2: What they're trying to do to get battery costs down,
Speaker 2: which is vital because you take the battery for like
Speaker 2: a Chevy Equinox, for example, the pack alone is roughly
Speaker 2: thirteen thousand dollars, So to get that cost down, they're
Speaker 2: looking at a battery pack that's more similar to what
Speaker 2: BYD does.
Speaker 4: That's BYD Auto, a Chinese carmaker.
Speaker 2: What BYD in China does is that their cells are
Speaker 2: kind of shaped like a small brick, and the advantage
Speaker 2: there is you don't have space between them. So if
Speaker 2: you can get a smaller battery pack, even if it's
Speaker 2: a little more expensive to make it, maybe you can
Speaker 2: have fewer cells, get more power on board, and it's
Speaker 2: just a more efficient package. That's one of the big
Speaker 2: things they're trying to do. And the other thing is
Speaker 2: that they're going for some cheaper chemistries that don't let
Speaker 2: you drive as long, but it does make for a
Speaker 2: cheaper ev So those are the two big levers they're
Speaker 2: trying to pull David.
Speaker 4: I know this is a big priority for Mary Borrow,
Speaker 4: who's the CEO of GM, and she spent her whole
Speaker 4: career at the company. Why did she decide to make
Speaker 4: this something that she wanted to prioritize.
Speaker 2: Yeah, GM, under Mary Barrow I had a plan that
Speaker 2: goes back probably six or seven years where she had
Speaker 2: this vision with autonomous cars and electric cars to you know,
Speaker 2: she called it zero zero, zero, zero missions, zero congestion,
Speaker 2: and zero crashes. I think it was so the autonomous
Speaker 2: vehicles would help with congestion and crashes, and of course
Speaker 2: the electric vehicles would help with the emissions. Now, that
Speaker 2: was more of a mission statement sort of thing than
Speaker 2: something that I think they thought was a near term reality.
Speaker 2: But she wanted to take GM, which was this one
Speaker 2: hundred year old company that sells pickup trucks and big SUVs,
Speaker 2: and modernize it. So that was self driving technology, it
Speaker 2: was software based vehicles, and it was electric cars. And
Speaker 2: you know, to her credit, I think Mary Borrow learned
Speaker 2: a lesson from the EV one.
Speaker 4: The EV one that's the electric car that GM started
Speaker 4: selling back in the nineties.
Speaker 2: Here they released out a few thousand of them. The
Speaker 2: customers that had them loved them, but they lost a
Speaker 2: lot of money on the program, so they shut it
Speaker 2: down in two thousand and three, that's the same year
Speaker 2: Tesla was founded. And Tesla's stuck with its EV development
Speaker 2: over those two decades, through good times and bad. You know,
Speaker 2: now Tesla is the one with a huge market cap,
Speaker 2: even though that's obviously suffered the past year. But you know,
Speaker 2: Tesla's the one that's worth hundreds of billions of dollars
Speaker 2: and GM's worth about fifty billion dollars. They missed out
Speaker 2: on an opportunity when they were the first one in
Speaker 2: the game. And I think she's saying, all right, we
Speaker 2: have to stick through this because it will be the
Speaker 2: future one day, even if the future is not going
Speaker 2: to get here as fast as we thought.
Speaker 4: For now, though, David Welch says GM is losing money
Speaker 4: on its current EV push, So will that bet on
Speaker 4: the future pay off? After the break, how Trump's tariffs
Speaker 4: have upended GM's electric vehicle plans and how long the
Speaker 4: company might have before it runs out of road? David,
Speaker 4: how has President Trump's reelection changed the landscape for GM?
Speaker 2: Look, it's kind of changed everything. First off, GM's two
Speaker 2: most affordable evs, which are the Chevy Equinox and Chevy Blazer.
Speaker 2: They're made in Mexico, so they're facing a tariff right now.
Speaker 2: With the exception of the US made content on those vehicles,
Speaker 2: the rest of the vehicle will face a twenty five
Speaker 2: percent tariff. There are other parts and things on the
Speaker 2: US assembled evs that are going to be tariffed as well.
Speaker 2: And then the other big thing, of course, is Trump
Speaker 2: is vowed to get rid of the electric vehicle tax credits.
Speaker 2: That's seventy five hundred dollars to the consumer who buys one,
Speaker 2: and there are thousands of dollars that go to the
Speaker 2: manufacture of these evs as well, which essentially means all
Speaker 2: the companies who sell evs have to figure out do
Speaker 2: they discount their evs by seventy five hundred bucks or
Speaker 2: five thousand or whatever the number is to keep volume
Speaker 2: going and then just eat that in terms of profitability,
Speaker 2: or do they leave the price where it is and
Speaker 2: hope they sell Without the tax credits. It just makes
Speaker 2: life that much more difficult when you're trying to sell vehicles,
Speaker 2: and this money that was going to come from the
Speaker 2: government may not be there. In say, six months, or
Speaker 2: whenever Trump gets around dealing with that issue. He's a
Speaker 2: little busy with tariffs right now, but I think eventually
Speaker 2: he's going to turn his head to the EB tax credits,
Speaker 2: and they're certainly on the chopping block.
Speaker 4: David, you talked with Mary Barrow, and I wonder what
Speaker 4: you learned about the relationship that she's managed to develop
Speaker 4: with President Trump.
Speaker 2: So some of the tension between Mary Barrow and President
Speaker 2: Trump started in his first term. He'd called the CEOs
Speaker 2: of the Detroit three companies to Washington and said, look,
Speaker 2: I'm going to cut the few economy and emissions rules
Speaker 2: that the Democrats have put in place, and you can
Speaker 2: sell all the pickup trucks and big SUVs you want,
Speaker 2: make lots of money. In return, you're going to hire
Speaker 2: more Americans and get those factories humming, and we're going
Speaker 2: to bring back US automaking again. And Mary Barr was
Speaker 2: already on this path of leaning up the company, improving
Speaker 2: its profits and cash flow, and that meant closing some plans,
Speaker 2: including a big one in Lordstown, Ohio that infuriated Trump.
Speaker 2: And what she was doing by saving money in boosting
Speaker 2: cash flow was investing in self driving cars and electric vehicles.
Speaker 2: Trump didn't care about either one of those things. He
Speaker 2: just wants jobs, and so she takes away jobs, and
Speaker 2: in its place, she invested something he doesn't care about.
Speaker 2: And there was just a lot of tension over that
Speaker 2: during his first term. So that was the cause of
Speaker 2: conflict the first time around. And now, look, every car
Speaker 2: company is struggling with these tariffs, particularly if they stay
Speaker 2: in place for a long time. But GM imports one
Speaker 2: point two million vehicles into the US market out of
Speaker 2: the two point seven million that they sell, and a
Speaker 2: lot of them come from Mexico. Trump does more love that.
Speaker 2: He wants GM to hire more people here. I don't
Speaker 2: think Mary Barr is in a war with him over that.
Speaker 2: But GM is certainly, like other car companies, lobbying hard
Speaker 2: to make sure these tariffs don't last long so they
Speaker 2: can kind of continue the businesses of bringing in parts
Speaker 2: from all over the world, bringing in cars from Canada
Speaker 2: or Mexico for the US market. Trump wants things made
Speaker 2: the United States, and so there's going to be some
Speaker 2: natural tension there.
Speaker 4: When she looks at the competitive landscape, who does she
Speaker 4: see as her biggest rival? How does she see that
Speaker 4: competitive space.
Speaker 2: I think BYD because GM does still even though it's declined,
Speaker 2: they have a significant business in China, and by D
Speaker 2: is the big player in the China EV business. But
Speaker 2: in the US, Tundai and Tesla and like Tesla look,
Speaker 2: they're still by far the leader in US EV sales.
Speaker 4: We have watched consumer sentiment to a degree change when
Speaker 4: it comes to Tesla. People who are upset that they
Speaker 4: bought Tesla's or won't entertain buying them because of Elon
Speaker 4: Musk's proximity to the president. Is that an opportunity for
Speaker 4: GM or they trying to pick off some of those
Speaker 4: customers or prospective customers.
Speaker 2: They are now GM isn't being overt about it, like
Speaker 2: you're not seeing ads, you know, dealing with Elon Musk's
Speaker 2: politics and seeing come by from US and look in
Speaker 2: a lot of products. The people who buy products don't
Speaker 2: necessarily know or care about the politics of the CEO
Speaker 2: of that company. In Tesla's case, Elon Musk so identifiable
Speaker 2: for being allied with the Trump administration that I think
Speaker 2: it has become a factor. It's not the only factor.
Speaker 2: The other thing is GM has fresher vehicles than Tesla,
Speaker 2: does the model why is being refreshed right now, But
Speaker 2: the others have been kind of the same looking for
Speaker 2: a long time, so they have some stale product. So
Speaker 2: you know, in addition to this political issue, I think
Speaker 2: we just have stale Teslo product, and GM and for
Speaker 2: that matter, Hyundai have a real chance to go in
Speaker 2: and get some buyers.
Speaker 4: Just wrapping up here, David, GM has been in this
Speaker 4: game for a while now. By what is this company
Speaker 4: going to know if it's bet on EVS has paid off?
Speaker 2: I would say probably the next two years. We'll see
Speaker 2: if they get this critical mass of sales. Their sales
Speaker 2: doubled almost in the first quarter of this year. So
Speaker 2: if we look out a couple of years and they've
Speaker 2: sold three four hundred thousand or half a million evs,
Speaker 2: and you know, they've gained more market share doing this,
Speaker 2: and the program starts to break even, I think they
Speaker 2: can say that it's a pretty good success and they
Speaker 2: can really build on that. Not then they've got a
Speaker 2: lot of stranded capital and a lot of factories that
Speaker 2: aren't producing much, and they'll probably end up having a
Speaker 2: way off workers who work in those plans.
Speaker 4: David, thank you very much.
Speaker 2: Good problem Thanks Chris.
Speaker 4: This is The Big Take from Bloomberg News. I'm David Gura.
Speaker 4: This episode is produced by Alex tie. It was edited
Speaker 4: by Aaron Edwards and Mark Millian, who was fact checked
Speaker 4: by Adriana Tapia, and mixed and sound designed by Alex Sagura.
Speaker 4: Our senior producer is Naomi Shaven. Our senior editor is
Speaker 4: Elizabeth Ponso. Our deputy executive producer is Julia Weaver. Our
Speaker 4: executive producer is Nicole Beemster. Board Stage Bauman is Bloomberg's
Speaker 4: head of podcasts. If you liked this episode, make sure
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Speaker 4: you want to learn more, David Welch wrote a book
Speaker 4: called Charging Ahead, GM Mary Bara and the Reinvention of
Speaker 4: an American Icon. Thanks for listening. We'll be back tomorrow.