- Tesla spurred an EV price war earlier this month, with price cuts to its most popular models.
- Ford responded with similar cuts to the Mustang Mach-E earlier this week.
- But GM said Tuesday it won’t make cuts to its electric vehicles.
General Motors says it’s staying out of the industry’s electric vehicle price war, which has been heating up since the start of the year.
The automaker will not be responding to the latest price cuts from Tesla and Detroit-rival Ford by cutting prices for its own electric cars, chief financial officer Paul Jacobson said on a Tuesday media call ahead of GM’s fourth quarter earnings call.
Facing weakening demand, Tesla slashed the prices of some of its most popular models earlier this month. That quickly bolstered demand for Tesla vehicles and sent shock waves throughout the industry.
In response, Ford lowered the price of the Mustang Mach-E by as much as $5,900 earlier this week, as both automakers sacrifice profit for market share.
GM is spending $35 billion to electrify its product lineup by 2025. The company’s EVs include the $100,000 GMC Hummer, $60,000 Cadillac Lyriq, $45,000 Chevrolet Blazer, $30,000 Chevrolet Equinox, and $40,000 Chevrolet Silverado, with more to come.
But even with increasing competition, the automaker said it doesn’t feel it has to drop costs. “Our customers are saying that our vehicles are priced well,” Jacobson told media.
In GM’s fourth-quarter earnings call with analysts Tuesday, CEO Mary Barra reiterated the company’s confidence in its current pricing strategy.
“When we look at our strong product portfolio and the interest that we have at the prices we’ve already announced, we feel that we’re well positioned,” Barra said, noting the company would monitor the situation to make sure it stays competitive.
GM faces industry skepticism
GM will have nine EVs on the market in North America this year alone, and projects capacity of 1 million EVs here by 2025. It is also targeting $50 billion in annual revenue from EVs by that year.
Industry analysts aren’t convinced that sticking with its current prices is the right move.
“With over 100 EV models expected to be available to U.S. consumers by 2025 and GM making such an aggressive bet on EVs,” Garrett Nelson, senior equity analyst at CFRA Research, said in a note Tuesday morning, “we view the risk of market oversaturation as very high and an industry pricing war should pressure margins.”
Wedbush analyst Dan Ives said in a note Tuesday that he’s more optimistic.
“With this exceptional performance and guide from GM, we believe this was a strong statement to the Street expressing that demand worries and supply shortages are a thing of the past,” Ives wrote, “and to focus on the massive opportunity ahead as GM continues chipping away at its transformational story.”
Source: www.autoblog.com