General Motors (GM) confirmed on Wednesday that more than 1,700 workers are being laid off across its manufacturing operations in Michigan and Ohio, according to The Detroit News. The company said the decision was tied to a slowdown in demand for electric vehicles and a change in the policy environment that previously supported those sales. The largest cut happened at the company’s Detroit EV plant, where around 1,200 employees were let go. Another 550 workers were cut from the Ultium Cells battery plant in Ohio, and that same facility saw 850 temporary workers released as well. GM also said 700 temporary workers at its Ultium Cells plant in Tennessee are being laid off. The company said that the changes were necessary because the expected pace of EV adoption has fallen. In its words: “In response to slower near-term EV adoption and an evolving regulatory environment, General Motors is realigning EV capacity.” It added that it is still committed to its manufacturing footprint in the United States and said flexibility in its operations will help it adjust to market changes. General Motors also confirmed that battery cell production in Ohio and Tennessee will be paused beginning January, with operations expected to restart by mid-2026. That downtime will be used to upgrade the production systems at both sites. The layoffs come one week after the company said it would also cut over 200 salaried employees, mostly engineers, at its global technical campus in metro Detroit, as part of a broader cost restructuring effort. Federal credit expiration sends EV demand down The layoffs followed a major change in federal support for electric vehicles. After September, the $7,500 federal incentive for EV purchases expired. Before it ended, buyers rushed to secure the credit, creating a short-term spike in EV sales. Many automakers, including General Motors, reported record plug-in sales in the third quarter, and GM said its EV sales more than doubled compared to the same quarter the year before. But once the credit disappeared, the momentum dropped. Research firms tracking sales reported that EVs made up less than 6% of new car sales in October, compared to almost 13% in September. That was the lowest share since 2022. Stephanie Valdez Streaty, an industry analyst at Cox Automotive, said on a webinar that there is still opportunity for EVs to grow, but the market is entering a slower phase. Stephanie said EV sales may settle at 8% to 9% of total sales in 2025, before rising again in 2027, when new and less expensive EV models from companies like Rivian, Slate, and Ford hit the market. Investors push automakers back toward gas-powered vehicles The shift in buying patterns has reshaped how automakers speak to investors. Mary Barra, the CEO of GM, told investors last week: “We’re going to build to consumer demand. We’re not going to overbuild,” while adding that “electric vehicles remain our North Star.” At the same time, the company’s CFO Paul Jacobson said on CNBC that EVs are still part of GM’s long-term plan, but “we do have some structural changes that we need to do to make sure that we lower the cost of producing those vehicles.” General Motors’s most recent earnings report also showed a $1.6 billion financial impact tied to EV production not scaling the way the company planned. That financial strain, combined with weaker near-term demand, is what triggered the reassessment of its EV manufacturing schedule. While GM is slowing EV production, Ford is doing so as well. Ford paused production of its F-150 Lightning after a fire at a supplier facility disrupted aluminum supply. Meanwhile, Wall Street firms are already preparing for internal-combustion models to dominate longer. Deutsche Bank said in a recent investor note: “The narrative becomes much more centered around ICE for longer.” Get $50 free to trade crypto when you sign up to Bybit now
