GM says price-only competition is risky for EVs

Price competition is risky for Electric Cars

GM believes that competing solely by lowering prices, rather than showcasing a car’s actual value, is detrimental to the electric vehicle market. This type of competition hinders the profits that companies need to invest in developing new technologies, such as improved batteries and charging systems.

CEO Mary Barra stated that GM’s top priority is to achieve adjusted profit margins of 8% to 10% in North America. She noted this goal is based on driving EV profitability and maintaining production discipline, according to statements.

$1.6 billion charge cuts into Q3 profit

The market for electric cars is not growing as fast as GM had planned, forcing the company to slow its production timelines. This strategic shift led to a significant one-time financial issue that negatively impacted their third-quarter earnings and overall profitability.

GM booked $1.6B in Q3 charges tied to its EV realignment, including about $1.2B related to EV capacity and supplier settlements. The North American adjusted profit margin fell sharply from 9.7% in Q3 2024 to 6.2% in Q3 2025.

Keeping price discipline to protect profits

Instead of using significant discounts to match rivals, GM is focusing on selling cars for what they are truly worth, thereby protecting its profits. The company must maintain strong pricing to afford future investments in new technology.

GM is keeping incentives as a percentage of Average Transaction Price (ATP) low at just 4.0% in Q3 2025. This is significantly lower than the automotive industry’s average incentive spend of 6.9% during the same period.

Expected slow EV demand until 2026

GM’s leaders have publicly stated that customer demand for electric cars is not increasing as quickly as they hoped. Because of this, they are slowing down some planned factory upgrades until sales catch up with production.

CFO Paul Jacobson said EV demand is ‘choppy’ and likely muted into early-2026. Mary Barra stated that near-term EV adoption will be lower than planned.

Growing revenue from digital services

Since making profits on the electric cars themselves is difficult due to price wars, GM is focusing on earning money from high-tech software features, such as OnStar and Super Cruise. These digital services have very high profit margins and are a key part of the company’s future revenue strategy.

GM reported nearly $2B YTD revenue from software/services through Q3-2025 and said OnStar surpassed 11M global subscribers (+34% YoY); Super Cruise customers are now >500k.

Cost cutting to stay profitable

GM is aggressively working to reduce internal costs and its overhead spending to protect its long-term profit margins. Cutting fixed costs helps the company better handle pressure from slow sales and price competition.

GM cut more than 200 salaried roles (mainly CAD/design) a few days after raising full-year guidance. Their effort to increase efficiency involves deleting 2,700 unique parts from their production process.

Reducing vehicle manufacturing costs

GM is working to modify the physical components and design of its electric cars to reduce the cost of their production significantly. This helps them offer more value for the customer without needing to cut the car’s sticker price.

GM expects to save approximately $6,000 per electric vehicle unit by utilizing the new Lithium-Iron-Phosphate (LFP) battery chemistry. The Ultium batteries utilize a Nickel-Cobalt-Manganese-Aluminum (NCMA) chemistry, which reduces the use of expensive cobalt by 70%.

Massive investment in Ultium technology

GM’s long-term plan is to create value through its unique Ultium battery and car platform, which cost billions of dollars to develop. This massive investment aims to give GM a competitive edge based on better, lower-cost technology.

General Motors increased its total investment in electric vehicles and self-driving technology to $35 billion for the period running from 2020 through 2025. The Ultium pouch cells can be stacked horizontally or vertically, allowing for packs with capacities ranging from 50 kWh to 200 kWh.

Building Ultium battery plants in the U.S.

A key part of the Ultium strategy is building its own battery factories in the United States through a joint venture with LG Energy Solution. This guarantees a domestic supply of custom batteries and helps control the most significant cost factor of an electric car.

Ultium Cells is a joint venture between GM and LG Energy Solution to build battery plants in Ohio, Tennessee, and Michigan. Their third U.S. plant, located in Lansing, Michigan, is a $2.6 billion investment expected to have an annual capacity of 50 gigawatt-hours.

New battery partnership to diversify supply

To protect its long-term battery supply chain, GM created a new joint venture with a second major battery maker for a fourth U.S. factory. This diversification in partners and cell types makes GM’s EV production more secure against any single risk.

GM and Samsung SDI agreed to invest $3.5 billion in a joint venture for a new battery cell plant in New Carlisle, Indiana. This plant is scheduled to begin production in 2027 with an expected initial capacity of 27 gigawatt-hours (GWh) per year.

The tough global competition landscape

Price competition is a global issue, especially from overseas rivals who are willing to accept much lower profit margins. This intense rivalry is forcing all automakers, including GM, to exercise extreme caution in controlling their costs.

In the U.S., Tesla’s operating profit margin declined from 10.8% in Q3 2024 to 5.8% in Q3 2025, primarily due to price cuts and rising costs. Chinese rival BYD surpassed Tesla by selling approximately 1.61 million electric vehicles from January to September 2025.

GM’s strong China market recovery

Despite intense competition in the Chinese market, GM’s joint venture with local partners has achieved a rapid turnaround in profits. This positive financial result in the world’s largest auto market helps offset weaker performance in other areas.

GM’s equity income from its China joint ventures reversed a loss of $137 million in Q3 2024 to a profit of $80 million in Q3 2025. Total vehicle deliveries in the China market for the first nine months of 2025 reached approximately 1.56 million units.

Strong gas truck and SUV sales financial cushion

GM’s highly profitable traditional business of selling gasoline-powered trucks and SUVs is what provides the funds to support the transition to electric vehicles. This strong market position acts as a financial cushion during the slow EV transition.

GM was the number one automaker in total U.S. sales in the third quarter of 2025 with 710,000 total deliveries. This resulted in a U.S. market share of 17.0% in the third quarter of 2025.

High unexpected costs and tariff impact

Beyond the shift to electric vehicles, GM incurred significant, unexpected expenses due to trade tariffs and costly recalls, which reduced its earnings. These surprise costs make it even harder for the company to protect its profitability.

GM’s Q3 2025 adjusted profit was hurt by a $1.1 billion tariff impact and an increase of $0.9 billion in warranty-related expenses year-over-year. The warranty covered the costs of repairs and fixes for existing vehicles.

Upward revision of 2025 full-year guidance

The company’s strong performance in its traditional business, combined with successful cost-cutting measures, enabled it to raise its financial outlook for the whole year. This raised guidance demonstrates confidence in GM’s ability to manage costs and maintain core profits despite the changes in the EV market.

GM raised its full-year 2025 adjusted Earnings Per Share (EPS) guidance to a range of $9.75 to $10.50, up from the previous range of $8.25 to $10.00. It also increased its adjusted EBIT-adjusted forecast for the year to between $12.0 billion and $13.0 billion.

Want to know why both automakers pulled back on tax perks? Read more in GM reverses decision to claim last-minute EV tax credits.

Adjusting long-term EV production goals

GM’s initial plans for selling electric cars were ambitious and anticipated much faster customer acceptance than is currently happening. Since the market is slower, GM is adjusting its goals to prioritize profitability over speed.

GM initially set an internal goal to have the capacity to produce more than one million electric vehicles globally by the end of 2025. They have since announced a “more gradual” ramp-up, for example, moving the full EV re-opening of the Orion Assembly plant to mid-2026.

Curious how Ford’s move lines up with GM’s latest shift? Check it out in Ford mirrors GM decision, removes EV models from credit list.

What do you think — is cutting prices killing EV progress? Drop your thoughts below.

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This slideshow was made with AI assistance and human editing.