GM Faces Challenges with EV Production and Cruise Business in 2024

General Motors (GM) is gearing up for a challenging year ahead as it grapples with obstacles in its electric vehicle (EV) production and Cruise autonomous vehicle division. Despite projecting a robust profit of nearly $10 billion for the previous year, GM faces significant hurdles in key areas of its operations.

Electric Vehicle Production Woes

GM's ambitious electric vehicle strategy has encountered setbacks primarily due to production limitations. The company has struggled to scale up production of EVs built on its Ultium battery architecture, partly attributed to issues with automation equipment suppliers, which have slowed down battery module assembly. In response, GM deployed teams to establish manual assembly lines and is actively enhancing module capacity across its EV plants.

In December, sales of the new Chevrolet Blazer EV were halted due to software quality issues, further underscoring the challenges GM faces in streamlining its EV manufacturing processes. CEO Mary Barra acknowledged the company's shortcomings in executing its EV strategy in the past year but remains committed to achieving significantly higher EV production in the coming months.

David Whiston, a U.S. autos equity analyst with Morningstar Research Services LLC, emphasized the critical importance of flawless launches, particularly concerning the upcoming Equinox EV. With a base model aimed at mass-market buyers, GM aims to tap into a segment that Tesla has yet to penetrate fully, underscoring the significance of getting it right.

Cruise Autonomy Crisis

Beyond EV production hurdles, GM's Cruise autonomous vehicle business is grappling with its own set of challenges. Following an October incident where a Cruise robotaxi was involved in a collision, resulting in federal investigations and the suspension of operations, Cruise's future hangs in the balance. The incident raised questions about safety protocols and regulatory compliance, prompting Cruise to conduct a comprehensive internal investigation.

Last week, Cruise released findings from an external law firm's investigation, revealing systemic failures within the organization, including lapses in leadership, internal processes, and regulatory understanding. Despite acknowledging these shortcomings, GM reiterated its commitment to Cruise's vision of transformative technology that ultimately saves lives.

Looking Ahead

As GM prepares to announce its fourth-quarter and full-year financial results, investors and industry analysts eagerly await insights into the company's strategies for overcoming these challenges. With significant investments in EVs and autonomous technology, GM's ability to navigate these hurdles will shape its trajectory in an increasingly competitive automotive landscape.

With uncertainties looming over GM's EV production ramp-up and the future of its autonomous vehicle division, the company faces a pivotal year ahead, testing its resilience and adaptability in a rapidly evolving industry landscape. As CEO Mary Barra and CFO Paul Jacobson prepare to address analysts, their guidance and vision for the future will be closely scrutinized, offering insights into GM's roadmap for success amidst adversity.