As consumers pine for more affordable vehicles, General Motors has announced it's nixing its most affordable electric models by year end.
Focusing on higher-margin EVs will allow the automaker to offer lower-priced EVs long term, GM says. But eliminating the Chevrolet Bolt EV and Bolt EUV in the face of demand seems counterintuitive for an automaker that says it is committed to affordable electrification for the mainstream.
Analysts said consumer confidence wavered in April as vehicle prices reached near-record highs. There is demand for more sub-$30,000 vehicles, but the average new-vehicle retail transaction price in April is expected to reach $46,044, according to J.D. Power and LMC Automotive.
Affordability concerns may even be powering a slight comeback for car models, after a decadeslong retreat in the U.S. Cars made up 21 percent of light-vehicle sales in the first quarter, rising from 19.6 percent at the end of 2021, according to the Automotive News Research & Data Center. The gain is noteworthy as car share has steadily declined since 2002.
To be sure, GM is offering some relative bargains on the gasoline-powered side of its lineup, including the newly introduced 2024 Chevrolet Trax, the brand's smallest crossover, which will start below $25,000 with shipping. Chevy is pushing the Trax as a possible answer for those who previously purchased its now retired small affordable sedans.
It is imperative that automakers refill their stock of lower-priced vehicles as inventory of microchips and other supply-constrained parts increases. During the pandemic and subsequent supply crisis, most automakers focused production on their expected return on investment. That was a wise strategy, but now they should concentrate on expanding their lower-priced models.
GM's decision to discontinue the Bolt EV and larger Bolt EUV may make strategic sense. They are built on a previous-generation platform and are not profitable. Plus, GM is renovating the Bolt plant so the company can build 600,000 electric pickups, which have much higher profit potential.
Still, price continues to be a formidable barrier to broader EV adoption. The share of new-vehicle shoppers who say they are very unlikely to buy EVs has grown over the past three months, due in part to their high prices, J.D. Power says.
Without affordable EVs, those who cite price as their primary obstacle to trying one will remain on the sidelines.