Bloomberg Audio Studios, podcasts, radio news. President Trump's tariff announcements are still reverberating throughout the world, and new twists keep coming. On Friday, Trump announced there would be a temporary exception from tariffs for phones, computers, and popular consumer electronics, and today he indicated relief could be ahead for another sector, the auto industry. Trump told reporters he was exploring possible temporary exemptions to tariffs on imported vehicles and auto parts.
While things could still change on a dime, the auto exemptions could be welcome news for one industry at a critical juncture, the electric vehicle industry. Since Trump took office for a second term in January, the US has started to do a complete one eighty on its investment in evs.
The tariffs are making vehicles more expensive, and all of this is creating economic concerts to you and dropping consumer confidence. So you're talking about something that's by a lot of people still seen as kind of a luxury good, an electric vehicle.
David Welch is Bloomberg's bureau chief in Detroit, where he covers the car industry. Lately, he's been looking into the switch away from electric vehicles by the federal government and by some of the biggest automakers, But David says one company has mostly held firm on its commitment to evs as others have ditched them, and that's General Motors.
We have a very strong ED portfolio. We have the broadest in the key segments.
That's GM CEO Mary Barra, who David spoke to earlier this month. GM developed what was essentially the world's first modern all electric car on the market in the nineteen nineties, and as its competitors steer away from them, GM is betting on their.
Future over the long term. We think EED demand will grow from mid to long term. A lot of it is the consumer is very irrational, and it has to do with what's the cost to the vehicle, what's the range of the vehicle, what's the charging infrastructure. Those things are going to continue to improve.
But there are huge hurdles ahead from a shaky market for the cars to uncertainty in Washington.
So whoever's still in the game and a lot of companies and backed away. What whoever's still in the game. There are a lot of challenges that are either existent right now in terms of how consumers view electric vehicles or some potential big clouds here on the horizon.
I'm Sarah Holder, and this is the big take from Bloomberg News today. On the show GM's Big bet on electric Vehicles? Can the company weather the EV downturn and come out on top? And what do its ambitions mean for electric vehicle owners and for the consumers who want them? Well? Spoke with my co host David gar here's that conversation.
Just how hard is it to be in the electric vehicle business right now?
It's kind of always been hard, but it's even tougher these days. Because you had this massive growth period that really started probably twenty eighteen when Tesla was starting to put out a lot of models, and that lasted until about twenty twenty two, and then there was still growth, but things started kind of ratcheting down in terms of
the growth rates. The early adopters had their cars, the luxury buyers who wanted an EV, they wanted the latest thing, They got their cars, and you start to get among the mass market and people worry about how far the car can go before it has to be charged. They're more expensive, and so growth slowed, and now you do have President Biden's EV tax credits are still out there and still getting people to buy evs, but Trump is threatening them.
Over the last year year and a half, what does this market look like? Has it been performing?
We had the past year, so it's a twenty twenty four. There was growth. I think the total EV market was up seven percent, which is more growth than the regular vehicle market head But the year before that it was a fifty percent growth. So you can see that we're kind of hitting a critical mass where evs are roughly, let's call it, eight to ten percent of the US market at any given quarter, and that's kind of where
it's settling in right now. And I think it's going to grow from here, but I think the growth is going to be harder fought.
You mentioned that there are some companies that might still be in the game, but perhaps have reduced their dependency on electric vehicles, changed their timeline from when they planned to transition to electric vehicles. Why hasn't GM made that decision? Why is GM still, for all matter of things, still all in on electric vehicles.
Yeah, Look, it's sort of the industry is divided into two groups. You've got companies like Ford, Honda, Toyota that have kind of pulled back to laid investment, canceled certain investments. And then you've got GM, Hyundai and of course Tesla because that's all they do, that are still pushing ahead.
You know.
For GM, they see this one as a growth area, right. The other part is long term, they see, we're ardles of what the Trump administration does, future administrations and governments in China, in Europe, in the US, other markets, pushing for cleaner transportation. And I think they also believe that very long term, one day all vehicles will be electric.
So you may as well learn this, get platforms that can give you scale, get knowledge of battery, get your cost down, do it now rather than wait, and you know, all these things sort of make sense in the long term. Near term though, it's set them up for a struggle and they're probably going to lose money on these vehicles for a while.
David, what kind of investment has GM made in inevs.
They have invested about thirty five billion dollars. That's for the technology, the vehicles they've developed, the battery plants, the assembly plants that they've retooled to do this, and that includes vehicles that they sell in China as well, but it's a very big investment they got out there.
With electric vehicles, the battery is everything. How is GM approaching battery design, battery manufacturing.
What they're trying to do to get battery costs down, which is vital because you take the battery for like a Chevy Equinox, for example, the pack alone is roughly thirteen thousand dollars, So to get that cost down, they're looking at a battery pack that's more similar to what BYD does.
That's BYD Auto, a Chinese carmaker.
What BYD in China does is that their cells are kind of shaped like a small brick, and the advantage there is you don't have space between them. So if you can get a smaller battery pack, even if it's a little more expensive to make it, maybe you can have fewer cells, get more power on board, and it's just a more efficient package. That's one of the big
things they're trying to do. And the other thing is that they're going for some cheaper chemistries that don't let you drive as long, but it does make for a cheaper ev So those are the two big levers they're trying to pull David.
I know this is a big priority for Mary Borrow, who's the CEO of GM, and she spent her whole career at the company. Why did she decide to make this something that she wanted to prioritize.
Yeah, GM, under Mary Barrow I had a plan that goes back probably six or seven years where she had this vision with autonomous cars and electric cars to you know, she called it zero zero, zero, zero missions, zero congestion, and zero crashes. I think it was so the autonomous vehicles would help with congestion and crashes, and of course
the electric vehicles would help with the emissions. Now, that was more of a mission statement sort of thing than something that I think they thought was a near term reality. But she wanted to take GM, which was this one hundred year old company that sells pickup trucks and big SUVs, and modernize it. So that was self driving technology, it was software based vehicles, and it was electric cars. And you know, to her credit, I think Mary Borrow learned a lesson from the EV one.
The EV one that's the electric car that GM started selling back in the nineties.
Here they released out a few thousand of them. The customers that had them loved them, but they lost a lot of money on the program, so they shut it down in two thousand and three, that's the same year Tesla was founded. And Tesla's stuck with its EV development over those two decades, through good times and bad. You know, now Tesla is the one with a huge market cap, even though that's obviously suffered the past year. But you know, Tesla's the one that's worth hundreds of billions of dollars
and GM's worth about fifty billion dollars. They missed out on an opportunity when they were the first one in the game. And I think she's saying, all right, we have to stick through this because it will be the future one day, even if the future is not going to get here as fast as we thought.
For now, though, David Welch says GM is losing money on its current EV push, So will that bet on the future pay off? After the break, how Trump's tariffs have upended GM's electric vehicle plans and how long the company might have before it runs out of road? David, how has President Trump's reelection changed the landscape for GM?
Look, it's kind of changed everything. First off, GM's two most affordable evs, which are the Chevy Equinox and Chevy Blazer. They're made in Mexico, so they're facing a tariff right now. With the exception of the US made content on those vehicles, the rest of the vehicle will face a twenty five percent tariff. There are other parts and things on the US assembled evs that are going to be tariffed as well.
And then the other big thing, of course, is Trump is vowed to get rid of the electric vehicle tax credits.
That's seventy five hundred dollars to the consumer who buys one, and there are thousands of dollars that go to the manufacture of these evs as well, which essentially means all the companies who sell evs have to figure out do they discount their evs by seventy five hundred bucks or five thousand or whatever the number is to keep volume going and then just eat that in terms of profitability, or do they leave the price where it is and
hope they sell Without the tax credits. It just makes life that much more difficult when you're trying to sell vehicles, and this money that was going to come from the government may not be there. In say, six months, or whenever Trump gets around dealing with that issue. He's a little busy with tariffs right now, but I think eventually he's going to turn his head to the EB tax credits, and they're certainly on the chopping block.
David, you talked with Mary Barrow, and I wonder what you learned about the relationship that she's managed to develop with President Trump.
So some of the tension between Mary Barrow and President Trump started in his first term. He'd called the CEOs of the Detroit three companies to Washington and said, look, I'm going to cut the few economy and emissions rules that the Democrats have put in place, and you can sell all the pickup trucks and big SUVs you want, make lots of money. In return, you're going to hire more Americans and get those factories humming, and we're going
to bring back US automaking again. And Mary Barr was already on this path of leaning up the company, improving its profits and cash flow, and that meant closing some plans, including a big one in Lordstown, Ohio that infuriated Trump. And what she was doing by saving money in boosting cash flow was investing in self driving cars and electric vehicles.
Trump didn't care about either one of those things. He just wants jobs, and so she takes away jobs, and in its place, she invested something he doesn't care about. And there was just a lot of tension over that during his first term. So that was the cause of conflict the first time around. And now, look, every car company is struggling with these tariffs, particularly if they stay
in place for a long time. But GM imports one point two million vehicles into the US market out of the two point seven million that they sell, and a lot of them come from Mexico. Trump does more love that. He wants GM to hire more people here. I don't think Mary Barr is in a war with him over that.
But GM is certainly, like other car companies, lobbying hard to make sure these tariffs don't last long so they can kind of continue the businesses of bringing in parts from all over the world, bringing in cars from Canada or Mexico for the US market. Trump wants things made the United States, and so there's going to be some natural tension there.
When she looks at the competitive landscape, who does she see as her biggest rival? How does she see that competitive space.
I think BYD because GM does still even though it's declined, they have a significant business in China, and by D is the big player in the China EV business. But in the US, Tundai and Tesla and like Tesla look, they're still by far the leader in US EV sales.
We have watched consumer sentiment to a degree change when it comes to Tesla. People who are upset that they bought Tesla's or won't entertain buying them because of Elon Musk's proximity to the president. Is that an opportunity for GM or they trying to pick off some of those customers or prospective customers.
They are now GM isn't being overt about it, like you're not seeing ads, you know, dealing with Elon Musk's politics and seeing come by from US and look in a lot of products. The people who buy products don't necessarily know or care about the politics of the CEO of that company. In Tesla's case, Elon Musk so identifiable for being allied with the Trump administration that I think it has become a factor. It's not the only factor.
The other thing is GM has fresher vehicles than Tesla, does the model why is being refreshed right now, But the others have been kind of the same looking for a long time, so they have some stale product. So you know, in addition to this political issue, I think we just have stale Teslo product, and GM and for that matter, Hyundai have a real chance to go in and get some buyers.
Just wrapping up here, David, GM has been in this game for a while now. By what is this company going to know if it's bet on EVS has paid off?
I would say probably the next two years. We'll see if they get this critical mass of sales. Their sales doubled almost in the first quarter of this year. So if we look out a couple of years and they've sold three four hundred thousand or half a million evs, and you know, they've gained more market share doing this, and the program starts to break even, I think they can say that it's a pretty good success and they
can really build on that. Not then they've got a lot of stranded capital and a lot of factories that aren't producing much, and they'll probably end up having a way off workers who work in those plans.
David, thank you very much.
Good problem Thanks Chris.
This is The Big Take from Bloomberg News. I'm David Gura. This episode is produced by Alex tie. It was edited by Aaron Edwards and Mark Millian, who was fact checked by Adriana Tapia, and mixed and sound designed by Alex Sagura. Our senior producer is Naomi Shaven. Our senior editor is Elizabeth Ponso. Our deputy executive producer is Julia Weaver. Our executive producer is Nicole Beemster. Board Stage Bauman is Bloomberg's
head of podcasts. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show and if you want to learn more, David Welch wrote a book called Charging Ahead, GM Mary Bara and the Reinvention of an American Icon. Thanks for listening. We'll be back tomorrow.