Here's Why GM Is Backpedaling on EVs

• General Motors has announced it will be bringing hybrids back to dealerships as quickly as possible.
• CEO Mary Barra pledged continued focus on going emissions-free by 2035, but indicated that the U.S. charging infrastructure is lagging. 
• Current software flaws and recalls are also reasons for concern.

The more pessimistic automotive pundits out there have long said that goals for an emissions-free consumer automotive industry by 2035 are a pipe dream. This week, General Motors gave those folks an awful lot of ammunition while simultaneously raising more red flags than might be reasonably expected at a semaphore symposium.

As part of a wild ride of an earnings call, General Motors disclosed the billions lost due to the UAW strike plus too-expensive batteries and also admitted to a series of crucial tech-related missteps that have cursed everything from Cruise automation to the Blazer EV.

The piece that got the most play was CEO Mary Barra's intent to shift focus away from GM's aggressive EV rollout in favor of a new wave of plug-in hybrids (PHEVs). A generous way to read this is General Motors listening to the feedback from its dealers, who, according to a conveniently timed Wall Street Journal report, just days before, urged GM leadership to give them more hybrids.

But it's hard to not read this as GM taking advantage of a current wave of EV skepticism to slink away from an increasingly unlikely, or at least unprofitable, electrification target. (You can almost hear the echoes of "Don't be suspicious, don't be suspicious ..." in the transcript.)

Here's what Barra said on the call:

"Let me be clear, GM remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035. But in the interim, deploying plug-in technology in strategic segments will deliver some of the environmental benefits of EVs as the nation continues to build its charging infrastructure."

That's Barra deflecting more than a little blame to the troubled state of the U.S. charging infrastructure, simultaneously shifting attention away from the troubled rollout of GM's oft-hyped Ultium battery platform.

Ultium was meant to underpin a new generation of electric vehicles, everything from big trucks to lunar rovers. Ultium was to be flexible, easy to manufacture, and cheap. But the Hummer EV, literally the most high-profile Ultium product to make it to market, demonstrates none of those ideals. Paul Jacobson, GM's CFO, said the company is taking a $1.7 billion writedown due to battery cell production costs.

Ultium's second movement, the far more sensible Blazer EV, has its own troubles to overcome as it finally comes to market, troubles that have more to do with the software running in the car than the battery pack strapped beneath it. The Blazer is still subject to a stop-sale, which was announced just days after we documented the many issues with the Edmunds long-term Blazer EV — 23 separate fault codes in just two months of ownership.

Barra was frank: "We disappointed these customers, and we know it." She promised organizational changes, including establishing a "software quality division." 

Of all the red flags in this call, this one was far and away the biggest for me. I'm a former software architect, and I can tell you that deploying software without quality control is a recipe for disaster. It's like giving a rookie driver the red key to your prized Hellcat, showing them how to disable the traction control, and then telling them to have a good time with their friends. 

When companies are looking to cut costs on software, the quality assurance and quality control departments (QA/QC) are too often the first ones out the door, leaving the wide-eyed developers clutching the red key. I don't know if that's what happened here, but if the software running in the Blazer EV and GM's other EVs was developed without the help of QA and QC, I'm not surprised at the state of things. (For the record, I asked for clarification from General Motors on this point and others. The automaker declined to respond.)

Beyond the Blazer kerfuffle, The General has made a number of major tactical missteps over just the past year, not the least of which was getting caught up in a brutal conflict with the UAW. (For the record, this cost the company $1.1 billion.)

Then there's the still perplexing decision to drop support for Apple CarPlay and Android Auto in its next-generation electric vehicles, willfully dismissing services that approximately half of all consumers have said they won't buy a car without. 

And I have to mention the tragic state of Cruise, a company racing to create a robotaxi that I'm not even sure the market wants any longer. Regarding Cruise, Barra said: "We are committed to earning back the trust with our regulators and the public through our actions." The first action? A $1 billion cut in funding, which I hope doesn't come at the expense of the company's QA and QC departments. 

CEO Barra and CFO Jacobson were nothing if not frank on the call. They're clearly aware that changes need to be made and, by the sound of things, those changes are happening. That is genuinely good news.

With the proper checks and balances in place, assuming General Motors can create a culture of collaboration and not conflict between software developers and quality checkers, it shouldn't take long to get the company's code whipped into shape. It will, however, take time to fill dealership lots with hybrid machines that customers actually want to buy. 

Or, perhaps more accurately, that those dealers actually want to sell. 

General Motors put its most successful PHEV out to pasture years ago, and its current U.S. hybrid offerings amount to bupkis. Given that, when Barra said that GM will be "bringing our plug-in hybrid technology to select vehicles in North America," she clearly meant hybrids available elsewhere. 

Look for rebadged machines like the Chinese-market Equinox PHEV and Buick Velite 6 coming soon to a dealer near you. It's easy to turn your nose up at cross-continent badge engineering like this, but GM has proven it can do this successfully. Both the Chevrolet Trailblazer and Buick Encore GX come from complicated international parentage, but they're great little SUVs that make a lot of sense in the North American market. 

It is a massive shame that GM didn't double down on the Volt when it had the chance, but there's no point in crying over milk long soured. Many customers feel like they're being forced too quickly into an emissions-free lifestyle. If more PHEVs is what it takes to move them along the path to electrification, and if it gives GM's leadership a little more time to get their house in order, then it's the right move.

I mean, it must be. At the time of publication, the company's stock is up 10.5% this week despite all those red flags, and the market is always right. Right?

Edmunds says

Last year was a rough one for General Motors, and these issues point to some fundamental problems running deep through the company. But with a critical eye looking inward for fixes, plus a selection of powertrain offerings to satisfy the EV-cautious, 2024 should be a better year.