A number of automotive industry analysts believe General Motors may risk losing market share as it forgoes introducing new or updated models in favor of investing in its future electric vehicle programs.
GM plans to invest $20 billion in electric and autonomous vehicle programs between now and 2025 – making it one of the biggest backers of electric vehicle technology in the entire industry. Moving so much cash to one area will have an impact on the rest of its model portfolio, however. According to The Detroit News, GM is only planning to replace 65% of its current lineup with a new or updated model in the coming years, with much of its resources dedicated to new EV programs like the Cadillac Lyriq and GMC Hummer EV.
Speaking to The Detroit News on a conference call this week, Bank of America Global Research Analyst John Murphy said this strategy is emblematic of GM’s dedication to EVs, but may hurt it in the short term as competitors introduce more-up-to-date internal combustion engine vehicles.
“The very active shift General Motors is making shows the confidence that they have to move where the market is going,” Murphy said. “It may result in lost market share.”
Sam Abuelsamid, an analyst at Detroit-based firm Guidehouse Insights, echoed Murphy’s sentiments when speaking to The Detroit Free Press this week. He said one area where GM may lag behind reivals is with regard to hybrid crossovers. GM has said it will not invest in new hybrid products as it only sees them as a temporary stop-gap to EVs, but hybrids are among some automakers’ best-selling crossovers.
“General Motors has put a lot of resources into electric powertrains and vehicles that use those,” he explained. “That means they’ve taken away some of the resources from traditional products.”
The best-selling Toyota hybrid vehicle in the U.S. is the RAV4 Hybrid crossover, Abuelsamid pointed out.
“So there’s a lot of electrification going on in the crossover area that GM is not pursuing.”
This strategy may result in short-term market share losses, but will set GM up well further into the future, analysts believe. GM can benefit from the heavy profit margins offered by popular products like the Chevrolet Suburban and Silverado while developing its new EVs and will then have a robust portfolio of EVs when the technology becomes more popular further down the road.
“GM will be in a good position where others would not,” Murphy said. “It’s a concerted decision … and probably a good one.”