Top Bank of America analyst John Murphy urged GM and its cross-town rivals Ford and Stellantis to abandon the Chinese market in order to free up money for expensive electric vehicle (EV) investments, during a recent presentation on the vehicle market.
In his yearly Car Wars report, Murphy said the Big Three (or Detroit Three), including GM, should “exit China as soon as they possibly can,” according to a report by Reuters.
Murphy says GM and the other companies will need to cut expenses to the bone in order to successfully transition to EV production in such a way that will enable them to compete successfully with Tesla and various overseas rivals. The analyst says the process is “really some tough medicine” and must involve pumping profits from ICE vehicle operations into electric vehicle development as well.
Murphy said Chinese automakers have a decisive advantage in their home country that obliges GM and other foreign companies to spend excessively in an effort to carve out a niche for themselves. He notes that “China is no longer core to GM, Ford or Stellantis” and that Tesla can make EVs for an average of $17,000 less in parts, making it impossible for the Big Three to compete against it in the Chinese electric vehicle market, at least for the moment.
While the EV market remains troubled – with a recent study showing 46 percent of U.S. EV owners would like to return to ICE transportation – Murphy believes GM and its two main competitors should push ahead with their EV plans nevertheless. He advises the automakers to focus on building and selling their profitable gasoline-powered pickups to fund a transition to profitable EV production.
Murphy summed up his argument by stating “exiting China from a pure profit standpoint and strategic standpoint makes sense to focus on where you’re making the money, which is North American trucks,” with the goal of “ultimately investing in autonomous connected and electric vehicles over time.”
General Motors sales fell 9 percent overall in China during the 2023 calendar year. The slump continued, and potentially accelerated, in early 2024, with a 5 percent drop in sales during the first quarter. Sales grew for Cadillac and Baojun, but fell for Buick, Chevrolet, and Wuling, balancing out to a significant net decline.
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Comments
Leave the country that overall wants EVs to put more money and invest into EVs for a country that overall has rejected them. Brilliant!
John, You do know that China is the enemy of the US and stands with North Korea, Russia, and Iran . You do know that they want to take over this Country and put you in a two-room cement block Apartment building
Yes, similar to what the WEF crowd would have with their 15 minute cities. Neither option sounds like much of a life to me.
The WEF stands with China too. Klaus Schwab, the same man that said “You will own nothing and like it” has gone on record to say “China is a model the rest of the world should follow.” – Oh I bet. When you say we should own nothing and like it, I imagine you are VERY MUCH SO inspired by China.
The World Economic Forum and “the Great Reset” have long been at the center of conspiracy theories. The forum is a prominent international nongovernmental organization that engages political, cultural and business leaders in building regional and global agendas. But the forum has never advocated for a global takeover, and there’s no evidence it wants to abolish private ownership of goods and property.
This claim that the World Economic Forum wants to take control of people’s possessions likely originates from a 2016 Facebook video, which listed eight predictions for the world in 2030. The first one said, “You will own nothing and be happy. Whatever you want you’ll rent and it’ll be delivered by drone.”
Danish politician Ida Auken wrote this prediction in 2016. The corresponding article has since been removed from the World Economic Forum’s website, but in an archived version, Auken explains that this is not her “utopia or dream of the future.” The author’s note also says that she “wrote this piece to start a discussion about some of the pros and cons of the current technological development.”
A few years later, at the COVID-19 pandemic’s onset, the World Economic Forum proposed a set of policy ideas it referred to as “the Great Reset.” But it has since been hijacked by conspiracy theorists.
The theory’s believers saw the World Economic Forum’s proposal as proof that “global elites want to use the coronavirus as a tool to reorganize global societies and economies to their benefit at the expense of ordinary people, with the ultimate goal of a global totalitarian regime,” according to the Anti-Defamation League. However, this conspiracy theory has been widely debunked.
We rate the claim that World Economic Forum “elites” are pushing the Great Reset, which aims to control people by taking all their possessions, False. SOURCE – Politifact
LOL!!! You ever read the articles and watch the videos on their own website? I have and there is no secret to what they are doing. They freely and openly discuss it and they mean what they say.
Politifact. The same media outlet controlled by the world elites pushing the EV agenda and participating on the board of the WEF. May as well believe CCP owned Xinghua and CGTN while we’re at it too. Why even say such a thing about owning nothing and liking it? What does this have anything to do with technology?
The WEF is evil
What are the specific things about the WEF that you feel are evil? What defines evil for you? I am honestly asking.
I thought this was a reasonable question, but it is getting downvoted. We can’t learn from each other without asking questions and seeing why people hold the opinions that they do.
Karl Schwab never actually said that. (You will own nothing and like it) It was on the WEF website, but it was a comment from a Danish economist who was just posing possible scenarios based on technology changes in the future. It has never been a policy goal of the WEF. (and if they were plotting this secretly, why would they have it on the website?).
Regarding China, I am a strong advocate for democracy in China, and for protecting rights in our own democratic Western countries. That doesn’t mean that there aren’t aspects of authoritarian states that can do better than a pure capitalist system. Long term planning, for example. The question is, is it worth the costs to our freedoms. For me, the answer is no. I would not want to live in China as it is currently. But like everything in life, things aren’t always black and white
Which American praised Xi Jinping many times, and said he admired what he is doing?
Former US President Donald Trump on Tuesday lavished praise on China’s President Xi Jinping, calling him a “brilliant guy.” Speaking to US Fox News, Trump described Xi as an exceptionally intelligent individual who governs China’s population of 1.4 billion people with “iron” authority
Ruling with an iron authority? Doesn’t sound like the freedom westerners continue to enjoy.
Why does Trump get a pass for saying this?
Please stop with the false claim that 15 minute cities will force anyone to do anything. It is just an attempt to improve the layout of cities so people can get to things by walking rather than driving. It is actually an attempt to bring back some of the things we have lost – close neighbourhoods where we know the store owners, where kids can play safely, where people feel a connection to each other. Just like so many places in America before the car and big boxes took over. If anything, it is a return to a more traditional lifestyle. And cities have always had planning departments and zoning rules. it is not some sort of recent conspiracy
You do know that GM doesn’t care, that’s why they went there in the first place.
To screw over American workers and profit off slave labor. No loyalties there, only massive GREED !
Barra won’t be around forever. Once she is gone this madness will end. Like Jack Welch, she has hurt the company to benefit her once pocketbook. Barra is so delusional that she believes her policies have helped GM. Once Barra is gone GM stock will climb, and Warren Buffet may even reinvest in the company. Buffet knows what a disaster Barra has been.
Foda-se nacionalidade, o que importa é vender, pare com essa nojeira contra a China, o US acabou, aceite que dói menos.
I love all the third-world country hopefuls that think China is a godsend for your country when in reality they don’t give a flying f*** about your country (especially the people of that country) and only want your resources and your seaports. But keep believing that they care about you when they don’t even care enough about their own people to have personal freedoms. Remember one thing. When Bolsonaro wanted to investigate Huawei for privacy concerns the CCP retaliated by threatening to cut off supplies of the Covid vaccine. So remember that when you feel that China is coming to your rescue.
Every military is designed to go after a specific military (our Cold War era equipment was meant to counter Soviet equipment). What terrifies me is they (CCP and associated Pinks) are viewing themselves as the superior race and everyone else as inferior. Watch videos of how they are indoctrinating their children into killing anyone that shames China (especially any westerner). They resemble Germany in the early 1930s and we know what became of that. Its spine chilling especially considering my grandfather grew up under Mussolini and godfather under the Weimar republic. People need to stop burying their heads in the sand and wake up.
EV sales are up 14% YOY compared to sales last year, beating the average industry rate of only 7% increase.
It’s ICE that’s dying.
14% of a very small number is still a very small number. ICE forever!
I agree with the “exit China” idea but the rest of what that guy said is crack-smoke fueled insanity.
Yes, they need to leave china, but not to focus on EV’s. They need to leave china because china is using them, stealing their technology and then undercutting their sales. Focus on Europe, Africa and South America before china gets their hands on those markets.
Also, what kinda BS is this that teslas are 17K less in parts? Are they factoring in that Tesla is considered a “luxury brand” and comparing to Cadillac Lyriq? Cause the model S has the same level of fit and finish as a Malibu primer. The model Y is on par with the bolt and even then a little more spartan. Tesla still barely breaks even on car sales, and makes its profit on government battery grid sales and government carbon credits. And that’s despite having the oldest lineup in the industry and Elon spending next to nothing on marketing/R&D. Just look how long it took them to launch the cyber truck
Silly, leave the largest market in the world, one that I suspect is still making money for gm. Tesla has not, and has no plan to. The article is about as non-sequitur as you can get. There is no logic to the argument.
China isn’t the largest market in the world, not by a long shot. USA alone is over 2X the size. Now, china does have more “new” vehicle sales, but that’s because USA market less than 25% of our sales are new. That’s also because our cars are built to last. In china there’s lots of “disposable” cars sold. Thin seats that tear after a years use, 1.5L engines that blow up at 50,000 KM (KM, not miles 😳) and thinly coated chassis that rust out after 4 winters if the rest of the car makes it that long. More premium china cars like BYD’s are on par with our Malibu, but owners dump their retirement into buying them and hold onto them for almost 2 decades. Even their millionaires over there who are buying our Buicks and Cadillacs are buying them with the smaller 2.0 turbos and 2.5L 4 cylinders. Even the Tahoe offered over there only has the 2.7 turbo.
Tesla atleast didn’t put all his eggs into Chinas basket and did things more intelligently. Tesla has solid markets in the EU and other countries in Asia and Middle East. They have a local supply chain for China and a global supply chain for elsewhere should things take a geopolitical turn for the worst he can sever his China operations while maintaining the rest of the global market running (based off an article I read on how he was doing things for Tesla). Apple is following a similar strategy now by opening a production facility in India. I would love to think GM has done the same but the fact is they abandoned the other markets for China rather than focusing on making better globally competitive products and follow a strategy more akin to VW, the Japanese brands, and Korean brands. Now that reality of souring relations between US and China and the decline in their Chinese market share is setting in, they are pushing to re-introduce cars in the EU and Australia. I just hope this isn’t too little too late.
More than half of Tesla’s vehicles are made in China with sourced batteries.
The battery sourcing may still be from China but the materials can be obtained anywhere. Rare metals aren’t exactly “rare”. But their bulk manufacturing and market is global. Its better to have to make small adjustments to sourcing in the case of geopolitical complications than to have to make drastic and costly changes should the government decide to nationalize your assets.
Correct, rarity of “rate earth metals” is less because they aren’t common, more that you can’t find a vein of them, like an iron ore vein that 20% iron 80% rock. Lithium is available everywhere, in a 1/10% of a percentage. So while not “rare” it’s difficult to source
Read that again: More than half of Tesla’s vehicles are made in China with sourced batteries.
I wasn’t talking just about battery sourcing. I was talking about manufacture and assembly at the Shanghai factory. China is not just Tesla’s biggest market, they are the source of more than 50% of the vehicles they ship globally.
They would be far more fucked than GM if China decided to globalize American companies.
You nationalize. Not globalize. Nationalize means they as the state take over their private assets in the country essentially making them “state owned”. Russia did the same with several companies (Renault being one of them) after the start of the Ukraine war and should have served as a warning to these companies of what to expect from China if they invade Taiwan and the US acts on it. But I get what you are saying.
I don’t get it. It won’t change my stance on the matter regardless (and if the downvotes are from shills and 50 Cent soldiers I would care even less as their opinions mean as much to me as used toilet paper), but why do I get flooded with downvotes at the mere mention that GM should diversify their markets and not rely solely on China and US? Would this not be a good thing for GM to diversify and make globally competitive products? Toyota, Hyundai, and VW does it. Any wise investor would tell you to diversify. And as for China, again, I am not saying to abandon the market (doing so without legit cause is missing out on lucrative revenue) but it still doesn’t change the fact that the geopolitical risk of dealing with an adversarial government with authoritarian control over your assets for those who aren’t prepared to hedge against the risks. We can bury our heads in the sand all we want the risk will still be there.
Turkey too? Wow that’s news to me but it does make sense. While Turkey doesn’t have their own car company anymore (not since Tofas at least) they do have significant auto manufacturing there. Ford and Renault have manufacturing plants there.
As for Tesla, well they have those other factories too. Whether they aren’t happy at the notion of increasing production at those plants at the expense of the Shanghai plant, as the saying goes, “sounds like a personal problem.”
While I agree that GM should reconsider their dangerous exposure to the CCP controlled Chinese market, the analyst’s reason for GM to leave is way way off base.
Well considering he works for Bank of America, you know the bank that keeps getting sued and bailed out, I’m assuming he doesn’t know much about banking and even less about those rolling thingies with the 4 wheels and that motor thing. 🤪
I don’t think they should leave China unless they have no choice but I definitely think they should be diversifying their baskets. Putting all your eggs (or rather close to half of them) in a country as volatile and unhinged as China is a very dangerous endeavor and I have long said its a market they cannot take for granted. I hope at the very least GM has a backup plan should things take a geopolitical turn for the worse.
Looking at the full calendar year ignores that Buick introduced two new high volume EVs in the second half of the last year, Cadillac is building on their growth with three new models, Wuling is rebounding with a whole slate of new models and the Ultium platform has been successful enough they’re already opening a third factory.
Ironically, I actually feel China is the reason GM will probably pull ahead in the EV game further than the other legacy automakers (provided they work through their transition pains). Because when it comes to China, GM drops everything they are doing to baby that market.
There’s a middle ground. Don’t invest any more in China, but continue to use the resources there unless they can be sold for a decent return. Otherwise the risk is that the Chinese government will someday nationalize them or make them worthless. The rate of return on any investment in China is questionable at best.
“ While the EV market remains troubled – with a recent study showing 46 percent of U.S. EV owners would like to return to ICE transportation – Murphy believes GM and its two main competitors should push ahead with their EV plans nevertheless. He advises the automakers to focus on building and selling their profitable gasoline-powered pickups to fund a transition to profitable EV production.”
The most insane viewpoint I have ever heard in the ‘EV transition’ debate.
This guy is an absolute twit. He doesn’t have the foggiest notion of how much money is made in China. He has no idea of how GM will use its facilities in the future – perhaps to export to other markets. He also has no idea of how much it would cost to exit China.
Tesla is an American car manufacturer and a successful one so far. After reading many comments on this site, why I have the feeling that most people here are rooting for its failure?
Probably because it is the only one led by a total freak. Do even 3 minutes of research on the guy and you should be terrified of his antics.
Jealousy
Yes and the freak is morphing into a Maggot
They are already selling there high priced trucks, suvs and dumping the profits into there ev technology and have been for several years. So that’s a stupid statement but I do fully back the get out of china manufacturing and technology sharing or theft as most people would say. Bring back the jobs to America
There is no labor shortage, if companies are willing to pay decent wages. Instead of stock buy backs and massive CEO pay.
With so many EV oppositions in the USA, why are you unhappy with their choice to open manufacturing on other markets. It is a business run for profit like any other successful business in the free world. As for the tariffs they face around the world it is their problem to worry about. Tariffs in US and Canada will only protect the legacy automakers from the EV “craze” giving them enough time to level the playing field.
The truth is that the legacy automakers wanted a piece of the pie that Tesla was eating alone. They rushed in and everybody can see the outcome.
Sure, let someone else make money in China.
DO NOT THINK SO, GM is much more chinese than Americas recently.
And if you lived in California, you wouldn’t need to pretend at all. Gavin is practically a CCP party member and he is running his state in that direction going so far as to even drive many businesses away. Such as Tesla.
Recently, not more than 2 weeks ago, we went for 10 Days at UAE. In 2023 we had gone too. At Contacts with Emirates had said to Al Maktoum family to remove all Black BMW of Business Service. Well, Talking with Driver of the 2024 Lexus ES350, he confirmed indeed all BMW were resold and sent back to China. So said him, than am greatful and happy Al Maktoum attended me, much because my bad history with BMW arrogance between 1998 to 2008, doing indirect their cars. He complement, all in UAE is to be Asia Cars. Indeed our transfer from DXB to Abu Dhabi Hyatt Hotel saw only 1 BMW 1 series in white, all rest is the big Patrol, many Lexus, for example the Lexus LS430 which drove at Audi Ingolstadt, and many other Toyotas, Nissan etc. During our visit at Emirates Palace, during Bruder President Welcome in Wedding Shaking Hands, hat a RR Cullinan and after a Mercedes Maybach in White, well if were a Packard Victoria 1933 in Green could have photographed. We walked 1300 m from Emirates Palace to UAE Presidential Palace, and also to Marina Mall, to Mosque the 4 Taxis we took, were all Toyota Camry. Back at Burj Khalifa, we saw 2 RR Ghost, but we hope UAE get Rid of all German and Rolls Royce Cars, mainly those produced by BMW. At Hyatt Garage had an Aston Martin, some Genessis, a GM Tahoe in white and others, at the 2nd floor down had a unique BMW X5. As said hope all German Cars go out of UAE. Chinese cars are really good cars, we do not need German cars anymore. Here in Hamburg we see a lot black BMW, Mercedes, Audi etc, but also hope, BYD take the front soon. It is difficult to convince the snob germans in Naziland but let’s see. Hope in North America German cars get rid off roads too Regards MK. In Brasil because the low R$ 1300 aka DHS 1300 GMB paid for me during 1995 to 1997, hope GM is out of South America too. Lets see next 5 to 10 years …
GM and many other investment in
China is penny wise and pound foolish.
They went there to make a quick buck and all they get in return now is diminishing returns – not too many more years and they will be out of China completely, once the last bit of auto manufacturing knowledge has been gleaned from GM.
Was obvious to me at the start of all this.. At this point, Caddy sales are more profitable in the states than China.
So what does GM do? Forget their most profitable and AMERICAN roots, and give the most choice offerings to China – a country where they soon will be losing money….
JEEP already shown the door and completely gone.
Caddy profits in the states are almost exclusively slade sales. Something that does not sell in China due to massive tariffs on engine displacement. I said it before, China is the number one market for new car sales. By volume, caddy sold 184K vehicles in China 2023 vs 147K in the US. You just cannot abandon that. Talk about biting your nose to spite your face as long as we are using old sayings.
It’s practically there already. GM is losing market share in China while SAIC with MG is gaining global market share. They are practically done with them now. I think they are only keeping them around just for Buick but once that fizzles away they will kick GM to the curb. That is why I keep saying GM needs to diversify their markets and not do what they did abandoning every other market for China. Now they have no choice. They are losing their market share in China. They have regained some in the states with their CUVs (their products have much improved over the years) but it will never claw its way back to the days before the Japanese invasion. So they better start changing their strategy and start learning from Toyota, Hyundai, and VW if they want to stay viable.
Everyone in this comment section would make a better analyst than this BoA employee.
Toyota 2025-2027 will completely revamp the modern car industry- new battery tech for their EVs , and completely new engine type for their hybrids( estimates are 100mpg+) for the hybrid and 700mile 30 min charge EV batteries- the next 5 years could be interesting. Hopefully the tech does not get stolen by CCP.
The Joint Ventures in the car industry that China imposed as a mandatory condition of entering their market has paid dividends over and over for Chinese car companies. They no longer need GM, Ford, or Stellantis. They can stand on their own two feet and are well propped up by the CCP. American car companies had a great run and made billions. But that run is over. Chinese car companies can build it better, faster and now cheaper. And the Chinese consumer no longer needs the American car companies in order to get a great looking and reliable car.