GM Lays Off 1,700 Workers as EV Demand Slows Post-Federal Credit Expiration

• Over 1,200 employees cut from Detroit EV plant amid EV sales slowdown.

• 550 workers laid off at Ohio’s Ultium Cells battery plant, plus 850 temporary releases.

• 700 temporary workers affected in Tennessee; production pause starts January 2025, with upgrades planned for restart by mid-2026, per company statements.

GM layoffs hit 1,700+ workers as EV demand slows post-federal credit expiration. Discover impacts on production and market shifts in this analysis.

What is causing General Motors layoffs in 2025?

General Motors layoffs stem primarily from a slowdown in electric vehicle demand following the expiration of federal incentives and an evolving regulatory landscape. The company is realigning its EV production capacity to match current market realities, affecting manufacturing sites in Michigan, Ohio, and Tennessee. This includes pausing battery cell production to enable upgrades, ensuring long-term operational flexibility.

How has the end of federal EV credits impacted sales?

The $7,500 federal tax credit for EV purchases ended in September 2024, leading to a rush of sales that quarter but a sharp decline afterward. EVs dropped to under 6% of new car sales in October 2024, the lowest since 2022, according to data from research firms like Cox Automotive. This shift prompted General Motors to adjust its production plans, as initial EV adoption forecasts proved overly optimistic. Stephanie Valdez Streaty, an industry analyst at Cox Automotive, noted during a recent webinar that while EV growth opportunities remain, the market is transitioning to a more gradual pace, potentially stabilizing at 8-9% of total sales in 2025 before accelerating with affordable models from competitors like Rivian, Slate, and Ford by 2027.

Frequently Asked Questions

What are the details of General Motors layoffs across its plants?

General Motors confirmed layoffs of more than 1,700 workers on Wednesday, with the largest impact at its Detroit EV plant, affecting around 1,200 employees. Additional cuts include 550 from the Ultium Cells battery plant in Ohio, 850 temporary workers there, and 700 temporaries in Tennessee. These measures address slower EV adoption and support production realignment, as stated by the company.

Why is GM pausing battery production in Ohio and Tennessee?

GM is pausing battery cell production at its Ohio and Tennessee Ultium Cells plants starting January 2025 to upgrade facilities, with operations resuming by mid-2026. This downtime responds to reduced near-term EV demand and regulatory shifts, allowing the company to enhance efficiency and adapt to market changes while maintaining its U.S. manufacturing commitment. It follows a broader strategy to build according to consumer needs, avoiding overproduction.

Key Takeaways

• EV Demand Slowdown Drives Layoffs: The expiration of the $7,500 federal credit caused a post-September sales drop, forcing GM to cut over 1,700 jobs and pause production for upgrades.
• Production Realignment for Flexibility: GM remains dedicated to EVs long-term but is adjusting capacity in response to investor pressures and financial impacts, including a $1.6 billion hit from scaled-back EV output.
• Market Outlook Points to Gradual Growth: Analysts predict EV sales at 8-9% in 2025, rising later with new models; companies like GM emphasize building to demand to navigate the transition.

Conclusion

In summary, General Motors layoffs reflect broader challenges in the electric vehicle sector, driven by the end of federal incentives and tempered adoption rates. With production pauses in key battery plants and a focus on cost efficiencies, GM is positioning itself for sustained growth amid shifting investor expectations toward internal-combustion engines in the near term. As the automotive landscape evolves, staying informed on these EV market shifts will be crucial for stakeholders, with opportunities emerging as new technologies and policies take shape.

General Motors confirmed on Wednesday that more than 1,700 workers across its Michigan and Ohio manufacturing operations are being laid off, as reported by The Detroit News. The decision ties directly to a slowdown in electric vehicle demand and changes in the supportive policy environment that had boosted those sales previously.

The most significant reductions occurred at the Detroit EV plant, impacting approximately 1,200 employees. At the Ultium Cells battery plant in Ohio, 550 workers were let go, alongside the release of 850 temporary staff. GM also announced layoffs for 700 temporary workers at its Ultium Cells facility in Tennessee.

These adjustments are in response to the slower-than-expected pace of EV adoption, according to the company. In its official statement, GM explained: “In response to slower near-term EV adoption and an evolving regulatory environment, General Motors is realigning EV capacity.” It emphasized continued commitment to its U.S. manufacturing presence, noting that operational flexibility will aid adaptation to market dynamics.

Battery cell production at the Ohio and Tennessee sites will pause starting January 2025, with resumption anticipated by mid-2026. This period will focus on upgrading production systems to improve future efficiency.

This follows last week’s announcement of over 200 salaried positions, primarily engineers, being eliminated at GM’s global technical campus in metro Detroit as part of ongoing cost restructuring.

Federal credit expiration sends EV demand down

The layoffs coincide with a pivotal shift in federal EV support. The $7,500 incentive expired after September 2024, prompting a buying surge that inflated third-quarter sales. Automakers like General Motors saw record plug-in vehicle volumes, with GM reporting EV sales more than doubling year-over-year in that period.

Post-expiration, sales momentum waned significantly. Tracking by research firms indicated EVs comprised less than 6% of new vehicle sales in October 2024, down from nearly 13% in September—the lowest market share since 2022. Stephanie Valdez Streaty from Cox Automotive highlighted on a webinar that EVs hold growth potential, but the sector is entering a consolidation phase. She forecasted stabilization at 8% to 9% of total sales in 2025, with renewed expansion by 2027 as budget-friendly options from Rivian, Slate, and Ford enter the market.

Investors push automakers back toward gas-powered vehicles

Changing consumer patterns are influencing automaker communications with investors. GM CEO Mary Barra addressed shareholders last week, stating: “We’re going to build to consumer demand. We’re not going to overbuild,” while reaffirming that “electric vehicles remain our North Star.”

CFO Paul Jacobson echoed this on CNBC, noting EVs are integral to GM’s future strategy, but added: “We do have some structural changes that we need to do to make sure that we lower the cost of producing those vehicles.”

GM’s latest earnings revealed a $1.6 billion charge linked to EV production falling short of projections. This financial pressure, coupled with subdued demand, necessitated the manufacturing reassessment.

Similar adjustments are evident industry-wide; Ford halted F-150 Lightning production due to a supplier fire disrupting aluminum supplies. Wall Street analysts, per a Deutsche Bank investor note, anticipate prolonged emphasis on internal-combustion engine vehicles, stating: “The narrative becomes much more centered around ICE for longer.”