GM Re‑Embraces Gas Cars as EV Dream Hits a Major Pothole

The electric vehicle revolution just got a harsh reality check. General Motors is tapping the brakes on its all-electric push, signaling that the gasoline-powered cars we’ve known for a century have a much “longer runway” than previously predicted. This marks a strategic pivot that speaks volumes about the cooling EV market.

The shift in tone and strategy was laid bare during the company’s second-quarter conference call with analysts Tuesday, where executives announced plans to increase production of popular and profitable internal combustion engine (ICE) models. The move is a direct response to a messy, slowing EV market and the looming expiration of the popular $7,500 federal tax credit for new electric vehicles on September 30th. Sales of EVs dropped by over 6% in the second quarter compared to the second quarter of 2024.

In a clear sign of the new direction, GM CEO Mary Barra announced that the company will be “adding Chevrolet Equinox ICE production at Fairfax assembly in Kansas and moving Blazer ICE production to Spring Hill in Tennessee,” according to the transcript of the second-quarter’s earnings conference call. This decision to bolster the output of two of its bestselling gasoline SUVs is a pragmatic retreat from the all-in-on-EVs rhetoric that has dominated the auto industry for the past several years.

“We are well positioned to succeed in an ICE market that has now a longer runway,” Barra told analysts, a striking admission from the leader of a company that has invested billions in its all-electric Ultium platform. “We will continue to drive improved profitability for ICE, and focus on EV profitability improvement.”

This strategic pivot is rooted in a simple truth: while EV sales have grown, they haven’t grown fast enough to offset the massive capital investment, especially as mainstream consumers show hesitation. As recent sales data has shown, the EV market has become a messy battleground with clear winners and losers, and the initial explosive growth has tempered into a more challenging slog. The end of the federal tax credit, a key incentive that helped bridge the price gap for many buyers, is poised to make that slog even tougher.

GM’s answer is to lean on its traditional strength. Chief Financial Officer Paul Jacobson framed the company’s ability to build both gas and electric vehicles as a core competitive advantage over EV-only startups.

“That built in flexibility for us to switch between EV and ICE and make sure that we meet customers where they are is an inherent advantage that we have,” Jacobson explained. “We can absorb some of the cost of that manufacturing facility with more ICE production if EV demand goes down. So that flexibility is gonna be important for us as we as we go through the next several years, and I think it’s gonna be helpful on that journey.”

For the American car buyer, the immediate impact is clear. The affordable, familiar gasoline-powered SUVs they continue to buy in droves will be more readily available. The dream of a truly mass-market, affordable EV, however, appears to be pushed further down the road as automakers confront the challenge of making them profitable without government subsidies.

This doesn’t mean GM is abandoning its electric ambitions. Barra was firm that a profitable EV lineup remains the company’s “North Star.” But the path to that star is now being paved with profits from gasoline-powered trucks and SUVs. The focus has shifted from a headlong rush into electrification to a more methodical, financially-grounded transition.

“What we’re investing going forward is largely focused on improving our EV profitability,” Barra stated, referencing developments in lower-cost batteries. When pressed by an analyst on whether there was a clear path to making affordable EVs profitable, her answer was resolute but telling.

“We are focused on each and every vehicle getting to profitability and we’re not going to stop until they do,” she said.

GM’s recalibration is a story of pragmatism over promises. It’s an acknowledgment that market realities and government policy have forced a change of course. By leveraging the enduring popularity of its gas-powered vehicles, GM is buying itself time and generating the cash needed to make its electric future not just a vision, but a viable business.