General Motors plans to invest billions of dollars to continue producing its biggest gas-powered pickups and SUVs for at least another decade.
A series of announcements made this month took many observers by surprise considering CEO Mary Barra’s oft-repeated mantra that GM is on “a path to an all-electric future.” But by continuing to produce its biggest — and most profitable — trucks through at least the early 2030s the automaker expects to generate billions to help fund the costly transition to EVs.
And it’s not alone. Even as it ramps up production of its all-electric F-150 Lightning pickup, Ford is rolling out the next generation of its Super Duty models, with production set to push up to, and possibly into, the early 2030s.
HD pickups likely to “be the last” to go all-electric
The same is the case at Stellantis where the Ram truck brand recently unveiled the all-electric Ram 1500 Rev pickup set to launch next year. But shortly before being reassigned to run the Mopar accessories division, then-Ram boss Mike Koval told TheDetroitBureau.com the brand’s own heavy-duty models would likely “be the last” among all Stellantis products to switch to battery power.
EV pickups, at least light duty models like the Ram 1500 Rev, Ford F-150 Lightning and Chevrolet Silverado EV, have generated significant interest from potential buyers. Ford, the first of the Detroit automakers to launch an electric full-size truck, cautiously tooled up a new plant in Dearborn, Michigan to assemble just 25,000 of the Lightnings annually.
But initial demand has been so strong it is expanding capacity to handle 150,000 a year — while investing about $6 billion to set up a new EV truck plant, dubbed BlueOval City, near Memphis, Tennessee.
Pushback
But there has been pushback. Some of it is political, with some Conservatives resisting the Biden administration’s charge into electrification. There’s also concern about whether EV trucks are up to the job. Real-world tests of the Lightning have found its EPA range sharply reduced when towing, a common use for pickups of all sizes.
The suburban buyers who make up a large share of sales for light duty pickups, such as the Lightning and Ram Rev, are less likely to see that as a drawback, according to industry data. On the other hand, range, towing and cargo load numbers are particularly critical for heavy-duty truck users. And that goes for both pickups and full-size SUVs, such as the Chevrolet Suburban and Ford Expedition.
There’s yet another reason why automakers plan to take it slow shifting such models from gas to electric: the massive profits they deliver. The gas-powered offerings have some of the highest margins in the industry, according to Joe Phillippi, head of AutoTrends Consulting.
EV parity is still a ways off
And that could prove critical in the years ahead, as automakers like GM begin switching over the rest of their product lines.
During an earnings call in May, Ford CEO Jim Farley warned all-electric models aren’t likely to reach cost parity with the company’s gas-powered models until as late as 2030. In the meantime, the automaker — and its rivals — are investing tens of billions of dollars to engineer those new EVs and set up the factories needed to build them.
In GM’s case, that helps explain why the automaker plans to continue building gas-powered trucks, likely right up to the 2035 target date CEO Barra has set to go completely electric.
Big profits
“In the meantime, profit from ICE vehicles continues to roll in,” the Reuters news service said in a new study. On average GM delivered an average $10,678 in earnings for each of its trucks and SUVs — before interest and taxes — last year, according to Benchmark auto analyst Michael Ward.
On full-size pickups and SUVs alone, Reuters estimated, that will translate into $7.5 billion a year in earnings. And that will more than justify the $1.5 billion GM said last week it will invest in two plants in Flint, Michigan to produce heavy-duty pickups, and two others in Ontario and Texas to assemble full-size SUVs.
GM’s Arlington, Texas plant, which produces big gas-powered models including the Chevy Tahoe and Suburban, as well as the GMC Yukon, is “the most profitable auto plant in the world,” Ward told Reuters. Last year, he noted, it produced 345,000 of the big SUVs, generating $25 billion in revenue and nearly a third of the automaker’s earnings before interest and taxes, or EBIT.
Cadillac Escalade the big exception
GM scrapped an early plan to build all-electric versions of its biggest pickups, according to AutoForecast Solutions — with one exception. Last month, it confirmed that it will launch the battery-powered Cadillac Escalade IQ. The automaker didn’t discuss timing but it’s expected to go into production late next year as a 2025 model.
That wasn’t a complete surprise, as Cadillac has indicated it will be the first GM brand in North America to go 100% electric. Even so, versions of the big Escalade using internal combustion engine, or ICE, technology will remain in production for the foreseeable future.
But the transition to electric propulsion will eventually cover the rest of the full-size truck range. By the end of the decade, according to AutoForecast Solutions, GM will offer EV versions of models like the Tahoe, Suburban and Yukon. The precise timing of going all-electric with heavy-duty pickups has yet to be locked down.
Timing TBD
Several factors could influence timing, starting with the ongoing development of EV batteries. GM’s latest Ultium technology offers a big improvement over the earlier lithium-ion cells used in the Chevrolet Bolt, its first long-range EV.
Researchers are working on technologies that could deliver another giant leap. Toyota, for example, announced Tuesday it plans to start producing new solid-state batteries in 2026 that could yield nearly 650 miles of range — depending upon the vehicle — and cut charging times down to as little as 10 minutes.
The automaker also is targeting a cost reduction of 20% compared to today’s best lithium-ion batteries. While GM has the most aggressive plan in place for electrifying its North American vehicle line-up, its domestic rivals are accelerating their own plans. Both Ford and Stellantis have an assortment of all-electric light trucks under development. But they also plan to take it slow when it comes to their largest — and most profitable — pickups and SUVs.