The US’s biggest carmakers are slowing their plans for electric vehicle (EV) production, as lower consumer demand dents forecasts.

General Motors (GM) said on November 29 that it will roll out a $10bn share buyback in a bid to boost its share price, following a letter from the CEO in October that it is “moderating the acceleration of EV production in North America to protect our pricing [and] adjust to slower near-term growth in demand”.

The week prior, American auto giant Ford said on November 21 that it was scaling back plans for its new battery plant in Michigan as it balances investment, growth and profitability. Its Michigan plant will now create some 1700 jobs, down from an initially announced 2500, while its planned capacity of roughly 20 gigawatts (GW) per hour remains unchanged. This followed the firm’s announcement in October that it will postpone $12bn of its planned investment in EVs. 

Arun Pillai-Essex, principal consultant at Verisk Maplecroft, says that with consumers feeling the pressure from higher interest rates and inflation, demand for EVs has been curtailed.

“These headwinds show no sign of abating in the immediate short term, curbing demand for EVs, which — despite efforts by major carmakers to cut prices — remain costlier than internal combustion engine vehicles,” he says. According to a Pew Research Centre survey this year, half of US adults say they are “not too or not at all likely to consider purchasing an EV”. 

Elsewhere, both Ford and GM recently agreed pay rises with the United Auto Workers (UAW) trade union following weeks of strikes. GM estimates that the UAW strike cost the company $1.1bn.

South Korea’s LG Energy Solution is also laying off 170 workers at its Michigan battery plant, according to local press reports. 

Under the Inflation Reduction Act, EV producers and battery makers in the US have been able to avail themselves of tax credits for manufacturing battery materials domestically. Atlas Public Policy estimates that carmakers and battery producers will invest roughly $210bn in EV production in the US by 2030.

Greenfield foreign direct investment and interstate investments in the US EV supply chain have fallen from an estimated $10.5bn in the first quarter of this year to $6.4bn in the third quarter, according to fDi Markets. Interstate investments, where an American company makes a domestic investment outside its home US state, fell to just $33m in the third quarter, their lowest level since the first quarter of 2019.

Meanwhile, a broader challenge for US carmakers will be “ensuring that EV charging networks expand in tandem to accommodate EV demand”, says Mr Pillai-Essex.

“Boosting access to charging networks is a major plank of the Biden administration’s goal to convert 50% of all new car sales to electric by 2030 and make important strides to reach net-zero by 2050,” he adds.