General Motors has laid off 1,000 employees in an effort to reduce costs as the company faces challenges with the unprofitability of its electric vehicles, according to the Wall Street Journal. Despite these financial struggles, production of electric vehicles continues to rise, fueled in part by government incentives and mandates.
Government programs, such as tax credits under the Inflation Reduction Act, play a major role in encouraging automakers to invest in electric vehicle production. Additionally, there is optimism about the long-term profitability of electric vehicles, with Goldman Sachs research predicting that electric vehicles will represent half of global car sales by 2035.
California is at the forefront of this push, enforcing strict mandates that require 35% of new cars to be electric starting with 2026 models. By 2035, all new vehicle sales in the state must be zero-emission. Eleven other states and Washington D.C. have adopted similar policies. However, some automakers have raised concerns about the feasibility of meeting these mandates. Toyota’s CEO, for example, has called the California-led requirements “impossible.”
Electric vehicles currently make up about 8.5% of car sales in the U.S., a figure that continues to grow. However, most automakers, except Tesla, are losing money on electric vehicle production. Ford, for instance, has reported a $2.5 billion loss on electric vehicles in 2024 alone. A study by Boston Consulting Group found that automakers are losing $6,000 on every EV sold.
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