GM shares were trading down nearly two per cent at midday, even though CFO Paul Jacobson said demand for GM’s trucks and SUVs remains strong in the United States.

GM has been able to raise prices in the U.S. over the past two years as supply chain bottlenecks kept production in check. Going forward, Jacobson said the opportunity to boost prices much further “isn’t there. We have to be more urgent around cost-cutting.”

GM will cut production to keep inventories in check, Jacobson said. The automaker earlier this year shut down a pickup truck assembly factory in Fort Wayne, Indiana, for two weeks.

GM had set a goal of cutting $2 billion from operating costs by the end of 2024, with 30 to 50 per cent of the total being achieved this year (all figures US$). The response to a buyout program announced last month means GM will be at the higher end of that 2023 goal, Jacobson said during a presentation at a Bank of America conference.

GM will take a $1 billion charge in the first quarter, he said. The company had previously projected $1.5 billion in charges related to staff reductions.

Jacobson said GM is now allocating 75 per cent of its annual capital spending toward electric vehicle projects, which in the short term will be less profitable than the automaker’s combustion vehicles.

GM is in a good position to benefit from U.S. electric vehicle subsidies under the Inflation Reduction Act because of its investments in North American battery, raw materials and EV assembly, Jacobson said.

GM has three battery factories in North America, and will announce the location of a fourth domestic battery plant soon, he said.

Jacobson added that the company was going to have to “prioritize down” on growth businesses to focus on preserving cash. Some analysts have questioned GM’s continued investments in its Cruise robo-taxi business. Jacobson said Cruise is expanding and “executing really well.”

— Reporting for Reuters by Nathan Gomes in Bangalore and Joseph White in Detroit.

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The base variant of Ford’s electric F-150 truck now starts at $59,974, excluding shipping and taxes, up nearly 50 per cent from its starting price when launched last year (all figures US$).

The Detroit automaker resumed production of the F-150 Lightning earlier this month after recalling 18 electric trucks due to a battery-cell manufacturing defect.

Ford’s hike comes after EV maker Tesla ignited a price war this year by aggressively trimming prices.

A week earlier, Ford said its electric-vehicle business unit was expected to lose $3 billion this year, but remained on track to achieve a pretax margin of eight per cent by late 2026.

The company was not immediately available for further comment on the price increase, which was first reported by Automotive News on Thursday.

— Reporting for Reuters by Kannaki Deka and Nathan Gomes in Bangalore.

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GM CEO Mary Barra on Wednesday told the annual CES technology conference via video that the electric Silverado will launch in two stages in 2023, starting in the second quarter with a $39,900 WT work truck that will be delivered to a limited group of commercial fleets (all figures US$).

In the fall of 2023, GM plans to start delivering a consumer, outdoor adventure-oriented model that will start at $105,000 — more than an electric Mercedes EQS sedan.

Retail customers will see less expensive versions of the electric Silverado roll out in 2024 and beyond, Chevrolet officials said in briefings ahead of Barra’s CES speech. Barra was scheduled to make her speech online after GM pulled out of in-person attendance at CES due to the spread of the Omicron variant of the coronavirus.

The electric Silverado’s debut escalates a battle for sales and customer loyalty in a segment that includes some of the most profitable vehicles the Detroit automakers sell. Startup Rivian Automotive’s electric R1T pickup, first shown in 2018, and Tesla CEO Elon Musk’s polarizing vision for an all-electric pickup called the Cybertruck, spurred the Detroit Three to accelerate development of electric pickups.

The Cybertruck’s launch date remains uncertain. For now, the first lap of the electric pickup race is a contest among Ford, GM and Rivian, which began shipping the first of its $67,500 and up R1T models late last year.

The electric Silverado, built on the same architecture as the GMC Hummer EV, will enter the race for both fleet and consumer buyers a year or more behind the electric Ford F-150 Lightning. That gap reflects contrasting strategic choices by the long-time rivals.

Barra and GM president Mark Reuss are betting GM will win in the long run by first developing dedicated electric vehicle architectures and a vertically-integrated battery and motor production chain, then launching electric vehicle models in high volume during the middle and latter part of this decade.

By then, GM executives expect the costs of the company’s proprietary Ultium battery technology will be lower than rivals, conferring a decisive advantage.

Ford took a different path. The F-150 Lightning due for delivery starting this spring is a modified version of the current, gasoline F-150 that is part of the best-selling vehicle line in the United States.

Ford’s approach was faster, and Ford CEO Jim Farley last month said the company had to cap at 200,000 the number of reservations it will take from consumers for the truck.

Farley is pushing aggressively to build as many Lightnings as possible before GM’s Silverado and other rivals hit the market. On Tuesday, Ford said it planned to double capacity for building Lightnings at its Rouge complex in Dearborn, Michigan. to 150,000 vehicles a year. Ford last September said it was increasing Lightning capacity to 80,000 from 40,000 vehicles.

Ford also is starting work with battery partner, SK Innovation, on an $11.4 billion network of vehicle assembly and battery-making plants in Tennessee and Kentucky.

Ford and GM both are targeting commercial fleet customers with electric pickups priced just below $40,000.

GM said the WT, or work truck, version of the Silverado EV will have a 400-mile driving range and will first go to a select group of fleet customers under deals already negotiated. GM expects to deliver “tens of thousands” of electric work trucks, said Steve Carlisle, head of GM’s North American operations.

Ford and GM are taking different paths to winning retail customers. The F-150 Lightning for retail customers has a 300-mile range, a 400-litre capacity front trunk that can function as a drink cooler and an option that enables the truck to power a house during a blackout. It can carry 1,800 pounds of stuff. The consumer Lightning had a starting price of $52,974, excluding tax breaks, before Ford capped orders.

The electric Silverado RST for retail buyers has a 400-mile range, a “mid-gate” in the back of the cab that can accommodate kayaks and surfboards, but carries less cargo and will not have backup generator capability when it launches.

Carlisle said the generator function is “very much on the radar.” A Chevrolet spokeswoman said bi-directional charging to power a home will be available within the first year of production.

GM executives said they will emphasize the Silverado’s superior range in advertising that will start this year.

GM’s decision to charge European luxury car prices for the first Silverado RSTs mirrors the strategy for the first Hummer EVs, which started at over $110,000 and are now available for starting prices of $99,995 — more than double the average transaction price for a GM vehicle.

— Joe White is a Reuters automotive industry correspondent in Detroit.

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Catching up with rival trucks from Stellantis NV and Ford Motor Co., most 2022 Silverado models will get larger dashboard screens and new connectivity technology featuring built-in Google voice commands and software.

Chevrolet also will add a 420-horsepower Silverado ZR2 designed for rugged off-road adventures — or to give the appearance that the owner would have them. The Silverado ZR2 will chase Ford’s F-series Raptor and the Ram TRX from Stellantis, which are attention-getting performance models for those brands.

The current Silverado, launched in early 2019, has been outflanked in sales by rival Stellantis NV’s Ram pickup. The Ram in 2018 got a makeover with a more refined interior and a 12-inch dashboard screen that was closer in style to a Tesla Model S sedan than a conventional pickup truck.

The Fiat Chrysler unit of what is now Stellantis also expanded production capacity for Ram pickups in North America, gunning to displace the Chevy Silverado as the No. 2 brand in the North American pickup segment.

That strategy — led by Mike Manley, now head of Stellantis North America — worked. Through the first half of 2021, Ram’s pickups have outsold the Silverado and are now in second place behind Ford’s F-series trucks, the best-selling model line in the United States for more than 40 years, according to sales data compiled by Automotive News.

Smartphone-like experience

Steve Carlisle, head of GM’s North American operations, told Reuters GM has learned from the challenge from Ram. “You have to be very agile and react,” he said. “And maybe ask different types of questions.”

Going forward, Carlisle said GM sees the market moving from “bigger is better” when it comes to dashboard displays to more emphasis on improving the user experience.

Carlisle said his goal for the revamped Silverado is to knock Ford out of the top spot in the segment.

“We will not rest until that happens,” he said, though he added, “we are going to do the right thing from a brand point of view.”

Ram and Ford have their own upgrades coming for 2022. Ram trucks will get enhanced infotainment systems. Ford is touting a hybrid system available on the F-150 pickup that can power a house, and promoting its all-electric F-150 Lightning coming next spring.

The new Silverados will get other new technology. The redesigned trucks will be the largest-scale application of GM’s partnership with Alphabet Inc.’s Google to create a more smartphone-like experience in cars. And top-of-the-line Silverados will offer GM’s Super Cruise system as an option to enable hands-free driving on more than 200,000 miles (321,869 km) of roads in Canada and the U.S.

The Silverado ZR2 responds to a more traditional form of automotive competition. Powerful pickup trucks equipped with tall, beefy suspensions and other modifications to handle racing over rough desert or leaping sand dunes have become the 21st century answer to Detroit’s 1960s muscle cars. Ford and Ram had models designed for extreme off-road enthusiasts. Chevy did not. Now it will.

Carlisle said 60 per cent of Chevrolet Silverados sold now are “lifted trucks” with tall suspensions. The Silverado ZR2 will add a 420-hp, eight-cylinder gasoline engine to the formula. Carlisle said the ZR2 could account for more than 10 per cent of Silverado sales.

Ford’s Raptor has a starting price of nearly US$66,000. Carlisle said Chevrolet’s ZR2 will be more “accessible” with a lower starting price.

— Reporting for Reuters by Joe White in Detroit.

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The second-largest U.S. automaker said the recall covers certain models between the years 2017 and 2019 with carpet flooring that could experience a post-crash interior fire.

According to the statement, in affected vehicles a front seat belt pretensioner that deploys during a crash could generate excessive sparks and possibly ignite a fire.

Ford said it was aware of one report of a fire related to this condition in the United States, and was not aware of any accidents or injuries related to this condition.

The affected vehicles were built in Ford’s Kentucky truck plant between Oct. 8, 2015 and Oct. 29, 2019, the company said.

The recall impacts 490,574 vehicles in the U.S. and federal territories, 56,112 in Canada, and 852 in Mexico, Ford said.

— Reporting for Reuters by Dominic Roshan K. L.

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Strong U.S. sales this year of the highly profitable big trucks have helped offset lagging passenger car sales.

But it is not clear how much of the truck demand is linked directly to ample factory incentives and dealer discounts, or how far sales might decline without those subsidies.

A Reuters survey of Ford, General Motors’ Chevrolet and Fiat Chrysler Automobiles’ Ram truck dealers across the U.S. indicates stores are offering deep discounts on some of the country’s best-selling full-size pickup trucks.

“The walls are not crashing down on full-size trucks,” said Sam Fiorani, vice-president of global vehicle forecasting at AutoForecast Solutions in Chester Springs, Pennsylvania. Detroit-based automakers want to keep cranking out their high-margin trucks, he added, and “giving up a little of the profit is the cheapest way to do it.”

Stores are offering discounts of up to $12,000 on the 2018 Ford F-150, which remains the best-selling vehicle in the country, recording more than 80,000 sales in May (all figures US$).

Discounts run up to $13,000 on the 2018 Chevrolet Silverado and as high as $16,000 on the Ram 1500.

Average transaction prices for full-size pick-ups range from around $42,000 to $45,000, industry analysts and automakers say.

All three companies are spending furiously — GM and Fiat Chrysler to help sell off carryover 2018 trucks to prepare for redesigned 2019 models, and Ford to sustain its long-held sales crown.

A supplier fire that temporarily shut down production of the F-150 last month “changed the game,” said Jeff Schuster, senior vice-president of forecasting at LMC Automotive in Troy, Michigan.

The supply halt nudged Ford’s crosstown rivals “to ratchet up incentives on the current models to go after weakness at Ford,” he said.

Deals advertised on the companies’ official websites range from rebates and low-interest loans to ultra-cheap lease rates, but they are not telling the whole story.

Ford, for instance, advertises a $2,000 rebate and a $500 financing credit on sales of certain F-150 models.

But James Collins Ford in Louisville, Kentucky, is offering discounts of up to $12,215 on the 2018 F-150 XLT SuperCrew 4×4.

The price cuts are even steeper at a number of GM and Fiat Chrysler dealers.

Quirk Chevrolet is selling the 2018 Silverado 1500 Double Cab at $13,000 off sticker. Gurnee Chrysler Dodge Ram Jeep outside Chicago is marking down the 2018 Ram 1500 Harvest Crew Cab 4×4 by up to $16,000.

— Paul Lienert is a Reuters correspondent covering the U.S. auto sector from Detroit.

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The recall, the third announced by Ford this week, affects 2017 model year F-250 vehicles powered by 6.2-litre gasoline engines and built in its Louisville, Kentucky, truck plant, it said in a statement.

Ford, the second-largest U.S. automaker, also said it was unaware of any injuries or accidents associated with the latest issue.

The company said Wednesday it was recalling 211,000 vehicles in North America to replace potentially faulty side door latches.

Another recall involves 230,000 vehicles that present a fire risk in the engine compartment. Ford said it had reports of 29 fires related to that issue but no injuries.

The Dearborn, Mich.-based automaker had previously recalled nearly four million vehicles for door latch issues in six separate announcements since 2014, including 2.4 million vehicles recalled in late 2016.

— Reporting for Reuters by Frank McGurty.

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