As it struggles to keep up with low-cost rivals like BYD, GM expects to suffer a $5 billion blow to its business in China. The multi-billion hit comes as GM rapidly loses market share in the world’s largest EV market.
GM sees $5 billion impact from restructuring in China
GM’s Chinese joint venture, SAIC-GM (SGM), a 50-50 partnership with state-owned SAIC Motor, is facing an over $5 billion impact as it restructures the business.
SAIC-GM revealed in a regulatory filing on Wednesday (via The New York Times) that it expects to write down between $2.6 billion and $2.9 billion in the fourth quarter. The automaker is also expecting another $2.7 billion in restructuring expenses.
According to the filing, GM’s latest measures will include “plant closures and portfolio optimization.” However, no specifics were given about which facilities would be included.
GM is “focused on capital efficiency and cost discipline” as it works with SGM to “turn around the business in China.” The company is close to finalizing a restructuring plan and expects year-over-year (YOY) improvement in 2025.
The announcement comes as GM’s market share in China has nearly halved over the past 10 years. GM’s market share in China fell from around 15% in 2015 to just 8.6% last year.
With three straight quarterly losses, GM has lost nearly $350 million in China this year. Its sales are down nearly 20% through the first nine months of 2024.
Like most legacy automakers, GM is struggling to keep pace with low-cost EV makers like BYD in China. BYD sold a record 506,804 vehicles in November, its second straight month topping the 500,000 mark. Through the first 11 months of the year, BYD has sold over 3.7 million EV and PHEV models.
BYD surpassed Volkswagen to become China’s top-selling car brand last year, ending the German automaker’s four-decade run.
As it expands overseas, BYD is now on pace to surpass Ford in global deliveries, which could make it the sixth-largest automaker globally.
Electrek’s Take
With low-priced EV models, like its top-selling Seagull, starting under $10,000 in China, BYD is squeezing legacy automakers like GM, VW, and Ford out of the market.
As it looks to overcome the new wave of EVs launching in China, BYD is quickly expanding in overseas markets like Southeast Asia, Central and South America, and parts of Europe.
For the first time in Q3, BYD delivered more vehicles than Nissan and Honda. Can it catch up to Ford and other leading global automakers? Although best known for its cheap EV models, China’s auto giant is quickly expanding into new segments like pickup trucks, midsize smart SUVs, and luxury models.
GM’s CEO Mary Barra told Fortune in October that China’s EV price war “has become a race to the bottom with pricing and the level of subsidies.” Barra explained that low-cost loans enable some companies to sell cars at a loss, which puts pressure on foreign automakers like GM.
Meanwhile, in the US, GM sold a record 32,095 EVs in the third quarter, up 60% year over year. The record sales were enough to top Ford and Hyundai, making GM the number two seller of EVs in North America, behind Tesla.
GM said its EV profitability in North America is steadily improving. The company expects to generate between $10.4 billion and $11.1 billion in net income this year.
