WASHINGTON (TNND) — General Motors has laid off 1,000 employees in a bid to cut costs as the company grapples with the unprofitability of its electric vehicles, according toreporting from the Wall Street Journal. Despite the financial challenges, production of electric vehicles continues to surge, driven in part by government incentives and mandates.
Government incentives, such as tax credits under the Inflation Reduction Act, play a significant role in encouraging automakers to fund and produce electric vehicles. Automakers are also motivated by the potential long-term profitability of electric vehicles, with Goldman Sachs research forecasting that electric vehicles will account for half of global car sales by 2035.
California is leading the charge with strict mandates, requiring 35% of new cars to be electric starting with 2026 models and by 2035, all new vehicle sales in the state must be zero-emission models. Eleven other states and Washington D.C. have adopted similar mandates. However, some automakers express concerns about the feasibility of these mandates. Toyota’s CEO has described the California-led mandates as “impossible” to achieve.
Currently, electric vehicles make up about 8.5% of car sales in the U.S., a figure that has been steadily increasing. 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 automakers are losing $6,000 on every EV sold.
