The leading U.S. automaker is refocusing on domestic production with significant investments.
General Motors unveiled a $4 billion plan to bolster U.S. manufacturing over the next two years, aiming to relocate vehicle production from Mexico to the United States for both gas-powered and electric vehicles.
On Tuesday, GM CEO Mary Barra affirmed the company’s goal to produce two million vehicles annually in the U.S., supporting American jobs. In 2024, GM manufactured 889,072 vehicles in Mexico, including the Chevrolet Equinox and Blazer.
Starting in 2027, U.S. plants will produce gas-powered Chevrolet Blazer models at GM’s Spring Hill, Tennessee facility and Equinox models at its Kansas City, Kansas plant. Additionally, GM’s Orion Township, Michigan plant will manufacture gas-powered full-size SUVs and light-duty pickup trucks, shifting from its prior exclusive focus on electric vehicles like the GMC Hummer, Cadillac Lyriq, and Chevy Silverado EV.
This marks GM’s second recent adjustment to its EV strategy. Last month, the company allocated over $800 million to produce new V-8 engines at its Buffalo, New York plant, previously dedicated to battery production. Despite these shifts, electric vehicles remain a priority, with GM reporting record Chevy EV sales last month and planning to ramp up production of the affordable Bolt EV in U.S. factories this year.
GM’s manufacturing pivot aligns with navigating President Donald Trump’s automotive tariffs. In April, Trump signed an executive order easing his earlier 25 percent import tariffs on cars and parts, but the levies still pressure automakers to localize production. Barra estimated tariff-related costs could reach $4 to $5 billion this year, though she did not confirm whether these would impact consumer prices.
GM, which operates 50 U.S. manufacturing plants and supports one million jobs across its network, faces challenges from higher labor costs, according to Morningstar analyst David Whiston. He noted that these costs might pass to dealers and consumers, potentially raising vehicle prices and affecting global competitiveness. Despite this, Whiston believes GM will stay profitable, though the company recently lowered its earnings forecast due to Trump’s policies.
The tariffs could push other automakers, like Stellantis, to increase U.S. production. Whiston highlighted that Japanese and Korean manufacturers—Toyota, Honda, Nissan, Hyundai, and Kia—face a dilemma: absorb tariff costs temporarily or invest in costly U.S. plants. Independent analysts warn that tariffs may still lead to higher consumer prices and reduced sales, even with increased domestic production.
Foreign automakers are exploring partnerships to access U.S. facilities to mitigate tariff impacts.