General Motors (GM) – Get General Motors Company Report was patient but eventually decided to respond.
The Detroit giant, like its peers, is facing disruptions in its supply chains, the shortage of chips and the rising prices of commodities such as nickel had initially waited before reacting.
Its competitors like Tesla (TSLA) – Get Tesla Inc. Report, have not hesitated to act quickly to protect their margins and not fully bear the rising cost of assembling their vehicles. Additionally, demand for cars — both gasoline cars and electric vehicles — remains strong. Automakers’ order books are full. Consumers are therefore seeing extended delivery times for their vehicles. This applies to both sedans and pickups / trucks.
GM has finally decided to follow its competitors and raise the price of the GMC Hummer EV pickup, the electric version of its legendary Hummer truck.
The Hummer EV has increased in price by $6,250 since June 18 and for all subsequent orders after that date, GM said. Any orders placed before June 18th will not be affected. With this price increase, the company hopes to be able to offset the high raw material and transport costs.
The Hummer EV is initially available in a top-of-the-line $110,295 Edition 1 model, but GM is offering three lower-priced variants starting at $80,000, $90,000, and $100,000. We now need to add the new price increase.
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As of now, reservations add up to more than 77,500 units for GMC Hummer electric pickups and SUVs. The Hummer EV pickup will be followed by the Hummer EV SUV in 2023. Reservations for the first model, Hummer EV SUV Edition 1, with a starting price of $105,595, are full, according to GM. There are three variants with a starting price of $80,000.
“Everything is on the table when it comes to how we need to think about some of these commodities that could become scarcer in the future,” GM CFO Paul Jacobson said at a conference organized by Deutsche Bank on June 15.
“We’re thinking really creatively because going forward we can’t just limit ourselves to how business with some of these trends has always been done.”
Jacobson also said GM was able to offset $5 billion in higher supply chain costs through price increases and cost cuts.
The Hummer EV’s main competitors are Rivians (RIVN) – Get Rivian Automotive Inc. Report R1T Pickup, Fords (f) – Get the Ford Motor Company Report F-150 Lightning and Tesla’s Cybertruck. Tesla plans to start production of the Cybertruck in 2023.
When Rivian raised the prices of its R1T electric pickup truck by 17% and its R1S SUV by 20% in February due to material costs and the ongoing chip shortage, the carmaker caused an uproar among its customers. To avoid order cancellations, Rivian was forced to forego price increases on orders placed before its decision.
“We announced price increases that broke the trust we have built with you,” Chief Executive Officer RJ Scaringe said at the time. “We erroneously decided to apply these changes to all future shipments, including pre-orders already configured.”