GM weighs tariffs, EV demand, factory flexibility as it moves some production to U.S.

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For years, General Motors had turned to Mexico to reduce assembly costs for many lower-priced vehicles.
Now it's spending $4 billion to move some of that production to the U.S. starting in 2027, as President Donald Trump's tariffs and evolving consumer demand changed the calculus.
GM's plan to build more gasoline-powered crossovers, pickups and SUVs at three U.S. plants gives the automaker more manufacturing flexibility for American consumers, who haven't switched to electric vehicles as fast as once anticipated.
General Motors is spending $4 billion at three U.S. assembly plants as it moves some vehicle production from Mexico and increases output of some gasoline-powered models in response to customer demand.
Investment
Chevrolet Blazer
Chevrolet Equinox
Chevrolet Silverado/GMC Sierra
Chevrolet Silverado
Source: General Motors
And it helps fill underused U.S. assembly plants, a key priority for the UAW, which has supported Trump's tariffs as a tool to encourage domestic auto manufacturing.
'It respects the tariff issue, but it is not driven entirely by the tariff issue,' said Stephanie Brinley, associate director of AutoIntelligence for S&P Global Mobility.
The fact that GM won't start building the vehicles in the U.S. for two years underscores the industry's message to the White House that production changes can't happen quickly, Brinley said. And with a longer runway for gasoline engines as EV demand builds gradually, GM will need to invest to keep its internal combustion lineup fresh.
After already spending billions of dollars to prepare an assembly plant in suburban Detroit for electric pickup production, GM now plans to build gasoline-powered trucks there instead. Orion Assembly will be a relief valve for other high-volume factories, including GM's SUV plant in Arlington, Texas, that are running near capacity.
'Automakers are thinking about more than one thing when they make sourcing decisions that are expected to last for a few life cycles,' Brinley said.
GM's new $4 billion investment will be shared among Orion Assembly, Fairfax Assembly in Kansas and Spring Hill Manufacturing in Tennessee. The automaker did not specify how much each plant would get, but sources told Automotive News affiliate Crain's Detroit Business that roughly half the amount is earmarked for Orion.
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'We believe the future of transportation will be driven by American innovation and manufacturing expertise,' GM CEO Mary Barra said in a June 10 statement. 'Today's announcement demonstrates our ongoing commitment to build vehicles in the U.S. and to support American jobs.'
GM will expand production of light-duty full-size gasoline pickups and SUVs to Orion Assembly, which has been down for retooling since the first-generation Chevrolet Bolt ended in late 2023. GM had delayed its timeline for the plant to reopen multiple times as EV demand stagnated.
'We had planned for that to be a big EV plant as we were thinking about rapid expansion of electric vehicles, and clearly we haven't seen that happen,' GM CFO Paul Jacobson said June 11 at a Deutsche Bank automotive investor conference.
'This is a great example of how we can pivot, how we can adjust, how we can be resilient in the face of an environment that's changing around us,' he said.
The Kansas plant will make the gasoline Chevy Equinox compact crossover, while Spring Hill will become the new home of the midsize Chevy Blazer now made in Ramos Arizpe, Mexico. A company source told Automotive News that production of the gasoline-powered Blazer will end in Mexico, while Equinox production will continue there for other markets.
The UAW celebrated GM's investment as 'a turning point' in its advocacy to bring auto jobs back to the U.S. from Mexico and other lower-cost countries.
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'The writing is on the wall: the race to the bottom is over,' UAW President Shawn Fain said in a statement. 'We have excess manufacturing capacity at our existing plants, and auto companies can easily bring good union jobs back to the U.S. They can prove the naysayers wrong by investing in our communities and putting workers before corporate greed. GM is showing that it can be done.'
GM's U.S. factory investment comes as the auto industry navigates the vehicle import tariffs Trump enacted in April. GM has said the tariffs will add $4 billion to $5 billion in costs this year and lowered the company's full-year earnings guidance as a result.
In recent weeks, GM has said it will increase U.S. production of full-size pickups that also are built in Canada and Mexico. The automaker likewise will cut production of the trucks in Oshawa, Ontario.
With the latest investment, GM said it will have capacity to build more than 2 million vehicles annually in the U.S. The $4 billion is in addition to $888 million it's spending to build more V-8 engines at a plant in New York.
Fairfax Assembly is currently offline for retooling to build the next-generation Bolt EV starting later this year, but that had been the factory's only assigned product after GM discontinued the Chevrolet Malibu sedan and Cadillac XT4 compact crossover. GM said the plant also is slated to build future low-priced EVs.
The automaker already uses a similar approach at Spring Hill and will assemble the Blazer alongside both gasoline and electric Cadillac crossovers.
'The idea that the Blazer and the Equinox EVs were going to replace volume of the gas-powered versions is a bit premature, and they're rectifying that situation by building more of them,' said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.
'Having flexible plants will help all automakers over the next decade or so. This is going to be a drawn-out transition, and many of the manufacturers did not plan for that.'
Jacobson said investing in existing U.S. plants with excess capacity is a more efficient use of capital than building new factories.
'That optionality is really important and critical for us as we move forward, being able to respond to where EV demand is going to be,' he said.
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