GM Has Already Paid Out $800 Million In Recall Costs For The Chevy Bolt Alone

The Chevy Bolt is causing more headaches for General Motors.

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Photo: Raphael Orlove

GM’s first big EV project since the EV1 has had a rough run so far. All that and more in The Morning Shift for August 4, 2021.

1st Gear: The Chevy Bolt Isn’t Cheap ... For GM

GM just announced its Q2 earnings, and that it made a $2.8 billion profit. Also included was this tidbit:

  • Revenue of $34.2 billion
  • Net income of $2.8 billion, and EBIT-adjusted of $4.1 billion, including warranty recall costs of $(1.3) billion, of which $(0.8) billion was related to the Chevrolet Bolt EV

The Chevy Bolt was supposed to be a home run for GM, a mainstream contender in the startup EV market. Having a series of fire-related recalls undermines it all.

There have been bigger recalls — hell, GM has been leaking money related to the ignition-switch drama for years, as noted in the same earnings report — but I still can’t get over this continuous comedy of errors for the car meant to beat the Tesla Model 3 and not.


The Bolt completely misread the market (let’s take on the premium Tesla Model 3 with a not-budget hatchback!) and I kind of wanted it to succeed in spite of itself. Alas.

2nd Gear: Profits For Honda And Toyota, Too

Car companies can’t help but keep making money even as they face colossal supply shortages. Along with GM, Honda and Toyota have seen strong profits.


Honda, via Reuters:

Honda swung to a quarterly profit as its vehicle sales recovered from the impact of the COVID-19 pandemic.

Operating profit in the latest quarter that ended June 30 was 243.21 billion yen ($2.23 billion) compared with a 113.7 billion yen loss a year ago.

Strong sales in the U.S. in the quarter contributed to Honda’s improved profit, Kohei Takeuchi, the automaker’s senior managing director, said during an earnings briefing on Wednesday.


Toyota, via Automotive News:

Toyota Motor Corp. blasted past the global pandemic and microchip shortage to achieve record operating profit in the latest quarter on robust sales and cost control as it managed to keep the product pipeline pumping, despite assorted production challenges.

Operating profit surged to 997.4 billion yen ($9.14 billion) in the company’s fiscal first quarter ended June 30, from 13.9 billion yen ($127.4 million) the previous year, when the worldwide auto industry was hit by the COVID-19 outbreak.

The results delivered a robust 12.6 percent operating profit margin for the most recent quarter, up from 0.3 percent a year earlier, as Toyota fortified its bottom line despite the global headwinds.


These companies caution that the piper should come calling by the second half of the year, when the short supplies of cars eventually dry up altogether.

3rd Gear: Strike!

There’s a mechanics strike at dealerships around Chicago, as Automotive News reports. Mechanic strife in Chicago is nothing new.

Auto mechanics working at 56 Chicago-area car dealerships went on strike Monday after voting to reject a proposal for a new contract.


In its news release, the union said it had three primary issues it wanted resolved. First, the union wants NCDC to not make it easier to reduce weekly guaranteed pay if a skilled worker is not meeting work expectations due to circumstances outside their control, such as COVID-19 shutdowns.

Second, union members want NCDC to pay agreed-upon health insurance rates. Third, the union wants NCDC to cease using language that “undermines the bargaining process by allowing it to cherry-pick provisions that it sees as favorable in other agreements.”


Negotiations have been going on for months, and the union says the strike is a last resort. Nobody should have covid held against them, and we’re rooting for the workers.

4th Gear: Subaru Recalls 165,026 Cars

Very sadly, this hits BRZ owners in addition to everyone who bought a more normal Subaru. At odds is an issue with fuel pressure, as Automotive News reports:

The recall, issued July 29, includes certain 2019-2020 Ascent, 2018 Forester and 2018-2020 Impreza, Legacy and Outback vehicles. It also covers 2018-2019 BRZ, WRX and Toyota 86 vehicles.

The affected vehicles may have a low-pressure fuel pump that may include an impeller manufactured with a lower density.

Dealers will replace the low-pressure fuel pump in the vehicles free of charge. Owner notification letters are expected to be mailed Sept. 13.


5th Gear: Here’s A Good Story On How We’re Underspending On Recreational Trails

The wonderful Streetsblog ran a story on how the Feds underestimated how much Americans use lovely recreational trails. The basic issue is that the government isn’t putting in as much investment into things like rail trails or snowmobile tracks as we’re paying in taxes on things like, well, gas for our snowmobiles. From Streetsblog:

According to a long-delayed new fuel study from the Federal Highway Administration, users of snowmobiles, all-terrain vehicles, and other off-road automobiles pay an estimated $281 million into the Highway Trust Fund via gas taxes every year — a staggering sum that advocates say was more than 10 percent higher than early estimates, and which doesn’t even account for the massive economic benefits of non-motorized travel that takes place on the same paths every day.

But under the federal government’s current surface transportation reauthorization bill, the FAST Act, the Recreational Trails Program gets just $84 million a year — not nearly enough money to maintain, much less expand, the vast network of urban greenways and critical rural transportation connections which the program funds. Contrary to what the name might suggest, the Recreational Trails Program is a versatile initiative responsible for funding many key transportation arteries for non-drivers, including segments of the Empire State Trail that run through New York City; about 30 percent of program funding is specifically allocated towards non-motorized transport, with a further 40 percent devoted to mixed-use paths.


My theory is more people are using these trails because our roads are just not fun to be on at all.

Reverse: I Missed This One Yesterday

My mom always told me about Reagan firing the air traffic controllers as a foundational act of destruction against the fabric of American society. This wasn’t the start of the end, but some days it feels like it was.


Neutral: What’s Your Favorite GM Oddball?

I have a very soft spot for the four-cylinder rope-drive Pontiac Tempests, and considered getting one instead of my VW Bug.