The ICE Age Isn't Over: GM's Gas Investment Gambit and the EV Timeline Reckoning

The electric vehicle (EV) revolution has long been framed as an inevitability, with investors and policymakers alike betting heavily on the rapid decline of internal combustion engine (ICE) vehicles. Yet General Motors' recent $4 billion U.S. manufacturing investment, doubling down on gas-powered trucks and SUVs, signals a stark rebuttal to this narrative. Far from a defensive move, this strategy underscores a critical truth: the ICE vehicle's commercial viability remains robust, and its profitability could outpace EVs for longer than markets expect. For investors, GM's pivot to high-margin ICE vehicles presents a contrarian opportunity—one that challenges the overhyped EV timeline and rewards those willing to bet on the resilience of the combustion engine.

The Gas-Fueled Manufacturing Push
GM's $4 billion allocation targets three core plants, each designed to amplify production of gas-powered SUVs and trucks—a segment where the company already dominates. At Orion Assembly in Michigan, gas-powered full-size SUVs and light-duty pickups will begin rolling off assembly lines in early 2027. Meanwhile, Fairfax Assembly in Kansas will produce the Chevrolet Equinox, a model whose sales surged 30% year-over-year in early 2025, while also launching an updated EV version of the Bolt by late 2025. Spring Hill Manufacturing in Tennessee will add gas-powered Blazer production, complementing its existing EV output.

This strategy is not merely about maintaining market share; it is a calculated response to structural realities. . Tariffs on imported vehicles and parts—up to 25% under U.S. trade policies—have created a financial imperative for GM to localize production, shielding itself from costs that could otherwise eat into margins. The company's 2025 capital expenditure guidance of $10–$12 billion annually, sustained through 2027, reflects a long-term commitment to this dual-track approach.

Why the EV Timeline is Slipping
The market's fixation on EVs has led to aggressive adoption forecasts, but GM's investment reveals a gap between hype and reality. While EVs are undeniably the future, their penetration rate is uneven. In 2024, GM sold 13 EV models across its brands but still derived only 5% of U.S. sales from EVs, with trucks and SUVs (gas-powered) accounting for over 60%. This disparity underscores a fundamental truth: consumers remain drawn to the cost efficiency, range, and performance of ICE vehicles, particularly in light trucks—a segment where GM holds a commanding lead.

The delayed EV shift is also a function of infrastructure and affordability. would likely show that while EV sales are growing, they are doing so from a smaller base, while trucks and SUVs continue to command premium pricing and steady demand. For investors, this means EVs' “winner-takes-all” narrative is premature. Pure-play EV manufacturers, such as Tesla or Rivian, face headwinds from pricing pressure, supply chain bottlenecks, and slower-than-expected consumer uptake. In contrast, GM's hybrid strategy—balancing ICE profitability with EV expansion—offers a safer, more flexible path to returns.

Profitability: ICE's Unacknowledged Edge
The financial case for GM's ICE focus is clear. Trucks and SUVs, particularly full-size models, carry gross margins of 20–25%, versus 10–15% for smaller EVs, due to their higher pricing and lower production complexity. Even as GM invests in EVs—such as its $888 million commitment to the next-gen V-8 engine—the company's manufacturing flexibility allows it to prioritize high-margin ICE vehicles while scaling EVs incrementally. This contrasts sharply with EV-only peers, which lack such a cash flow cushion.

Consider GM's valuation versus Tesla. would highlight that GM's stock trades at a fraction of Tesla's multiple despite comparable EV sales growth. This disconnect reflects market skepticism toward GM's ICE-heavy strategy—but also presents a buying opportunity. If EV adoption remains gradual, GM's near-term cash flows from trucks and SUVs could outperform EV stocks, which are priced on lofty future growth assumptions.

Investment Implications: A Contrarian Play
For investors, GM's move suggests three key opportunities:
1. Short-Term Profitability: GM's focus on high-margin trucks/SUVs positions it to deliver stronger earnings growth over the next 18–24 months compared to EV-pureplay peers. Historically, GM's stock has reacted positively to earnings surprises, with a 36% win rate within three days and a 54% win rate over 30 days, peaking at a 1.13% return on day 16. This underscores the near-term upside for investors when the company exceeds expectations—a pattern likely sustained by its ICE-driven cash flows.
2. Risk Mitigation: The company's diversified portfolio shields it from EV-specific risks like battery shortages or regulatory overreach.
3. Valuation Discount: GM's stock currently trades at a 40% discount to its pre-pandemic peak, despite record U.S. market share in trucks and SUVs.

The risks, of course, remain. A sudden EV surge, regulatory shifts, or a prolonged economic downturn could pressure ICE demand. Yet GM's strategy is designed to navigate such risks: its flexible manufacturing allows rapid EV ramp-ups if needed, while its U.S. manufacturing footprint insulates it from trade-related costs.

Conclusion
GM's $4 billion bet on gas-powered vehicles is not a retreat from the EV future—it is a recognition that the present is still very much ICE-driven. For investors, this presents a compelling opportunity to capitalize on a company poised to profit from delayed EV adoption and sustained demand for trucks/SUVs. While the EV revolution will eventually reshape the industry, the timeline is longer than markets believe. In the near term, GM's dual-track strategy offers a pragmatic, high-margin path to returns—a contrarian stance that could prove prescient.

would likely show that GM has underperformed its EV-focused peers, despite stronger cash flows and balance sheet metrics. For investors willing to look past the EV narrative, this gap may narrow as reality catches up to hype.