GM to invest $888 million for engine production at New York facility

By Kalea Hall

DETROIT (Reuters) -General Motors is investing $888 million at a New York propulsion plant to increase engine production and build a next-generation V8, the company said on Tuesday.

The investment at the Tonawanda propulsion plant in Buffalo, New York, first reported by Reuters, is a shift from a previously announced $300 million commitment to make electric-vehicle drive units at the plant.

The move is likely another sign of automakers adapting to slower-than-expected market demand for EVs and comes after the Detroit automaker aggressively lobbied Congress to rescind California electric-vehicle rules.

GM said the investment will support the sixth generation of GM’s V-8 engines, used in full-size trucks and SUVs expected to be more fuel-efficient.

New York Governor Kathy Hochul said the project will support 870 jobs at Tonawanda Propulsion, including 177 jobs deemed at risk. The state plans to provide up to $16.96 million in tax credits in return for investment commitments.

New York said last week it would pause penalties associated with any shortfalls of EV sales for two years.

GM has been more adamant in staying the course on its move to EVs than other automakers, but has also pulled back on some of its previously announced EV investments, including selling its stake in a battery cell plant to battery partner LG Energy.

GM CEO Mary Barra has said the automaker has a plan to sell only electric light-duty vehicles by 2035 but has said it will “be responsive to where the customer is.”

Executives have more recently positioned the company to be focused on adapting to customer demand for EVs, but the automaker has also continued launching the vehicles. It now has about a dozen EVs available in the United States.

GM committed to a $300 million investment for drive unit production at the Tonawanda plant during the 2023 negotiations with the United Auto Workers union. Production of the drive units had not been launched there.

(Reporting by Kalea Hall in Detroit; Additional reporting by David Shepardson in Albany, New York; Editing by Matthew Lewis)