GM’s Century-Old China Business Struggles to Keep Up with EV Boom

Mary Barra, CEO of General Motors, recently faced a question that many auto CEOs have been grappling with in the past year: Why is your company struggling in China?

Just a decade ago, China was a major revenue driver for GM, generating an automatic $2 billion a year for investors, according to David Whiston, an analyst at Morningstar. The American auto giant sold millions of Buicks and Chevrolets in China, even outselling the U.S. market for over a decade. However, that success story has shifted dramatically.

Today, GM’s China business, primarily a joint venture with state-owned SAIC Motor, is hemorrhaging money, losing the company millions of dollars each quarter. This decline is largely due to the rise of electric vehicle (EV) players like Tesla and local competitors such as BYD and Geely, which are pushing GM’s traditional models out of the market.

“When you have more than 100 domestic Chinese OEMs [original equipment manufacturers] entering the market, most of which are losing money, it has become a race to the bottom with pricing and the level of subsidies,” Barra said during an interview with Fortune’s Alyson Shontell at the Most Powerful Women Summit in Laguna Niguel, Calif., last October.

While subsidies play a role, GM’s struggles are also tied to its failure to keep pace with the rapid shift toward electric cars in China. In a December filing, GM revealed it would write down $5 billion in restructuring costs for its faltering China business. This news came just after GM reported a nearly $3 billion net loss for the final quarter of 2024, which it attributed to the restructuring efforts in China.

GM is not alone in facing these challenges. Many legacy automakers missed the EV revolution in China and are now scrambling to catch up. However, GM’s difficulties in China raise broader questions for the company: As the U.S. market hesitates to fully embrace electric cars, can American automakers stay relevant globally, especially as markets like China charge ahead?

GM’s Legacy in China

GM has deep roots in China, stretching back more than a century. In 1924, China’s last emperor, Pu Yi, imported two Buicks into Beijing’s Forbidden City. Buick quickly became the vehicle of choice for China’s political and business elite, especially in the interwar years. By the 1930s, Buick claimed that one in every six cars in China was a Buick.

However, GM was shut out of China after the Communist takeover in 1949. It wasn’t until the country began reopening to the outside world that GM returned in 1997, partnering with SAIC Motor to form a joint venture. By 1999, GM’s factories were producing Buicks for the Chinese market.

Chinese consumers flocked to the brand, with as much as 80% of all Buicks sold in China. One Chinese salesman told The Wall Street Journal in 2004, “The Buick has a royal bloodline. It stands for luxury, safety, and an earlier era of America.”

Buick’s survival as a brand was largely due to its success in China. When GM was restructuring in the wake of the 2008 financial crisis, Buick’s popularity in China played a pivotal role in the brand’s survival. As Steve Rattner, a former bailout chief, recounted to Fortune in 2009, GM’s then-CEO, Fritz Henderson, held a “passionate belief in Buick’s China appeal.”

In addition to its joint venture with SAIC, GM also partnered with Wuling Motors to produce small, affordable micro-EVs for budget-conscious Chinese consumers.

The Decline of GM’s China Sales

Despite these early successes, GM’s sales in China have plummeted from their peak in 2017. From 4.04 million vehicles sold that year, GM’s sales dropped to just 1.8 million in 2024. The company is now facing intense competition in a market that is rapidly shifting toward electric vehicles, with local manufacturers gaining ground at a pace that GM has struggled to match.