This investment will increase finished vehicle production at plants in Michigan, Kansas, and Tennessee, GM announced Tuesday in a statement.
The changes will relocate production of multiple top-selling models, including the highly profitable Chevrolet Silverado and GMC Sierra pickup trucks, as well as the Chevrolet Equinox SUV, from Mexico to US factories. According to a spokesman, GM anticipates adding between 3,000 and 4,000 jobs in the US as production ramps up.
In total, these investments will enable GM to manufacture over 2 million vehicles annually in the US. Additionally, they will decrease the company’s dependency on its Mexican factories, as stated by a source familiar with the initiative. While GM will still manufacture vehicles affected by this announcement in Mexico, it will do so at reduced volumes, the source added.
This shift represents one of the most significant changes by an automaker in response to Trump’s tariffs, which have disrupted the financial dynamics of automobile production. It also indicates CEO Mary Barra’s acknowledgment that Trump’s trade war is likely to persist.
Since Trump began his first term, he has criticized companies for producing vehicles in Mexico that are subsequently imported for sale in the US. Last year, GM was the largest importer of finished vehicles into the US, and the company is aiming to mitigate an estimated $5 billion exposure to Trump’s tariffs.
US Automakers Are Some of the Biggest Importers | Auto imports into the US in 2024
GM previously indicated that it expects to counter roughly a third of its tariff exposure. The latest initiatives are expected to further reduce these costs, according to a spokesman.
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For GM, this represents a departure from its long-standing strategy of increasing production in Mexico, a trend that began in the 1980s in pursuit of lower labor costs and a means to circumvent rising labor and retirement expenses in the US.
Barra has worked to build a positive rapport with Trump after facing criticism from him for shutting down a former plant in Lordstown, Ohio, during his first term. She has collaborated with Trump on tariffs and even defended them during remarks at a Wall Street Journal event in late May, asserting they could protect GM’s market position against foreign competitors.
Since Trump imposed a 25% tariff on imported vehicles and parts, Barra has held numerous discussions with the president and has come to believe that tariffs on vehicles made in Mexico are not going to disappear, according to sources familiar with the conversations, who requested anonymity due to the confidential nature of the discussions. GM executives began developing alternative strategies to manage the increased costs of vehicles produced in these facilities, one source indicated.
This transition will see GM producing pickups in five plants: three located in the US and one each in Canada and Mexico.
The automaker has consistently struggled to rationalize the production of pickups—its most profitable vehicle segment—using inexpensive Mexican labor. The Equinox SUV, priced around $28,000 with thinner profit margins, presents a more justifiable case for production in Mexico.
Tuesday’s announcement revitalizes GM’s plant in Lake Orion, Michigan, previously slated to construct electric versions of the Silverado and Sierra pickups, which are already produced at a different facility in Detroit. Plans for those electric models have been postponed twice due to sluggish demand in the EV market.
Now, the Lake Orion plant will commence production of gasoline versions of these trucks in early 2027, and will also manufacture large SUVs like the Cadillac Escalade and Chevy Tahoe, joining a plant in Texas that currently produces them.
GM’s Fairfax assembly plant in Kansas City, Kansas, will begin producing the Equinox in mid-2027. This model is currently manufactured in Mexico. In addition, the plant will assemble the new Chevy Bolt EV later this year, along with other affordable battery-powered vehicles that GM plans to introduce in the near future.
The Tennessee plant, which produces electric Cadillac SUVs, will also start manufacturing the gasoline-powered Chevy Blazer SUV in 2027.
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