GM to invest $500M in Texas plant that makes gasoline-powered big SUVs

General Motors continues to invest in the big gasoline-powered vehicles that deliver wide profit margins that fund the automaker’s transition to all electric cars in the next decade.

On Thursday, GM said it will invest $500 million in its Arlington Assembly plant in Texas to upgrade the facility to build the next generation of full-size gasoline-powered SUVs. In a statement, the automaker said the investment is “subject to successful discussions with local government officials.”

It is GM’s third announcement this week of major investments in its plants that build gasoline-powered trucks. The sales of the popular trucks are funding GM’s transition to EVs, which currently offer thin to no profits. In February, CEO Mary Barra said GM is nowhere near to getting battery costs down enough to make EVs as profitable as their gasoline-powered counterparts.

GM said the investment in Arlington will help it grow sales of the profitable full-size SUVs. Arlington builds the Chevrolet Tahoe and Suburban, GMC Yukon and Yukon XL, and Cadillac Escalade, Escalade ESV and Escalade-V. GM is not releasing any details or timing related to future full-size SUVs.

In the United States, GM sold 40,247 Escalades last year, about flat with 2021 sales, but the largest volume vehicle in the Cadillac brand. GM sold 50,951 Suburbans last year, a 6% increase from 2021. It sold 105,756 Tahoes, about flat with 2021 sales, and it sold 82,304 total Yukons, down 2.3% from 2021. GM sold a total of 2.3 million vehicles last year in the United States.

“Preparing the plant to produce future (internal combustion engine) full-size SUVs reflects our commitment to ourvalued customers and the efforts of the dedicated Arlington Assembly employees, who have been breaking production records this year,” Gerald Johnson, executive vice president of GM’s Global Manufacturing andSustainability, said in a statement. “This investment bolsters GM’s U.S. manufacturing operations, which includes more than 50 assembly, stamping, propulsion and component plants and parts distribution centers nationwide.”

The investment will pay for new tooling and equipment in Arlington’s stamping, body shop and general assembly areas, GM said. The UAW said GM should used the profits from such popular vehicles to reinvest in the workforce.

“It is good to see that GM recognizes the hard work you, the UAW membership, contribute to the success of this company,” Mike Booth, UAW vice president of the GM department, said in a statement. “We are proud that UAW-GM members will continue to build quality, union made products here in the USA.”

Texas Gov. Greg Abbott said in a statement that Arlington Assembly is integral to the economy in the Dallas-Fort Worth area.

“General Motors’ over half-a-billion-dollar investment in their North Texas assembly plant will strengthen Texas’ position as a global manufacturing leader and continue creating good-paying jobs for generations of Texans,” Abbott said.

GM has said it plans to offer all electric vehicles by 2035, but to fund that transition it must rely on the sales of big profit makers such as full-size pickups and large SUVs.