GM’s Silver Bullet: The Costco Auto Program

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Cox Automotive’s headline reads, “EV (Electric Vehicle) sales growth slows,” and Tesla is storing unsold inventory (~47K vehicles) in empty parking lots across the country.

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Supply has outpaced U.S. consumer demand, which has caused several automakers (General Motors (GM), Ford, etc.) to scale back aggressive electric vehicle rollout plans.

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U.S. automakers are turning to Costco’s Auto Program as their last hope. Automakers pay a participation fee, and Costco secures exclusive savings for Costco members.

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GM plans to leverage Costco’s Auto Program for EVs increasingly, per CNBC:

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• Costco Auto has facilitated more than 500,000 vehicle sales annually over the past five years on average (~3% of all vehicles sold in the U.S. annually)
• About 7% of member requests for vehicles to Costco Auto were related to electric cars in 2023

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The typically steep price point of EVs is a significant hurdle to mass adoption: Edmunds’ pricing data showed that the average price of an electric car was 42% higher in the first quarter of this year than gas cars.

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Automakers are bullish on Costco’s ability to help them increase market penetration since Costco members are typically affluent—35% of its members make more than $125K annually.

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With Costco in the driver's seat, EVs might finally get the bulk-buy boost they need.