General Motors, the USA’s largest automaker by revenue and vehicles sold, has announced it is to invest a colossal $35 billion over the next four years to 2025 in developing electric vehicles featuring driverless technology. The sum represents an increase of around 30% on the investment plan announced last November.
Having recently committed to discontinuing the production of traditional petrol and diesel-engine cars, SUVs and light pick-up trucks by 2035, the investment will be needed to replace those lines with new electric models.
The General Motors share price gained a little over 1.5% yesterday as markets signalled approval of the planned investment. The company’s valuation has more than tripled since a low last March and is up over 60% on where it was before the coronavirus market sell-off. Many see the company
Based in Detroit, the traditional home of the American automanufacturing industry, GM produces marques including the Chevrolet and Buick and is currently worth around $90 billion. Electric car maker Tesla is valued at a much higher $582 billion despite earning just a fraction of GM’s revenues and its profitability reliant on selling its surplus emissions credits to traditional carmakers and, more recently, bitcoin trading.
But GM realises electric vehicles are the future of its industry and is taking a proactive approach to its evolution into an EVs manufacturer with a pledge to have launched 30 electric models by 2025. The transformation represents a monumental undertaking, with only around 20,000 of the 2.55 million vehicles GM sold in the USA last year electric models.
But GM is one of the most experienced companies in the world when it comes to the supply lines and production facilities behind mass vehicle manufacture. And it is now working intensively on converting its existing structures into those needed for it to manufacture electric vehicles at scale rather than traditional engine equivalents.
Key to that are plans to have built two battery cell manufacturing plants by 2025 in addition to two already under construction in Ohio and Tennessee, which will manufacture Ultium Cells batteries, a joint venture the company has with LG Energy Solution.
As well investing heavily in electric vehicle technology and models, GM also has ambitions to become the first major carmaker to commercialise driverless vehicles. It owns autonomous driving start-up Cruise, acquired for $1 billion in 2016.
Chief executive Mary Barra yesterday commented on the increased investment announcement:
“We are investing aggressively in a comprehensive and highly integrated plan to make sure GM leads in all aspects of the transformation to a more sustainable future.”
“GM is targeting annual global EV sales of more than one million by 2025 and we are increasing our investment to scale faster because we see momentum building in the United States for electrification, along with customer demand for our product portfolio.”