By Emma Nitzsche
On Wednesday, General Motors announced a boost in spending on electric and autonomous vehicles. Known as the number one automaker in the United States, GM sold roughly 6.8 million vehicles under various brands last year. However, with more auto manufactures transitioning to electric vehicles, GM decided to increase EV spending.
The company said it would spend $35 billion through 2025 on EVs, increasing its budget 75% from March 2020. Additionally, GM announced plans for two U.S. battery plants and forecasted strong profits in the second quarter.
In a conference call with reporters, GM Financial Officer Paul Jacobson said that the company wanted to be ready to produce the capacity it needs to meet demand over time.
Jacobson didn’t disclose the location of the two new plants, but he said they would be similar to factories in Ohio and Tennessee. Each site will employ more than 1,000 workers and cost about $2.3 billion. Once they are created, the two factories will double the number of lithium-ion manufacturing facilities operating in the United States.
In the past, GM said it was on track to introduce thirty new EVs by 2025. On Wednesday, the company told consumers that the increased spending would allow it to manufacture even more vehicle types and styles.
Following the announcement, the consulting firm AlixPartners reported that investments in electric vehicles could total $330 billion over the next five years. This amount represents a 41% increase from the firm’s five-year investment outlook five years ago.
Despite its forecast, AlixPartners warned automakers that consumer demand for electric vehicles wouldn’t be on track to grow fast enough to sustain all the new entries to the market. It cautioned automakers that electric vehicle investments are “well ahead of natural sales demand and neutral total cost of ownership or industry profitability.”
Despite the forecast, major car companies are gambling on EV. GM’s announcement comes a few weeks after Ford Motors increased its EV spending by more than a third. Ford said its entire Lincoln luxury brand vehicles would be electric or gas-electric hybrid by 2030.
Electric cars comprise roughly 2% of global vehicle sales and are projected to comprise 24% of sales in 2030. The industry leader, Tesla, holds the EV market among affluent and younger consumers.
While large car companies compete to stay in the game, Tesla continues to deliver fully electric cars to consumers. Last year, the company sold nearly 500,000 vehicles to customers, and it expects deliveries to advance more than 50% in 2021.
With the updated spending budget, GM expects to sell more than 1 million all-electric vehicles by 2025. GM Chair and CEO Mary Barria told Forbes that the company’s emphasis on electric cars means a “world with zero crashes, zero emissions, and zero congestion.”
