Last Wednesday, General Motors Co announced it will boost spending on electric and autonomous vehicles. The company also went ahead with its plans to build two US-based battery factories. The carmaker also forecasts stronger-than-expected second-quarter profits.
GM To Boost Spending
The US’s top car manufacturer said it will boost spending for its EV and self-driving car programs by 75%. It will spend around $35 billion through 2025 as it develops new models that don’t run on gasoline or diesel fuel.
This is the second time that GM increased its EV budget. Last November, the company increased the EV Budget from $20 million to $27 billion. Investors seem intrigued with the plan, as shares of GM went up 1.5% by Wednesday afternoon.
The commitment to boost spending comes as many global vehicle makers continue to ramp up their EV lineup. AlixPartners estimate that by 2025, investments in electric vehicles can total $330 billion.
This is a 41% increase from its previous five-year outlook last year. GM Chief Financial Officer Paul Jacobson said that EVs are reaching a critical mass. “EV adoption is increasing and reaching an inflection point.
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We want to be ready to be able to produce the capacity that we need to meet demand over time,” he said. AlixPartners warned that demand for electric vehicles might not line up exactly with the number of models in the market.
Total Global Vehicle Sales
Currently, EVS only accounts for 2% of total global vehicle sales. By 2030, analysts predict that total EV sales will climb to 26%.
However, in order to recoup its investments, car manufacturers such as GM need EV sales to total at least 35% in order to make bank. AlixPartners added that electric vehicle investments are “well ahead of natural sales demand and neutral total cost of ownership or industry profitability.”
To help offset the costs, many automakers are pushing government agencies across the world to offset the costs of shifting their fleets from piston engines to batteries.
The companies also want the government to invest in the creation of charging infrastructure. Despite forecasts of overcapacity as well as low profits, car manufacturers seem intent on charging ahead as the new car of choice.
Meanwhile, governments and world bodies call for slashing vehicle CO2 emissions. As a result, young buyers with an affinity for the environment are more likely to buy EVs.
GM Promises 30 New EVs By 2025
GM previously said it would introduce 30 new EVs globally by 2025. With their decision to boost spending, the number of models will rise significantly. In particular, GM will design and build more electric commercial trucks.
The company also said that it will boost plant capacities to help build electric SUVs. Specifics of the new vehicle numbers and SUV plants involved were not detailed.
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As part of its strategy to boost spending, two US battery plants will rise by 2025. The new plants will join existing ones in Northeast Ohio and Spring Hill, Tennessee.
However, the location of the new battery plants remains under wraps. What’s guaranteed is these plants will account for more than half of the additional $9 billion to be spent.
Watch the Reuters news video reporting that GM will boost spending on electric vehicles by 30%:
Do you support the moves by GMto boost spending while building electric and self-driving vehicles? Also, will you buy an EV soon, or are you sticking to combustion engine models? Share your thoughts in the comments section below.