DETROIT (AP) — General Motors (GM)will raise spending on electric and autonomous vehicles and add two United States (US) battery factories as it gambles that consumers will eagerly switch from gasoline to the new technology.
The announcements on Wednesday came as crosstown rival Ford said its entire Lincoln luxury brand lineup would be electric or gas-electric hybrid by 2030, including four fully electric vehicles.
For months, the automakers have been one-upping each other with electric vehicle announcements, which have fuelled stock price increases for both companies.
GM wouldn’t give details about where it will build the new plants, but Chief Financial Officer Paul Jacobson said they would be similar in size to two factories now under construction in Lordstown, Ohio, and Spring Hill, Tennessee.
Those factories each will employ more than 1,000 workers and cost about USD2.3 billion. The new plants were to come later in the decade, but now are expected to be in operation around 2025. They are part of GM’s plan to spend USD35 billion on electric and autonomous vehicles from 2020 to 2025. The company also said it will switch more US assembly plant capacity to electric vehicles, but gave no details on Wednesday.
GM has previously said it would spend USD27 billion on electric and autonomous vehicle development by 2025 as it rolled out 30 new electric vehicles worldwide. Jacobson said the company would increase the number of electric vehicles but gave no details. GM has set a goal of selling only electric passenger vehicles by 2035.
Electric vehicles accounted for less than two per cent of US vehicle sales last year, largely in luxury brands. But industry analysts are predicting big growth later in the decade as EVs move beyond early adopters.
Jacobson said GM is seeing success with a new version of its Chevrolet Bolt hatchback and new Bolt small SUV, giving it confidence that EV adoption is reaching an inflection point. “This is really no-regrets capital. We know that we will need those battery plants as we further our goals.”
Wedbush analyst Daniel Ives said GM and Ford are continually trying to outdo each other with electric vehicle announcements. “This is an EV arms race going on in Detroit with Ford and GM competing for market and mind share in this green tidal wave,” Ives said in an email.
Both automakers, he said, are competing for what’s expected to be a USD5 trillion market during the next decade. GM came out earlier than Ford, which is trying to “catch up and not be viewed as the little brother”, he said.
Also on Wednesday, GM raised its first-half pre-tax earnings guidance from USD5.5 billion to between USD8.5 billion and USD9.5 billion, with net income of USD6.2 billion to USD7 billion.
Jacobson said the increase comes as GM continues to see strong demand for its vehicles, and because it has been able to mitigate production losses due to a global shortage of computer chips. He said GM probably won’t be able to build up its depleted inventory until mid-to-late next year.