Business

GM re-deepens EV commitment, increases spending by 30% to $ 35 billion

General Motors Co. increases interest in the race for electric vehicles, and increases its investment in future technology for a second time in eight months with plans to spend $ 35 billion by 2025 on more than 30 plug-in vehicles and a total of four batteries. plant. The carmaker said the increased investment reflected stronger-than-expected financial results for the year. The higher revenue and earnings growth of its GM Financial lending unit will increase adjusted earnings before interest and taxes for the first half of an earlier estimate of $ 5.5 billion to as much as $ 9.5 billion, the company said. Said Wednesday. With more cash and rising consumer demand for electric vehicles – even for lower price, lower selling models such as the battery-powered Chevrolet Bolt – the carmaker is raising the next generation of technological bets. The company has said it will expand its plans for 30 EVs worldwide by 2025, but will not post a number yet. “We are seeing great success with the Bolt and Bolt EUV,” GM chief financial officer Paul Jacobson said during a conference. “So beyond just higher price entries. There really is no remorse about capital. We know we need the battery plants.” GM shares dropped a gain of as much as 3.8% to trade 2.2% to $ 62.13 from 9:51 in New York. The stock is up about 49% this year.

4 battery plants

GM initially planned to spend $ 20 billion by 2025 and increase it to $ 27 billion in November. The company announced it was going to build two battery plants, one in Tennessee and another in northeast Ohio near the Lordstown assembly plant, which it closed and sold to troubled start-up Lordstown Motors Corp. locations. Investors are rewarding EV investments at both startups and established carmakers, and plug-in vehicle sales have increased, especially among luxury buyers. GM’s strong commitment to EVs carries the risk of its aging panel aging, meaning the company could lose market share in the next three years, Bank of America analyst John Murphy said in a report in June. The Detroit carmaker’s EV plans will accelerate, and later this year a Hummer pickup and Cadillac Lyriq sportnuts will begin rolling off its production lines. An electric Chevy Silverado pickup is also on the way. “We are investing aggressively in a comprehensive and highly integrated plan to ensure that GM leads to a more sustainable future in all aspects of the transformation,” GM CEO Mary Barra said in a statement. GM aims to increase annual global EV sales by more than $ 1 million by 2025, and we are increasing our investment to scale faster as we see momentum build up in the United States for electrification, along with customer demand for our product portfolio . “

China Mini EV

GM has big plans for EVs in the US, but may see more growth in China, where Cadillac has grown and demand for cheaper EVs is declining. The carmaker has a hit with the Hongguang Mini EV, which sells for $ 4,500 and appeals to urban drivers. To reduce the risk of car racing, GM and other carmakers have urged the Biden administration to help by building more charging stations and financing consumer credits for those who buy electric cars. GM and Tesla Inc. have both sold enough motor vehicles to use their $ 7,500 per vehicle consumer credits and want the government to add money to expand the program. Jacobson said GM had better-than-expected sales, despite a global shortage of semiconductors that hurt supply chains. The company said it could increase truck production due to the shortage of chips. The result is the prediction of stronger financial results.

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China factor

China is already by far the world’s largest car market and accounts for a third of global sales. It is larger than the US and Japanese car market combined. GM and Volkswagen both sell more cars through joint ventures in China than in their home markets. But China’s swing also extends to the production of electric motors. Concerned about its own pollution problems, Beijing wants to stay competitive in the technologies of the future, and has long had subsidies in its electric car industry. During the global financial crisis a dozen years ago, China already offered its taxi fleets and local government agencies up to $ 8,800 per car to choose electric models. Today, China is the leading manufacturer of large battery packs for electric motors, producing far more than the rest of the world combined. Until a year ago, Chinese regulations required the use of Chinese battery suppliers, instead of their mostly Japanese and South Korean competitors, for electric cars sold with Chinese subsidies. This has forced multinational companies to place large orders with CATL, the main Chinese producer. Chinese companies dominate world production of electric cars. China has even taken control of much of the world’s production of important raw materials needed for electric motors, including lithium, cobalt and minerals, known as rare earth metals. Major global car manufacturers are already developing electric cars in China. Daimler and Toyota have jumped into extensive joint ventures with Chinese manufacturers to build electric motors. Ford Motor announced on Thursday that its new Ford Mustang Mach-E, the most spinning car at the Beijing show this fall, will be manufactured in China as well as Mexico. So far, no Chinese company has produced an electric car that can compete with Tesla to capture the world’s imagination, even though one, NIO, is trying it. But China has completed many of the steps along the way. Tesla started making vehicles in a factory in Shanghai a year ago. The world’s shift to electric cars “is based on the Chinese technological roadmap,” said Yunshi Wang, director of the China Center for Energy and Transportation at the University of California, Davis. China is not trying to set global standards only for electric cars. It is also moving fast to commercialize a large number of self-driving cars, a technology developed in California. China is also trying to take the lead on how cars connect to the internet, through its planned nationwide implementation of 5G mobile communications. The Chinese government mandates require that the technology be widely installed by 2025. This prompted Chinese and Western companies to adapt. “From this we can see that autonomous driving and intelligent coupled vehicles are no longer a mere vision; they are a close reality,” Volkswagen China CEO Stephan Wollenstein said last week. GM’s Thursday announcement confirms China’s long-standing commitment to electric cars. Just a few years ago, American carmakers were committed to gasoline engines. German carmakers pushed diesels. Japanese companies have focused on gasoline-electric hybrids. China has chosen electric cars with batteries. It announced in 2017 that it was phasing out fossil fuels for cars by a then unspecified date. Many in the industry were skeptical. GM CEO Mary Barra flew to Shanghai two weeks later, declaring that while GM was planning to put more electric cars on the road, the company believes consumers, not governments, should decide when they no longer have petrol. – and should not buy diesel-powered. models. “I think it works best when customers choose the technology that meets their needs, instead of forcing,” she said at the time. China followed a different approach. Given the cost and complexity of developing electric cars, the government has set major targets and offered the support to help its businesses achieve them. As for the automotive industry, “is the most important thing the government does,” said Liu Jing, a professor at the Cheung Kong Graduate School of Business in Beijing. The major obstacle at the moment for the sale of electric cars is cost. Making the battery pack costs as little as $ 1,500 for the simplest electrical subcompactors of Chinese brands, which due to their inertia and modest range are not really suitable for driving on the highway. But the cost is as much as $ 12,000 for a high-performance car, like a Tesla. Gasoline engines in each category of car size and performance usually cost less than half as much. Yet battery costs around the world drop by almost a fifth annually. Chinese enterprises with lavish government support have built huge battery factories deep in western China, especially in Qinghai Province, where much of the lithium is mined for the batteries. Mass production yielded tremendous economies of scale. China is also the world’s largest producer of electric motors and a wide range of other electronics. China’s quest for dominance in electric cars began in 2007. That was when Wen Jiabao, then Prime Minister of China, unexpectedly chose a former Audi engineer, Wan Gang, to become the Minister of Science and Technology. Wan, who also served as president and director of the Center for Automotive Engineering at Tongji University in Shanghai, was a passionate proponent of electric cars. He had strong support from China’s military and intelligence community, which has long regarded the country’s oil imports as a strategic vulnerability. In 2008, China’s first full year in office, China produced only 2,100 electric motors. According to LMC Automotive, a London data firm, production has since risen to 931,000 last year. China also received help from Western companies that received little support at home. GM agreed in 2011 to transfer battery technology and other electric car technology to a joint venture in China with the country’s largest state-owned car manufacturer, Shanghai Automotive Industry Corp. At the time, the Chinese government put a lot of pressure on foreign car manufacturers to transfer techniques for electric cars to joint ventures in China. Such technology transfers – which foreign companies sometimes complain about being forced to gain access to the large Chinese market – have become a major problem between Washington and Beijing. The transfers were cited by officials under Donald Trump, the former president, as one reason for starting a trade war against China. Now many Chinese companies are joining the electric car pressure. Zhejiang Geely, a Chinese carmaker, announced on Friday that he and Foxconn, the contract maker of Apple iPhones and laptops in major factories in China, are in talks to help Faraday Future in the United States make electric cars. By fall, Liu of the Cheung Kong Graduate School of Business said, “you’re going to see a flood of electric vehicles everywhere, entering the market.”