The company plans to invest $27 billion through 2025.
America’s largest automaker, General Motors (GM), announced on Thursday it is going to put $27 billion into electric vehicle (EV) production through 2025. The Wall Street Journal notes that’s a $7 billion increase from what the company announced in March … just before the Covid-19 pandemic forced the American auto industry to effectively halt production.
But the company is making cars again, and this announcement didn’t come out of nowhere. GM is responding to demand.
In the months since March, another relatively small EV maker – Chinese state-backed Nio Inc. – has joined Tesla in having a larger market valuation than GM. So, GM upped its investment plans because the market is betting big on EV manufacturers.
A lot of the reasoning for that valuation is because investors like that most EV-focused companies are smaller and have a lot less to pay for, like dozens upon dozens of huge manufacturing plants that GM and other legacy automakers maintain. Just as important to their value, though, are policy trends.
Governments around the world are clamping down on auto emissions, and the market thinks it sees which way that wind is blowing. It thinks EVs – in a future that’s growing closer every day – are going to be the global auto industry’s growth engine:
Tighter regulations on tailpipe emissions in Europe and China also are pressuring auto makers to offer greener vehicle lineups. The European Union’s stricter rules on carbon-dioxide emissions have many auto makers there facing the prospect of paying billions of dollars in fines. Some states and countries have imposed future bans on gas- and diesel-powered vehicles, including the 2035 deadline recently set by California.The Wall Street Journal
And the industry thinks this, too. That’s why Ford says it’s spending $11.5 billion on EV production over a five-year period ending in 2022, and Volkswagen is putting in $41 billion through 2025. GM says 40% (!!!) of the vehicles it sells in the United States by mid-decade will be fully electric and will be expanding the number of electric models it offers to make that happen.
This is all well and good, because it’s better for the health of the planet if we all stop buying and driving machines that are polluting the atmosphere. It will be well and good for the American worker if we start rolling out industrial policies to encourage this kind of production, because 3 million Americans work in auto manufacturing or auto dealerships, another 1 million work in auto parts manufacturing, and hundreds of thousands work in supplier industries like steel and aluminum.
If we don’t, the jobs tied to auto manufacturing will go elsewhere – likely to China, which is currently pouring money into EV production.