General Motors expanded its expenditure on electric and autonomous vehicles and pulled right ahead plans for two U.S. battery plants and stronger stronger-than-expected second-quarter profits.
The best U.S. automobile-maker plans to spend $35 billion through 2025 on electronic automobiles which is a 75% increase from March 2020 before the pandemic shut down the industry. The market shares for General Motors went up by 2.8% in early trading.
GM’s additional expenditures move forward towards a global arms race among automobile makers and technology companies to increase the electric vehicle supplies. The consulting firm, AlixPartners said that investments in EVs are estimated to increase up to 41% i.e. $330 billion.
GM Chief Financial Officer Paul Jacobson told this at a press conference that,” EV adoption is increasing and reaching an inflection point. We want to be ready and to be able to produce the capacity we need to meet demand over time.”
The forecast by AlixPartners was that the challenges GM and other automakers will be facing for the next several years will be that the demand for electric vehicles from consumers and businesses won’t be growing fast enough to sustain all the new entries in the market.
From current sources, EVs count up to 2% of the total global vehicle sales and will go up to 24% by the end of 2030 which less than required. The EV sales need to go up to 34% of the total global sales by the year 2030 to absorb the expected increase in production.
The consulting firm heeded in its annual outlook on the global auto industry that,” Electric vehicle investments are “well ahead of natural sales demand and neutral total cost of ownership or industry profitability.”
Automakers in the US, Europe, and China are pressing government officials to use their public funds for the cost of shifting their fleets from piston engines to batteries, the investment needed for charging infrastructure.
But the low profits assumptions and stranded capacity preventing the companies from charging way ahead in the race to compete with EV industry leader Tesla Inc. Demands from authorities and investors to reduce CO2 emissions and the preferences of young buyers are helping with the investment boom.
GM previously announced that it will launch 30 new EVs globally by 2025, and recently also said that now the numbers will be rising with higher expenditure, including additional electric commercial trucks. Also, the additional US plant capacities will be used to manufacture electric SUVs.