DETROIT (AP) — General Motors will raise its spending on electric and autonomous vehicles and add two U.S. battery factories as it gambles that consumers will eagerly switch from gasoline to the new technology.
The announcements 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 fueled 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 $2.3 billion.
The new plants were to come later in the decade, but now have been pulled forward and are expected to be in operation around 2025. They are part of GM’s plan to spend $35 billion on electric and autonomous vehicles from 2020 to 2025. The company also said it will switch more U.S. assembly plant capacity to electric vehicles, but gave no details Wednesday.
The Associated Press reported Monday that GM would announce new battery plants this week.
GM has previously said it would spend $27 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.
Electric vehicles accounted for less than 2% of U.S. vehicle sales last year, largely in luxury brands. But industry analysts are predicting big growth later in the decade as EVs move beyond tech-savvy early adopters.
Jacobson said GM is seeing success with its a new version of its Chevrolet Bolt hatchback and a new Bolt small SUV, giving it confidence that electric vehicle adoption is reaching an inflection point. “The Bolts have done well for us,” he said. “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 $5 trillion market during the next decade. GM came out earlier than Ford, but Dearborn, Michigan-based Ford is trying to “catch up and not be viewed as the little brother,” he said.
“We view EV as the biggest transformation in the auto industry since the 1950s, and it’s shaking up the Detroit auto stalwarts in a major way as they chase after Tesla,” Ives said.
Also Wednesday, GM raised its first-half pretax earnings guidance from $5.5 billion to between $8.5 billion and $9.5 billion, with net income of $6.2 billion to $7 billion.
On a conference call with reporters, 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 the company was able to pull some chip deliveries ahead from the third quarter, and it remains cautious about the full year.
GM also announced more deals to sell its battery and hydrogen technology to other companies. GM said it will build two electric vehicles for EV and hydrogen partner Honda, and it will supply hydrogen fuel cells for Liebherr Aerospace. Earlier the company said it would supply batteries and fuel cell technology to Pittsburgh-based locomotive maker Wabtec, and it would supply fuel cells to heavy truck maker Navistar.
Ford said Wednesday the Lincoln brand’s first fully electric vehicle will go on sale next year, but gave no details. The company said that by mid-decade it expects that half of Lincoln’s global sales will be zero emissions vehicles.
Shares of GM rose 2.6% in early trading Wednesday, after the battery plant and spending announcements were made. They were trading at $62.35, near a record high. Ford shares were up just under 1% to $15.12.
GM also said that CEO Mary Barra is in Washington to meet with legislators and the administration of President Joe Biden on federal pollution and fuel economy standards.
Biden is in the process of reversing former President Donald Trump’s rollback of pollution limits and plans to announce stricter standards in July.
On CNBC Wednesday, Barra said she’s optimistic that legislators will expand tax credits to jump-start purchases of electric vehicles. Currently there’s a $7,500 federal credit for EV purchasers, and there are proposals to expand it to as much as $12,500. But once a manufacturer sells 200,000 electric vehicles, the tax credit is phased out. GM and Tesla have hit the cap and can’t offer the credit anymore.
“We really think being a first mover shouldn’t be something that’s penalized as we look at EV adoption,” Barra said. “We’re going forward with a full portfolio, but we think to level the playing field, having everybody have that same opportunity is going to be important.”
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