VVirtually all of the traditional automakers have started investing in electric vehicles (EVs) over the past decade. During the last years, General Motors (NYSE: GM) has been one of the most aggressive when it comes to investing in electric vehicles.

On its Electric Vehicle Day in early 2020, GM revealed it will invest more than $ 20 billion in electric vehicles and autonomous vehicles (AVs) through 2025. Despite the shock of the COVID-pandemic- 19 last year, the general increased his investment plan twice. . This highlights General Motors’ determination to improve its competitive position in the automotive industry as the electric vehicle revolution unfolds.

An ambitious agenda

General Motors has big plans for electric vehicles and utility vehicles, captured in its vision of “zero accidents, zero emissions and zero congestion”. Its Cruise subsidiary is one of the main AV developers and is on track to market autonomous taxis within a few years.

Earlier this month, Cruise became the first company licensed to offer fully autonomous (that is, no safety driver) ridesharing services to the Californian public. And in April, Dubai selected Cruise as the exclusive provider of autonomous taxis for the city until 2029.

Image source: General Motors.

When it comes to electric vehicles, GM plans to introduce 30 new electric vehicle models to the world by 2025. More than two-thirds of these will be available in North America. General Motors bets on vertical integration – similar to You’re here – to give it a competitive advantage over other historic car manufacturers. He created a flexible battery platform called Ultium that will serve as the basis for his future models of electric vehicles. GM designs electric motors, batteries and cell chemistries in-house and manufactures battery cells in a joint venture with LG Chem.

GM predicts that its second-generation Ultium batteries – which will be available in the mid-2020s – will have double the energy density of current batteries and cost 60% less. This could bring the company’s electric vehicles closer to price parity with traditional internal combustion engine (ICE) vehicles.

To accelerate its EV roadmap, GM upped its investment plans last November, telling investors it would spend more than $ 27 billion on EVs and AVs through 2025. Yet it hasn’t been. made.

Relaunch investment plans

On Wednesday, GM announced another massive increase in its investment plans. It now intends to spend $ 35 billion on engineering, capital spending, and other development costs for electric vehicles and utility vehicles through 2025. This will far exceed its spending on ICE vehicles during that time. .

The additional investments will allow GM to build and open two additional battery cell manufacturing plants in the United States by the middle of the decade, for a total of four. The first Ultium cell plant is expected to start production in early 2022, and GM announced plans for the second Ultium cell plant just two months ago. The latest investment shows GM is more worried about running out of battery production capacity than it is about having too much.

Workers in a laboratory test electric vehicle batteries.

Image source: General Motors.

General Motors is also stepping up investments in its HYDROTEC fuel cell platform. In addition, he is looking for opportunities to develop beyond his core business. passenger car company. It plans to develop its own electric commercial trucks and has entered into agreements to supply fuel cells and battery systems to the heavy-duty truck, railroad and aviation industries.

GM can cover the bill

Along with the announcement of its increased EV and AV investment plans, General Motors has officially raised its forecast for the first half of 2021.

Earlier this month, the automaker told investors it expected its first half results to be “much better“than its previous forecast. GM last week put firm numbers on this forecast increase. It expects to generate adjusted operating income between $ 8.5 billion and $ 9.5 billion for the period, up from its previous estimate of $ 5.5 billion.

CFO Paul Jacobson noted that GM will face persistent headwinds linked to the industry-wide chip shortage in the second half of 2021, as well as significant increases in commodity costs. As a result, the company has yet to update its annual forecast. Nonetheless, General Motors is expected to significantly exceed its initial outlook for the full year, thanks to its excellent first half results.

In short, GM’s core business is running at full speed. As chip availability improves and commodity costs normalize – or trickle down to consumers – profitability could improve further. This will give the General plentiful earning power to fund their aggressive investments in EVs and utility vehicles, paving the way for a smooth transition to the next generation of transportation.

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Adam levine weinberg owns shares of General Motors. The Motley Fool owns shares and recommends Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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