GM to spend $6.6 billion on EV investments in bid to dethrone Tesla in electric car sales by 2025
DETROIT – General Motors said it will invest roughly $6.6 billion in its home state of Michigan over the next two years to increase electric pickup-truck production and build a new EV battery cell plant.
The new spending is part of a plan to increase GM’s North American production capacity to build 1 million electric vehicles by 2025, the automaker announced Tuesday.
GM has projected it will overtake Tesla as the top U.S.-based seller of electric vehicles by mid-decade. The investments are part of the $35 billion the company has pledged to spend on EVs by 2025.
“We will have the products, the battery cell capacity and the vehicle-assembly capacity to be the EV leader by mid-decade,” GM CEO Mary Barra said in a statement.
GM has a lot to catching up to do in just three years. Tesla, which does not release U.S. sales specifically, delivered 936,172 electric vehicles globally in 2021. GM sold less than 25,000 EVs last year — ranking third in U.S. EV sales behind Tesla and Ford, which sold 27,140 of its Mustang Mach-E EVs.
Industry forecaster LMC Automotive expects Tesla’s U.S. production capacity to increase from about 580,000 units to about 1 million later this year after its second domestic plant in Texas is fully online.
The investments announced Tuesday include $2.6 billion for a new battery plant though a joint venture with LG Energy Solution in Lansing, Mich., and $4 billion to convert its Orion Assembly plant in suburban Detroit to produce electric trucks such as upcoming versions of the Chevrolet Silverado and GMC Sierra, beginning in 2024.
GM on Tuesday also announced an additional $510 million in investments in two Lansing-area vehicle-assembly plants to upgrade for non-electric vehicles.
Many of the new investments had previously been reported, but GM hasn’t disclosed how many vehicles it hopes to build by 2025, a production timeline or the products that will be built at Orion. The influx of capital is expected to create 4,000 new jobs and retain 1,000 current employees.
“Michigan will be the recognized hub and leader of innovation in the U.S. for EV R&D and manufacturing,” GM President Mark Reuss said during a media briefing.
Orion Assembly and GM’s Factory Zero plant in Detroit are expected to build a majority of the 1 million units electric vehicles in North America, according to Reuss. Orion is expected to be able to produce 360,000 vehicles annually by mid-decade, while Factory Zero is targeting 270,000 units. GM also is converting plants in Tennessee, Canada and Mexico to build EVs.
GM projects it will convert 50% of its North American assembly capacity to EV production by 2030 – five years ahead of a plan to exclusively offer light-duty electric vehicles by 2035.
The new 2.8 million-square-foot battery plant with LG is expected to open in late 2024. It is GM’s third such facility to be announced in the U.S. A battery plant in Lordstown, Ohio is expected to come online later this year, followed by another in Tennessee in 2023. At least one other plant is expected to be announced by GM in the foreseeable future. The plants are being built through a joint venture with LG called Ultium Cells LLC.
Battery cell production is a crucial part of the supply chain for electric vehicles. Aside from Tesla, which has massive Gigafactory battery plants in Nevada, China and one under construction in Germany, automakers largely outsourced such production to third-party suppliers. Automakers are now scrambling to team up with suppliers to have better control over the battery cell production as well as the raw materials needed for the batteries.
GM is using the name Ultium for its next-generation batteries and electric vehicle platform and technologies. It estimates the proprietary cells will be capable of a range of up to 450 miles or more on a full charge with 0-60 mph acceleration in three seconds. The cells are uniquely contained in pouches as opposed to most used today that are in cylinders.
Michigan’s economic development board on Tuesday approved $824 million in incentives and assistance for GM’s investment, according to the Associated Press.
Separately, President Joe Biden used GM’s investment announcement on Tuesday to tout his administration’s economic strategy in “helping power an historic American manufacturing comeback.”
“From day one, my administration has been laser focused on making sure that America leads the manufacturing future of electric vehicles,” Biden said in a statement. “This announcement is just the latest in over $100 billion of investment this past year in American auto manufacturing to build electric vehicles and batteries.”
Biden has been a proponent for EVs as well as retaining domestic manufacturing of their supply chains. His Bipartisan Infrastructure & Jobs Act included $7.5 billion for EV chargers. He’s also pushing the goal that automakers’ EVs sold in the U.S. account for half of total new auto sales by 2030.