Electrification is picking up more steam as countries pass increasingly strict tailpipe emission standards and more players join the nascent electric vehicle (“EV”) industry. Furthermore, the electric vehicle game isn’t limited to just EV startups; most established automakers are also working on electrifying their vehicle lineups and surpassing Tesla, which is currently the world’s largest electric vehicle maker. General Motors Company (NYSE: GM) plans to achieve this goal in large by leveraging existing manufacturing facilities and retrofitting them to build electric vehicles. And like fellow automakers, GM will invest a significant amount of money in electrification in the next decade.
According to sources close to the Detroit-based carmaker, GM intends to invest more than $3 billion to manufacture electric vehicles in its home state of Michigan. The sources also say General Motors is currently wrapping up plans for two electric vehicle projects in the state.
One project would see GM convert the Orion Assembly plant in suburban Detroit to build electric pickup trucks. The retrofit would cost at least $2 billion, and the factory, which only sees light use, would offer more than 1,500 new jobs. GM also plans on building a battery-cell factory close to one of its Lansing assembly plants.
The battery-cell project is the result of a joint venture between GM and LG Energy Solutions, with both firms investing more than $2 billion on the facility. Industry experts say that officials from GM are currently negotiating with local governments to lock in tax abatements and a couple of other approvals for the two projects. However, the sources note that the plans still aren’t set in stone and could be altered or even fall through.
A recent statement from the Detroit-based carmaker said that it was in the initial stages of developing a business case for possible future investment in various locations. GM also said that it was in the middle of negotiations with local officials on possible opportunities for incentives.
The American electric vehicle market will see an influx of dozens of new EV models over the next decade, a significant portion of them from established automakers such as GM. At the moment, the electric vehicle segment is still quite small, with an investor note from Credit Suisse stating that EVs make only 4% of U.S. vehicle sales and 8% of global sales. But as governments pass stricter emission standards and automakers develop more electric cars, Credit Suisse expects global electric vehicle sales to make up 24% of global vehicle sales by 2025.
The battle lines have now been drawn, and time will tell how US-based EV makers such as GM will tame the appetite of foreign-based companies, including NIO Inc. (NYSE: NIO).
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