After tepid growth last decade, we’re beginning to see signs that major auto manufacturers are ready to invest in electric vehicles.
GM, the US’s largest automaker, is one of the manufacturers leading the pack when it comes to new EVs. On Wednesday, the company announced a new EV business plan that will see the company spend more than $20 billion through 2025. Some believe the plan may signal that the auto manufacturing giant is willing to take a gamble on the future of EVs.
Here is what GM announced last week, and how the company plans to invest in the EV market soon.
GM’s $20 Billion EV Platform
At GM’s EV Day event, the company revealed the new modular architecture — dubbed “Ultium” — that will serve as the foundation of the company’s forthcoming EV offerings.
The new Ultium platform is designed to be highly flexible and will be capable of 19 different drive unit and battery combinations. (For comparison, the company currently offers 550 various internal combustion engines across its lineup of conventional vehicles.)
GM says that the platform will support trucks, cars, SUVs and even commercial vehicles. The company also announced that its new electric powertrains, developed as part of the platform, will support front-wheel, rear-wheel and all-wheel drive.
The focus on modularity and flexibility is likely due to the manufacturer’s desire to electrify a variety of its current models. At the event, GM also showed a range of new EVs that hadn’t yet been announced — like the Celestiq, a flagship sedan from Cadillac.
The company also announced that it is teaming up with LG Chem — a Korean chemical company and manufacturer of electric batteries — in a $2.3 billion joint venture to mass-produce new large-format battery pouch cells for use in EVs. These cells will come in 400- and 800-volt configurations and are capable of extremely fast 350 kW charging — meaning that they can go from 0 to 80 percent charged in just 30 minutes or less.
Storage on these new battery packs will range from 50 to 200 kWh.
The company’s relationship with LG Chem is more than a decade old, but the investment is one of the largest the company has made so far. Some have taken this as evidence that GM is committing to a future lineup that is heavy on EVs.
How GM’s Move May Impact the EV Market
The move is likely to have broader impacts on the EV market, but it’s hard to tell right now how investors will respond.
EV manufacturers across the market, including GM and Tesla, suffered severe losses on Monday. Tesla stocks, which were up nearly 70 percent year-to-date on the day of the GM announcement, plummeted more than 13 percent. GM stocks also dropped sharply, falling more than 13 percent.
While some market analysts believe that GM’s announcement may be the cause for some of Tesla’s share price drop, it will be hard to separate out the impact of the announcement from the overall market sell-off.
Despite these losses, the announcement is likely good news for the overall EV market. It may also be a sign that major manufacturers are beginning to take the market seriously and predict that EVs will make up a significant chunk of their revenue in the future.
The largest manufacturers have traditionally lagged behind on the development of EVs, despite predictions that EVs will make up a quarter of the overall auto market by 2029.
Smaller EV manufacturers like Tesla, however, may not be reassured by GM’s announcement. These companies haven’t needed to worry so much about competition from major manufacturers in the past. Soon, however, they may be faced with an EV market full of vehicles from big-name manufacturers with decades of experience.
How GM’s EV Plan May Change the Market
After years of slow growth, it seems like EV development and manufacturing is about to take off. GM, along with other major auto manufacturers, are beginning to join smaller companies like Tesla in the EV market.
While it’s not clear right now how GM’s announcement will affect the market, it’s likely good for the overall EV market. However, the move could be bad news for smaller manufacturers, who may not welcome increased competition from big names in auto manufacturing.
