GM CEO and Chairman Mary Barra speaks during an “EV Day” on March 4, 2020 at the company’s technology and design campus in suburban Detroit, Michigan
DETROIT – General Motors announced on Wednesday that it would increase spending on electric and autonomous vehicles to $ 35 billion by 2025, a 30% increase over plans announced late last year. It also said it is raising its earnings guidance for the first half of the year.
The additional money will be used to expand electric vehicle adoption and accelerate production of its battery and fuel cell technologies, including two new U.S. battery plants in addition to two currently under construction.
America’s largest automaker is in the running to catch up with EV leader Tesla and compete for a leadership position against other established automakers like Volkswagen. GM plans to sell more than 1 million electric cars annually by 2025.
“We are aggressively investing in a comprehensive and highly integrated plan to ensure that GM is at the forefront in all aspects of transforming into a more sustainable future,” said GM CEO Mary Barra in a statement.
Wall Street praised GM’s plans to expand its range of electric and autonomous vehicles and technologies. The stock has nearly tripled since its 12-month low of $ 23.33 last July. Shares rose slightly before markets opened at around $ 61 per share on Wednesday.
GM said the new investments will be enabled by the strong underlying business, including record pre-tax earnings for the past three quarters.
CFO Paul Jacobson said Wednesday that GM expected to deliver better-than-expected results in the second quarter despite a global semiconductor chip shortage affecting the industry. He said GM expects adjusted pre-tax profit of between $ 8.5 billion and $ 9.5 billion for the first half, up from an estimated $ 5.5 billion.
For the year previously, GM said it expected “high end” pre-tax profits of $ 10 billion to $ 11 billion. There was no update on full year earnings.
GM’s plans for increased spending come less than a month after Crosstown rival Ford Motor increased its electric vehicle spending to more than $ 30 billion by 2025. But Ford’s investments go back to 2016, while GMs are from 2020 to 2025.
Before the coronavirus pandemic shutdown car factories in March, GM initially announced it would invest $ 20 billion in autonomous and electric vehicles by 2025. That spending increased to $ 27 billion in November as vehicle programs advanced and battery cell production accelerated.
GM’s new investments were announced ahead of Barra’s Wednesday meeting with House spokeswoman Nancy Pelosi and other Democrats to discuss EVs and vehicle emissions, according to Reuters, which first covered the automaker’s plans late Tuesday.