GM increases spending on electric vehicles 75% to $ 35 billion

General Motors has announced a significant increase in spending on electric and autonomous vehicles. At the same time, it canceled plans to build two battery factories in the United States.

The largest American automaker said it intends to spend $ 35 billion on the production of electric vehicles by 2025. That’s 75% more than the previous plan published in March 2020, before the COVID-19 pandemic hit the industry.

GM’s willingness to increase spending, the source said, signals an accelerating global race involving automakers and tech companies to take over the electric vehicle market. Consulting firm AlixPartners said yesterday that total investment in electric vehicles could reach $ 330 billion by 2025. This is 41% more than last year’s forecast for the next five years.

The problem that GM and other automakers will face, according to AlixPartners, will be that consumer and enterprise demand for electric vehicles will not grow fast enough in the next few years to support manufacturers’ appetites.

Electric vehicles now account for about 2% of global car sales, and by 2030 they will account for about 24% of total sales, the consulting company predicts. At the same time, to cover the expected growth in production, sales of electric vehicles by 2030 should account for 35% of total sales.

AlixPartners believes that investment in electric vehicles is “well ahead of natural demand and neutral total cost of ownership or industry profitability.”

Automakers are pressuring government officials in the US, Europe and China to use government funds to offset the cost of switching to electric vehicles.