General Motors Co. 3.23%
A 2035 target date has been set for phasing out gasoline and diesel-powered vehicles from their showrooms globally, putting a timeline among the first major auto manufacturers to transition to a fully electric lineup Huh.
GM’s goal, revealed in a social-media post Thursday from chief executive Mary Bara, will mark a striking transition from its current business model. Vehicles that run on fossil fuels and today emit pollution account for about 98% of GM’s sales and all of its profits. Large pickup trucks and sport-utility vehicles that are the company’s biggest moneymakers are among the least fuel-efficient vehicles.
The nation’s largest auto manufacturer by sales called 2035 to date to eliminate all tailpipe pollution. Nevertheless, many governments around the world have promised to ban gas and diesel-powered cars from California to Japan and the United Kingdom.
GM previously said it expected its own portfolio and extensive car market to eventually go all-electric, but the deadline was not discussed by company officials.
The auto maker is placing the largest bets on electric vehicles of the car industry. In November, it said it would increase its investment from plug-in vehicles as well as driverless-car technology to $ 27 billion by one-third, mid-decade from earlier plans. The company has represented more than half of its planned capital expenditures during that time.
GM also said on Thursday that it aims to be carbon-neutral by 2040, which would mean eliminating carbon emissions from all its operations, as well as the vehicles it produces and sells. About three-quarters of GM’s carbon production comes from emissions produced by cars and trucks that keep it on the road.
GM shares rose sharply following their announcement in Thursday trading, up nearly 4% in Thursday afternoon trading.
The company’s plan to go fully electric by 2035 will mark the rapid pace of electric-vehicle adoption that most industry forecasts expect.
Research firm LMC Automotive Electric Vehicles will account for only 20% of global sales by 2032. RBC Capital expects electric-vehicle penetration to be 43% by GM’s 2035 target.
According to research firm EV Volume, last year around 2.2 million fully electric vehicles were sold globally, accounting for only 3% of total sales. Analysts point to several barriers to widespread adoption, including the need for more charging stations and other infrastructure. There are also questions about whether there will be a shortage of supplies for the raw materials needed to produce batteries, such as cobalt and lithium, should the electric-vehicle adopt.
Today, the high cost of plug-in cars relative to gas or diesel vehicles is an obstacle for many buyers. GM hopes that advances in battery technology will close this gap by mid-decade. It is investing in a $ 2.3 billion battery factory in Ohio in a joint venture with South Korea’s LG Chem.
Due to high battery costs, GM and other auto manufacturers have concentrated their initial efforts on luxury or sporty electric cars and trucks with higher price points to preserve profit margins. For example, GM’s first vehicle to use its new battery technology, the GMC Hummer Pickup Truck, will go on sale for $ 113,000 when it hits showrooms later this year.
“We believe that with our scale and reach, we can encourage others to follow suit and make a significant impact on our industry and economy,” Ms. Bara said in a post on LinkedIn.
On Thursday, GM’s Head of Sustainability, Dan Parker, said GM aims to run on electricity within 15 years, which hinges on government incentives and other support to partially support consumers toward plug-in cars. is.
Incentives “really help with consumer acceptance and overcoming some of the initial hurdles that consumers may incur in the first place, as well as things like charging infrastructure,” Mr. Parker said.
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