General Motors dropped a fuel bomb on the auto industry at the end of January. Specifically, it said the fuel of the future for many of its vehicles will be electricity, not gasoline. For an iconic company like GM, that news is beyond big.
GM has pledged to stop making gasoline-powered passenger cars, vans, and SUVs by 2035, a major pivot point for the legendary U.S. automaker. “As one of the world’s largest automakers, we hope to set an example of responsible leadership in a world that is faced with climate change,” GM CEO Mary Barra said on LinkedIn.
“GM has said it would invest $27 billion in electric vehicles and associated products between 2020 and 2025, outstripping its spending on conventional gasoline and diesel vehicles. That figure includes refurbishing factories and investing in battery production in conjunction with LG Chem, a South Korean battery maker,” wrote Steven Mufson in an article in The Washington Post.
GM said that by 2025, about 40 percent of its U.S. models will be battery-powered electric vehicles, and it has promised to make its factories and other facilities carbon neutral by the year 2040.
What does this mean for the metalworking industry, which supplies GM and other automakers with parts—including traditional drivetrains? First and foremost, it will bring market disruption on a vast scale. Fully electric vehicles require a completely different set of parts, including many that are not made via traditional machining processes. Suppliers will have to reassess and retool—and fast.
It’s no coincidence that President Biden has committed to transitioning the U.S. economy away from oil, gas and coal and toward solar, wind and other clean energy. The Biden administration is expected to announce by April that it will introduce rules requiring cars to reach an average of 51 miles per gallon by 2026. The proposal will likely include additional provisions designed to boost the production and sales of electric vehicles. In addition, the bellwether state of California will stop sales of gasoline-powered automobiles within 15 years, according to an announcement by Gov. Gavin Newsom in September.
Plenty of Company
GM is said to be following in the footsteps of other carmakers. Volkswagen plans to launch upwards of 70 new electric models in the next 10 years, increase EV production to 22 million during this decade, and spend $33 billion to electrify its other vehicles. Ford is spending $11.5 billion through 2022 on new EVs. Both companies are said to be chasing Wall Street darling Tesla, which also plans to increase sales of its all-electric auto fleet.
So, what could go wrong here? Plenty. A different presidential administration hostile to alternative fuels could take office in the U.S. Customers could reject EVs. But even with those risks, it appears that automakers have seen the future, and it is electric.