Key points:
- GM & LG awarded funding from state of Michigan for EV/battery manufacturing, including a $600M direct grant
- The new facilities marks GM's biggest investment over 114 years
- Will the expansion plans keep GM's head above water in the tightening EV race?
GM (NYSE: GM) has arguably been lacking a little in the EV race compared to its largest competitors; seemingly playing catch-up in a struggle to compete, illustrated by disappointing sales numbers in recent earnings releases. As a key figurehead in the US automobile industry, GM needs to maintain a reputation of relevance by ramping up EV production at a time where it’s make-or-break for capitalizing on market share.
Today, in a promising development for the company, GM was awarded tax incentives exceeding $824M for up to $7B in new capital investment in expanding GM’s EV and battery production in Michigan – this includes a $600M direct grant for GM and LG from the state of Michigan.
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The move is a testament to GM’s potential in the EV space, in what GM CEO Mary Barra described as the single largest investment in the company’s 114-year history. This is just the start for GM, the company plans to spend around $4B in the next three to five years adding manufacturing space to its Orion Assembly plant, as well as a further $1.5 to $2.5B in a partnership with LG for the construction of a proprietary Ultium battery manufacturing plant.
A promising move by GM; but one that is currently overshadowed by the current market competition. GM’s new range of electric pickups will have to find footing amongst the success of Ford’s anticipated F-150; and with a few years until the plant reaches full manufacturing capacity, GM’s short-term outlook remains susceptible to shortcomings.