Hey Big Spenders! Car Manufacturers Are Investing Billions in EV Batteries
$515 billion. According to Reuters, this is the amount global automakers are expecting to spend on EVs and batteries up until 2030.
As the quest for electrification continues to spread across the world, car makers are increasingly trying to steer clear from fossil fuels as they strive to meet increasingly tough decarbonization targets. Earlier this decade, it seemed that automakers were set to spend $300 billion on EVs, their batteries and related technologies. However, as big cities, including London and Paris, and entire countries such as Norway, push towards zero-emission areas and eliminating hybrids, investing in EVs and their batteries has become the car industry’s priority.
While Tesla was the first automaker to invest in building its own battery manufacturing plants and really push for the commercialization of EVs, other companies have since either followed suit or are in the process of doing so.
Having opened its first Gigafactory in 2016, Tesla has since opened 5 additional factories across the US, Europe and Asia, dedicated to EV batteries, components and assembly. Each Gigafactory costs anywhere between $1 billion and $5 billion and can produce half a million battery packs per year and up to 500,000 EVs per year.
As it aims to dethrone Tesla in EV sales by 2025, GM announced it will invest approximately $6.6 billion in its home state of Michigan through 2024. The American car maker’s main goal is to increase electric pick-up truck production and build a new EV battery plant. Indeed, GM plans on building 1 million EVs by 2025 and has projected that it will sell over 1 million EVs globally by 2025, overtaking Tesla as the top US-based EV seller during that period of time. CEO, Mary Barra, said GM “will have the products, the battery cell capacity and the vehicle-assembly capacity to be the EV leader by mid-decade”.
With plans to roll out 17 EV models by 2030, Hyundai announced it was investing $5.54 billion to build its first dedicated full EV and battery manufacturing facilities in the US. The South Korean car maker is set to begin commercial production in the first half of 2025 and aims to produce an annual capacity of 300,000 EVs. Currently, Hyundai is among the world's five biggest automakers by vehicle sales and though it already has production sites in Alabama and Georgia, there are also plans to invest $300 million to add EVs in its Montgomery (Alabama) assembly.
Building this new plant is an integral part of Hyundai's $7.4 billion planned investment in the US through 2025 to forward future mobility. To further solidify its electrification push, Hyundai also plans to invest the equivalent of $16.43 billion through 2030 for the expansion of its EV business in South Korea.
Ford is in the process of creating its most advanced, largest and most efficient car production complex in its 118-year history as part of the car maker’s more-than-$30 billion investment in EVs through 2025. Together with SK Innovation, they plan to invest $11.4 billion split between two complexes. The first, a $5.6 billion mega campus, BlueOval City, will be in Tennessee and will reimagine how vehicles and batteries are manufactured as it’s used to build next-generation electric pick-up trucks and advanced batteries. The second, the $5.8 billion BlueOval SK Battery Park, will be built in Kentucky and consist of twin battery plants that will power a new lineup of EVs. Production will begin in 2025 and will enable 129 gigawatt hours a year of US production capacity for Ford. In addition to this, Ford is investing $90 million in Texas, bringing its total to $525 million in the US, to train skilled technicians to service EVs.
Up until recently, Toyota focused on hybrids and only sold EVs in China. Indeed, Toyota’s executives often downplayed fully electric vehicles, promoting hybrids and fuel cell hydrogen cars instead. However, at the end of 2021, the Japanese carmaker announced plans to invest $3.4 billion in battery development and production in the US, which includes a $1.3 billion EV battery plant to produce in-house cells under a new company. After falling behind in electrification, Toyota is trying to catch up by investing in battery supply and research, and by securing large amounts of batteries, a critical aspect to achieve volume production of EVs.
Volkswagen is investing around €2 billion in its own gigafactory, Salzgitter, as it aims to make the battery cell production factory its European battery hub, and to manage its own battery activities and the setup of cell factories in Europe. At the same time, it is thought that while Tesla will retain the global sales top spot for at least another year, Volkswagen, already leading in Europe, will most probably overtake the American EV maker as early as 2024. Additionally, with the goal of capacity expansion in the fields of production, recycling and research and development, Volkswagen contributed $620 million in a financing round of its battery partner Northvolt AB with a total volume of $2.75 billion. Over in the US, with an investment of $800 million, Volkswagen already has an electrification factory in Tennessee. The German carmaker will also invest $7.1 billion to boost its product portfolio, R&D and manufacturing capabilities in North America. Furthermore, Volkswagen opened its $22 million Battery Engineering Lab where it tests EV batteries in the American marketplace and is said to be actively looking to build a new EV assembly and battery facility.
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