Thursday, 9 December, 2021
E-paper

Global carmakers now target $515bn for electric vehicles

Global carmakers now target $515bn for electric vehicles

LONDON: Global automakers are planning to spend more than half a trillion dollars on electric vehicles and batteries through 2030, according to a Reuters analysis, amping up investments aimed at weaning car buyers away from fossil fuels and meeting increasingly tough decarbonization targets.

Less than three years ago, a similar analysis by Reuters found car companies planned to spend $300 billion on EVs and related technologies. But looming zero-carbon mandates in cities such as London and Paris and countries from Norway to China have lent additional urgency to the industry’s EV-related investment commitments, report agencies.

The most recent analysis shows carmakers planning to spend an estimated $515 billion over the next five to 10 years to develop and build new battery-powered vehicles and shift away from combustion engines. But industry executives and forecasters remain concerned that consumer demand for EVs could fall well short of aggressive targets without substantial additional incentives and even greater spending on charging infrastructure and grid capacity.

Brian Maxim, head of global powertrain forecasting at AutoForecast Solutions, likens the growing investment commitments in vehicle electrification to the Cold War: “Once a few manufacturers announced EV programs, everyone else had to announce their own or be viewed as being left behind.”

However, he added, “this leaves a lot of vehicle manufacturers planning significant volumes for a vehicle category that has unknown consumer acceptance, and will have minimal to no profit” for years.

Reuters compiled the investment data from company statements, investor presentations and regulatory filings.

Other surveys have come up with different spending projections. In June, consulting firm AlixPartners said auto industry investments in electric vehicles would reach $330 billion by 2025. In 2020, all global automakers combined spent nearly $225 billion on capital expenditures and research and development, according to AlixPartners.

Tesla Inc, the world’s largest EV manufacturer, appears to be the one company that is selling virtually every vehicle it can build and is readying new multibillion-dollar “gigafactories” near Berlin and Austin that will significantly boost its annual production capacity. In early November, the company was valued at $1.2 trillion, more than twice the combined value of Volkswagen AG, Toyota Motor Corp, Ford Motor Co and General Motors Co.