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Automakers now target $515 billion for EVs, batteries 

Through 2030, global automakers intend to spend more than half a trillion dollars on electric vehicles and batteries.

According to a Reuters analysis, automakers are ramping up investments aimed at weaning car buyers away from fossil fuels and meeting ever-tougher decarbonization goals.

Reuters reported less than three years ago that automakers planned to spend $300 billion on EVs and related technologies.

However, looming zero-carbon mandates in cities such as London and Paris, as well as countries ranging from Norway to China, have given the industry’s EV-related investment commitments added urgency.

According to the most recent analysis, automakers plan to spend $515 billion over the next five to ten years developing and manufacturing new battery-powered vehicles as they transition away from combustion engines.

However, industry executives and forecasters are concerned that without significant additional incentives and even more spending on charging infrastructure and grid capacity, consumer demand for EVs could fall far short of aggressive targets.

The growing investment commitments in vehicle electrification, according to Brian Maxim, head of global powertrain forecasting at AutoForecast Solutions, are reminiscent of the Cold War:

“Once a few manufacturers announced EV programs, the rest of the industry had no choice but to follow suit or risk being left behind.”

“This leaves a lot of vehicle manufacturers planning significant volumes for a vehicle category with unknown consumer acceptance and minimal to no profit” for years, he added.

The investment data was compiled by Reuters from company statements, investor presentations, and regulatory filings.

Other studies have produced different spending estimates.

According to AlixPartners, a consulting firm, auto industry investments in electric vehicles will reach $330 billion by 2025.

According to AlixPartners, global automakers will spend nearly $225 billion on capital expenditures and research and development in 2020.

Tesla Inc (TSLA.O), the world’s largest electric vehicle manufacturer, appears to be the only one selling nearly every vehicle it can make, and is planning new multibillion-dollar “gigafactories” near Berlin and Austin that will significantly increase its annual production capacity.

The company was valued at $1.2 trillion in early November, more than twice as much as Volkswagen AG (VOWG p.DE), Toyota Motor Corp (7203.T), Ford Motor Co (F.N), and General Motors Co combined (GM.N).

Meanwhile, political and regulatory pressure is mounting on the world’s automakers to phase out fossil-fuel vehicles, including gasoline-electric hybrids, over the next 10-15 years while ramping up production of fully electric vehicles.

A number of countries, including Singapore and Sweden, have announced that new combustion engine vehicle sales will be prohibited by 2030. President Joseph Biden of the United States has stated that by 2030, he wants electric vehicles to account for 40% to 50% of all vehicle sales.

With more than $110 billion in EV and battery investment commitments through 2030, Germany’s Volkswagen Group, which is still recovering financially from the 2016 Dieselgate emissions cheating scandal, continues to lead the rest of the industry.

VW’s aggressive rollout plans for millions of electric vehicles in Europe, China, and North America over the next decade are based on these commitments, which account for more than 20% of the industry total.

According to public data released by the companies, VW’s investments, like those of many of its competitors, are aimed at improving the range and performance of batteries, lowering the cost of EVs, and expanding battery and EV production around the world.

VW and fellow German automakers Daimler AG (DAIGn.DE) and BMW AG (BMWG.DE) plan to spend $185 billion between now and 2030, while GM and Ford plan to spend nearly $60 billion between now and 2025.

Over the next decade, Chinese automakers, led by VW and GM local partner SAIC Motor (600104.SS), have set investment goals of well over $100 billion.

Honda Motor (7267.T), Toyota Motor (7201.T), and Nissan Motor (7201.T) are far behind, with a combined public commitment of less than $40 billion.

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The tens of billions of dollars being invested in additional production capacity by the world’s largest battery companies, many in collaboration with their automaker partners, are not included in these investments.

Reuters News

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