Global automakers spend $ 300 billion in EVs over 10 years


Global automakers are going all-in for electrification, with plans to spend $ 300 billion in EVs over the next decade, according to a Reuters analysis.

The race toward EVs is driven by increasing environmental and climate regulations around the world, while technological improvements have made EVs cheaper than ever.

Among global automakers, Volkswagen has the most ambitious view. VW, the world's largest automaker in sales, announced plans in December to invest $ 34 billion in e-mobility initiatives and $ 57 billion in battery purchases. Combined spending of $ 91 billion in EVs over the next decade is unmatched by any other global automaker. VW will present 50 battery-powered electric models by 2025 along with 30 hybrid election models. And over time, the German automaker will offer electric versions of all its 300 models.

The push of the EV comes at a difficult time for the world auto industry, which has recently faced problems. Last year, total car sales stopped in China, a big sign of economic slowdown. As the largest automotive market in the world, the 6% contraction in sales in China in 2018 inflicted economic losses on automakers around the world. According to RBC Capital Markets, the world auto industry reported a 2.9% decline in sales in the third quarter of 2018, followed by a 4% decline in the fourth quarter. This marked the first time that global auto sales have fallen in two consecutive quarters since 2009, during the depths of the financial crisis. Goldman Sachs predicts that car sales in China will fall further 7% this year as the economy slows and the effects of the trade war.

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However, within this contraction is a remarkable development. Even with the fall in total car sales, sales of EVs and hybrid vehicles in China are expected to increase by one-third to 1.6 million, according to Bloomberg and the China Association of Automobile Manufacturers. In fact, China is aggressively shifting to VEs, and the fact that it attracts nearly half – about $ 135 of the $ 300 billion in spending planned with VEs over the next decade – is clear evidence that China has become leader in electrification. China has a combination of mandates, credits and incentives imposed by the state, which have the combined effect of accelerating the adoption of the VE.

This two-track trend – increased sales of electric vehicles, but weak car sales – is also unfolding elsewhere. Sales are also stagnant in Europe and the United States. In the United States, drivers abandoned passenger sedans and instead turned to heavier SUVs, fueled by lower gasoline prices. Changes in consumer tastes have led to the disruption of auto companies. GM has announced a series of factory closures related to a slowdown in sales, particularly for smaller passenger vehicles.

At the same time, even though sales of VEs are still small, they are rising rapidly, rising more than 80 percent in the US last year.

But we are still in the early stages of this energy transition. The New York Times reports how the EVs will be a particular focal point at the North American International Auto Show in Detroit this week. GM is expected to announce a new EV model under the Cadillac brand, designed to be a luxury rival to Tesla. On Monday, VW announced plans to invest $ 800 million to build a new EV model at its factory in Chattanooga, Tennessee. The new initiative would add 1,000 jobs and the EV would begin production in 2022.

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These are just a few examples of the dozens of new EV models that are expected to be released in the coming years.

In a sign of the times, even ExxonMobil is considering an investment in an infrastructure company to recharge electric vehicles. That may not sound like bombshell news, but it's remarkable because Exxon has been one of the largest conservative oil companies in relation to the clean energy transition. Some of its competitors, including Royal Dutch Shell, BP and Total, for example, already have their hands on electric vehicles, renewable energy or utilities in some form or another.

Exxon firmly resisted this historic transition and stubbornly defined a vision of decades of oil and gas. As such, a small incursion into EV infrastructure, however trivial it may seem, is evidence that even the most conservative oil executives see the writing on the wall.

By Nick Cunningham,

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