The Big Switch: How Tesla Is Leading Automobile Giants' Shift To EVs

by Bhaswati Guha Majumder - Dec 16, 2021 09:19 PM +05:30 IST
The Big Switch: How Tesla Is Leading Automobile Giants' Shift To EVsTesla car
Snapshot
  • It's not just Tesla. Almost all automobile giants are going big on EVs.

Electric vehicles are the way of the future, and automakers are adding more EVs to their lineups every year. From well-known incumbent manufacturers to new brands, almost everyone is working on electric vehicles.

In 2020, Wall Street and Silicon Valley poured billions of dollars into electric-vehicle and associated firms, relying on their future supremacy.

While Elon Musk’s Tesla, the biggest name in EV keeps getting bigger, the American auto industry has vowed to increase manufacturing of EVs to the point where they account for roughly half of total sales in the United States by 2030, raising optimism that EVs will move from niche to mainstream.

However, apart from Tesla, which hit $1 trillion market capitalisation for the first time in October this year but recently dropped below the mark, there are other big names in the field of automobile manufacturing—such as Toyota, Mercedes-Benz and Ford—which are committed to invest millions of dollars to their EV development initiatives.

Tesla

In early 2020, it was reported that the company has updated its capital expenditure guidance, confirming a goal to spend up to $12 billion in two years on its new electric car and battery plants. At that time, Tesla CFO Zachary Kirkhorn stated during the conference call following the company's Q3 2020 earnings that the company is raising its anticipated capital expenditures.

While explaining the investment plan, the company said: “Owing and subject to the foregoing as well as the pipeline of announced projects under development and all other continuing infrastructure growth, we currently expect our capital expenditures to be at the high end of our range of $2.5 to $3.5 billion in 2020 and increase to $4.5 to $6 billion in each of the next two fiscal years.”

CNBC reported in November this year that according to construction papers with the Texas Department of Regulation, Tesla will spend over $1 billion on a new vehicle plant in Austin, Texas, with several significant sections of the complex expected to be completed by December 31, 2021.

It was said that Tesla intends to invest at least $1.06 billion in a "Gigafactory" that will produce the company's upcoming electric pickup truck, the Cybertruck, as well as the Model 3 and Model Y vehicles.

Recently, Tesla's India subsidiary, Tesla India Motors and Energy Private Limited (TIME), has received the green light for three new models, according to updates on the Ministry of Road Transport and Highways website Vahan.

Musk’s company is yet to launch its electric vehicles in India. Before joining the market, the American EV manufacturer is still in talks with the Centre to decrease import levies on electric vehicles.

Toyota

The Japanese multinational automotive manufacturer, the world's largest automaker, has pledged 8 trillion yen or $70 billion to electrify its vehicles by 2030, half of which will go toward developing a battery electric vehicle (BEV) lineup, as it seeks to capitalise on a rising market for zero-emission vehicles.

Toyota, which was a latecomer to fully electric vehicles, predicted that annual BEV sales would only reach 3.5 million by the end of the decade, or about a third of its current vehicle sales. At a press appearance in Tokyo surrounded by more than a dozen projected BEV models, Toyota CEO Akio Toyoda said the company is still pursuing a multi-pronged carbon-reduction strategy that includes hybrid automobiles and hydrogen-powered vehicles.

As reported by Reuters, Toyota's aim is to introduce a comprehensive line-up of 30 BEVs by 2030—that exceeds its earlier announcement of 15 models available by 2025.

The Japanese automaker also stated on 14 December that it would invest 2 trillion yen or more than $17 billion in battery vehicle technology, by 2030, up from 1.5 trillion yen previously announced.

Additionally, the report noted that a $1.29 billion investment will be made in a new battery plant in North Carolina, which will begin manufacturing in 2025.

Toyota is also working on internal combustion engines that run on hydrogen fuel, in addition to electrified vehicles. Toyota claimed that the technology might help save some of Japan's 5.5 million auto jobs by allowing the industry to maintain supply networks that would otherwise be lost if the country switched entirely to electric vehicles.

Volkswagen

In early December, the German automobile giant announced that more than half of the money spent by the Volkswagen Group over the next five years will go toward electric vehicles and other high-tech initiatives.

According to reports, the company expects that 25 per cent of the vehicles it sells globally will be electric by the end of 2026.

The report noted that Volkswagen would invest €89 billion, which is slightly more than $100 billion, to accelerate its transition to electric vehicles as part of its preparations. This is the first time the company has set aside more than half of its overall spending—around $180 billion—for electric vehicles.

However, at the same time, spending on hybrid vehicles, which combine a battery and a gasoline engine, will be cut by 30 per cent, the report added.

Recently, as per Reuters, the company said that it was also considering locations in Spain and Eastern Europe for planned battery cell plants, with the specific locations for its third and fourth gigafactories to be selected in the first half of 2022. Additionally, it has committed to invest $2.3 billion in a planned battery unit in Germany.

Mercedes-Benz

This German luxury vehicle behemoth is planning an all-electric future by the end of the decade, according to early reports.

The world's preeminent luxury automobile company is shifting from electric-first to electric-only, rushing toward an emissions-free and software-driven future. According to a December report, Mercedes-Benz has recently partnered with Factorial, a battery technology development business based in Massachusetts. The automobile giant intends to invest tens of millions of dollars in Factorial's solid-state battery research.

"With this cooperation, we combine Mercedes-Benz's expertise in battery development and vehicle integration with the comprehensive know-how of our partner Factorial in the field of solid-state batteries," said Markus Schafer, head of Daimler Group R&D and Mercedes Cars COO.

The company also stated that during the next five years, it plans to put solid-state battery technology into a modest number of its vehicles—expect some popular EQ models in the future years.

In July this year, it was reported that to accelerate the shift to all-electric, between 2022 and 2030, the German giant will invest over 40 billion euros or more than $45 billion in battery electric vehicles, according to the company's plan.

Mercedes-Benz plans to have battery electric vehicles (BEV) in all of its segments by 2022. All new vehicle architectures will be electric-only starting in 2025, and consumers will be able to choose an all-electric option for any model the firm produces.

However, in a December news release, Daimler, Mercedes-Benz’s parent company, said: “For the transformation into a software-driven and emissions-free future, the Supervisory Board signed off on an investment plan for the years 2022 to 2026 of more than 60 billion euros ($67 billion).”

“Although the company plans to reduce capex, research and development expenditure for the electrification of the product portfolio and digitalization measures, including steps towards automated driving, will remain at a high level,” it added.

Ford

In September, the American automobile manufacturer Ford announced a huge investment in EV production in the United States, vowing to build its largest factory and two battery parks in Tennessee and Kentucky, respectively.

Ford claimed that it will build zero-emission vehicles and pickups "at scale" for American consumers under the $11.4 billion plan and this initiative will also create 11,000 jobs.

According to the company’s news release, BlueOval City, a new $5.6 billion mega campus in Stanton, Tennessee, will create 6,000 new employment and reinvent how automobiles and batteries are created. It will become a vertically integrated ecosystem for Ford to manufacture an expanded array of electric F-Series vehicles.

Ford also noted that the company’s $7 billion expenditure is the greatest single manufacturing investment ever made by an American automaker.

This investment, which is part of Ford's more than $30 billion investment in electric vehicles through 2025, supports the company's longer-term goal of creating a sustainable American manufacturing ecosystem and accelerating its progress toward carbon neutrality, which is supported by science-based targets in accordance with the Paris Climate Agreement.

The company anticipates that 40 to 50 per cent of its global vehicle volume will be entirely electric by 2030.

General Motors

In the case of major investment in the EV development initiative, there is another name that stands out among the others—General Motors (GM).

Earlier this year, reports stated that GM has increased the amount it plans to spend on electric and autonomous car projects, as the company said that it will spend $35 billion through 2025, an increase of $8 billion over its previous plan published in November 2020.

As reported, by 2025, the American automobile maker wants to introduce 30 new EVs to the worldwide market and by 2035, it wants to be completely emission-free. With the new investment, GM plans to add new electric commercial vehicles to its North American plan, as well as expand production capacity for electric SUVs in the United States.

In addition to expanding its EV lineup, the automaker is investing in two new battery cell plants through its joint venture with LG Chem, termed Ultium Cells LLC. It has also put money into Cruise, its autonomous driving division, which it purchased for majority control in 2016.

At that time, CEO Mary Barra said: “GM is targeting annual global EV sales of more than 1 million by 2025, and we are increasing our investment to scale faster because we see momentum building in the United States for electrification, along with customer demand for our product portfolio".

Get Swarajya in your inbox everyday. Subscribe here.

An Appeal...

Dear Reader,

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Become A Patron
Become A Subscriber
Comments ↓
Get Swarajya in your inbox everyday. Subscribe here.
Advertisement

Latest Articles

    Artboard 4Created with Sketch.