General Motors (GM) - Get Report plans to increase spending on electric and autonomous vehicles to $35 billion over the next four years, a 30% increase from previous plans and another sign the automaker is preparing to compete with Ford (F) - Get Report, Tesla (TSLA) - Get Report and others to sell cars and trucks that go without conventional engines.
The Detroit-based automaker also said it is raising its first-half earnings guidance as effectively navigates the ongoing global semiconductor shortages and pandemic-related supply chain issues.
GM confirmed Wednesday that it plans to build two additional battery facilities in the U.S. and will also move ahead some of its investments in electrification. Locations for the plants haven’t been decided; each plant is expected to cost more than $2 billion.
GM’s EV spending boost comes less than a month after rival Ford raised its EV spending by more than a third to more than $30 billion by 2030.
GM and Ford’s combined $65 billion spend on electrification as well as increased spending by EV leader Tesla and startups Lucid and Rivian reflect the race to an all-electric future that has left some automakers like Lordstown Motors (RIDE) - Get Report scrambling to raise more cash.
Lordstown on Monday said its CEO Steve Burns will step down following an independent investigation into allegations made by short-seller Hindenburg Research that called the company a "mirage.' The company also said in a regulatory filing this week that it doesn't have enough cash on hand to build and sell its trucks.
In January, GM said it was setting a goal to sell all its new cars, SUVs and light pickup trucks with zero tailpipe emissions by 2035, a dramatic shift away from gasoline- and diesel-powered engines that currently dominate global roads.
Also Wednesday, GM raised its first-half pretax earnings guidance from $5.5 billion to between $8.5 billion and $9.5 billion, with net income of $6.2 billion to $7 billion.
On a conference call with reporters, GM CFO Paul Jacobson said the increase comes as GM continues to see strong demand for its vehicles, and because it has been able to mitigate production losses due to a global shortage of computer chips.
Shares of GM were up 3.55% at $62.97 in early trading. Shares of Ford were up 1.47% at $15.22 while shares of Tesla were up 0.21% at $600.62. Lordstown shares were down 1.55% at $10.15.