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Jeep and Ram Maker Sends Strong Message to Ford, GM and Rivian

Stellantis is looking to flex its battery-powered muscles in the electric vehicle sector.
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On July 4, 1894, the inventor Elwood Haynes climbed aboard his horseless carriage and drove the first gasoline-powered automobile down Pumpkin Vine Pike in Kokomo, Ind.

Kokomo was a hotbed of innovation, particularly in the automobile industry, and the midwestern metropolis has been officially dubbed the "City of Firsts."

Way Down in Kokomo

In the very same year that Haynes made his ride, D.C. Spraker created the first pneumatic rubber tire in the U.S. at the Kokomo Rubber Tire Company. 

The first aluminum casting was developed by William "Billy" Johnson from the Ford and Donnelly Foundry in 1895 and a few years after that George Kingston developed his Kingston carburetor right there in Kokomo.

The auto industry is shifting from the internal combustion engine to electric vehicles but that doesn't mean that Kokomo has no place to go.

In fact, Stellantis  (STLA) - Get Stellantis N.V. Report, the company behind such brands as Jeep, Dodge, Ram, and Fiat, and Samsung SDI got together on May 24 to announce they were going to jointly invest over $2.5 billion for a lithium-ion battery plant in--where else?--Kokomo.

The companies said the plant, which is targeted to start production in the first quarter of 2025, will aim to have an initial annual production capacity of 23 gigawatt hours (GWh) and look to increase to 33 GWh in the next few years.

'An Aggressive Electrification Strategy'

The total capacity would increase further as demand for Stellantis electric vehicles is expected to rise and the investment could gradually increase up to $3.1 billion.

The new facility will supply battery modules for a range of vehicles produced at Stellantis’ North American assembly plants. 

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Plant construction activities are scheduled to begin later this year and the facility is expected to create 1,400 new jobs in Kokomo and the surrounding areas. 

"Just under one year ago, we committed to an aggressive electrification strategy anchored by five gigafactories between Europe and North America,” Carlos Tavares, CEO of Stellantis, said in a statement. “Today’s announcement further solidifies our global battery production footprint and demonstrates Stellantis’ drive toward a decarbonized future outlined in Dare Forward 2030."

Stellantis has announced plans to have global annual battery electric vehicle sales of five million vehicles by 2030, reaching 100% of passenger car battery electric vehicle (BEV) sales mix in Europe and 50% passenger car and light-duty truck BEV sales mix in North America.

'No Time to Adjust'

The announcement could also be considered a shot over the bow at rival automakers such as General Motors  (GM) - Get General Motors Company Report, Ford  (F) - Get Ford Motor Company Report and Rivian Automotive  (RIVN) - Get Rivian Automotive Inc. Report, who are all looking to hotwire the electric vehicle market.

The battery manufacturing plant comes at a critical time for the EV sector. 

Tavares said after the announcement that he expects a shortage of EV batteries by 2024-2025, followed by a lack of raw materials for the vehicles that will slow availability and adoption of EVs by 2027-2028.

“The speed at which we are trying to move all together for the right reason, which is fixing the global warming issue, is so high that the supply chain and the production capacities have no time to adjust,” he said, according to CNBC.

Last month, Rivian's CEO RJ Scaringe issue a similar warning, stating that a shortage of battery supplies for electric vehicles could be a more serious challenge the current computer-chip shortage.

"Put very simply, all the world’s cell production combined represents well under 10% of what we will need in 10 years,” Scaringe said, according to the Wall Street Journal. “Meaning, 90% to 95% of the supply chain does not exist.”