Other surveys have come up with different spending projections. In June, consulting firm AlixPartners said auto industry investments in electric vehicles would reach $330 billion by 2025. In 2020, all global automakers combined spent nearly $225 billion on capital expenditures and research and development, according to AlixPartners.
Tesla Inc (TSLA.O), the world’s largest EV manufacturer, appears to be the one company that is selling virtually every vehicle it can build and is readying new multibillion-dollar “gigafactories” near Berlin and Austin that will significantly boost its annual production capacity. In early November, the company was valued at $1.2 trillion, more than twice the combined value of Volkswagen AG (VOWG_p.DE), Toyota Motor Corp (7203.T), Ford Motor Co (F.N) and General Motors Co (GM.N).
Meanwhile, political and regulatory pressure is building on the world’s carmakers to begin phasing out production of fossil-fueled vehicles, including gasoline-electric hybrids, over the next 10-15 years, while ramping up output of full electric models.
A number of countries, from Singapore to Sweden, have said they will ban sales of new combustion engine vehicles by 2030. U.S. President Joseph Biden has said he wants 40% to 50% of sales to be electric vehicles by 2030.
Germany’s VW Group, which is still recovering financially from the 2016 Dieselgate emissions cheating scandal, continues to lead the rest of the industry, with more than $110 billion in EV and battery investment commitments through 2030. Those commitments, which represent more than 20% of the industry total, underpin VW’s aggressive rollout plans for millions of EVs in Europe, China and North America over the next decade.
VW’s investments, like those of many of its rivals, are aimed at improving the range and performance of batteries and lowering the cost of EVs, as well as expanding battery and EV production across the globe, according to public data released by the companies.
VW and fellow German automakers Daimler AG (DAIGn.DE) and BMW AG (BMWG.DE) are planning to spend a combined $185 billion through 2030, while U.S. automakers GM and Ford expect to spend nearly $60 billion through 2025.
Chinese automakers, led by VW and GM local partner SAIC Motor (600104.SS), have announced well over $100 billion in investment targets over the next decade. Japanese automakers lag far behind, with Honda Motor (7267.T), Toyota Motor and Nissan Motor (7201.T) so far publicly committing less than $40 billion combined.
These investments do not include the tens of billions of dollars being invested in additional production capacity by the world’s largest battery companies, many in cooperation with their automaker partners.
Reporting by Paul Lienert in Detroit and Tina Bellon in Austin; Editing by Dan Grebler