GM's Bold Move on Electric and Autonomous Vehicles

$3 billion (approximately 3.504 trillion KRW) investment

Hamtramck plant transformed into GM's first dedicated electric vehicle production plant

[Asia Economy Reporter Kwon Jaehee] General Motors (GM), which has experienced poor performance in recent years, has made a bold move by focusing on electric vehicles and autonomous driving. This is a strategy to overcome the recession caused by the global economic downturn and the paradigm shift from internal combustion engine vehicles to eco-friendly cars.

According to the Wall Street Journal (WSJ) on the 27th (local time), GM CEO Mark Reuss announced at the Hamtramck plant in Detroit, Michigan, that the company will invest $3 billion (approximately 3.5 trillion KRW) in electric and autonomous vehicles. Of this, $2.2 billion will be invested in GM's Detroit Hamtramck plant. Production of the Chevrolet Impala and Cadillac CT6, previously manufactured at the Hamtramck plant, will be suspended from the end of February due to poor sales. The Hamtramck plant will then be temporarily closed for renovation and transformed into GM's first dedicated electric vehicle production plant.

The first model to be produced at the Hamtramck plant is expected to be the electric version of the 'Hummer' pickup truck. The U.S. automotive industry has long anticipated the possibility of converting Hummer to electric vehicles because the Hummer itself is large, making it easier to install battery packages. The autonomous vehicle 'Cruise Origin,' unveiled last week in San Francisco, will also be produced at this plant. GM expects that once the Hamtramck plant is fully operational, it will create more than 2,200 additional jobs.

In 2017, GM Chairman Mary Barra announced plans to launch about 20 electric vehicle models by 2023. This investment is also interpreted as part of that plan.

GM's large-scale investment is closely related to its poor performance over recent years and the paradigm shift in the global automotive industry. GM has struggled in the Chinese market, which has significantly impacted its overall performance. Last year, sales in China decreased by 15%. Profits also dropped to $883 million (approximately 1.399 trillion KRW), about half of the previous year's $1.7 billion.

Especially in major markets such as China and Europe, demand for electric vehicles is increasing due to carbon emission regulations. The European Union (EU) will begin enforcing carbon emission regulations from 2021 as part of its 'Green Deal' policy to achieve net-zero carbon emissions by 2050. China has also been providing subsidies for electric vehicles.

CEO Reuss stated, "We will produce various electric trucks and SUVs across different brands and price ranges. Although it is unclear when demand for electric vehicles will explode, GM must be prepared in time."

In December last year, GM announced a joint venture with LG Chem, with a 50-50 partnership, to build a battery cell plant in Rose Town, Ohio. The battery cells produced there will be installed in the models manufactured at the Hamtramck plant, which is being converted into a dedicated electric vehicle production facility.