Retooling auto factories for electric vehicles will cost billions. Biden wants to help
DETROIT, Nov. 17 (Reuters) – General Motors Co (GM.N) ‘Factory Zero’ in Detroit is at the forefront of a battle for the U.S. electric vehicle market between aging, unionized factories and new, non-unionized factories by young electric vehicle companies.
The administration of President Joe Biden wants to give the oldest part of the American auto industry a boost.
Biden’s scheduled visit to Factory Zero on Wednesday will highlight his administration’s proposals to provide billions in federal aid to help old auto factories and the Midwestern communities that depend on them, as part of his bill. âBuild Back Betterâ expenses.
The Biden administration and its Democratic colleagues in Congress have offered nearly $ 50 billion in tax breaks, incentives for government agencies to purchase electric vehicles, loans for factory retooling, and aid to communities in automobile factories.
Not to mention billions in new subsidies to boost sales of electric vehicles, such as a 30% tax credit for commercial electric vehicles.
A proposal for tax credits of up to $ 12,500 to consumers who buy an electric vehicle assembled in the United States by unionized workers so far appears to be lacking in votes to pass the widely divided United States Senate.
Build Back Better would also allocate $ 3.5 billion to convert US factories for the production of electrified or fuel cell vehicles, and would revive incentives that could generate $ 3.7 billion for automotive communities here. 2031.
Automakers could also benefit from $ 3 billion allocated to an energy ministry advanced vehicle manufacturing loan program.
GM’s global manufacturing chief Gerald Johnson told Reuters federal spending could accelerate demand for electric vehicles, which is one reason the automaker has made flexibility a priority at Factory. Zero.
If Build Back Better legislation is passed, GM will factor it into its plans, he said. “It doesn’t change what we do.”
Factory Zero, opened in 1985, is one of GM’s 21 assembly and powertrain operations in the United States, and the first to get a facelift to begin assembling electric vehicles.
Biden should take a look at one of the first factory-assembled GMC Hummer electric vehicles. Early Hummer models will have starting prices over $ 100,000 – too much to qualify for the proposed tax credits for electric vehicles.
GM said it could save billions by reallocating its factories and retraining its current workforce, rather than following competitors such as Tesla Inc (TSLA.O) and building new factories in the states of the United States. south and west.
Tesla captured nearly 80% of the US electric vehicle market in 2020. Its share is expected to decline as more electric vehicles are launched. The company told Texas officials that its factory workers would earn about $ 47,000 a year. GM factory workers start at $ 28 an hour, or about $ 56,000 a year, under their United Auto Workers agreement.
Factories that have battery manufacturing and vehicle assembly in a single complex – like the Tesla plant in Austin, Texas – can be more efficient, lowering the costs of transporting batteries, said Mike Tracy, president of Agile Group, a manufacturing consulting firm.
âGM is trying to avoid putting unionized workers out of work,â Tracy said.
Rival Ford Motor Co (FN) has added an F-150 electric pickup truck assembly line to a factory in Dearborn, Michigan. Ford also announced plans to build a large electric vehicle and battery assembly complex in Tennessee.
GM is trying to take advantage of a US factory system with excess capacity, Johnson said. Managing a mix of thermal and electric vehicles over the next decade could mean using what is now extra space to avoid disrupting production when factories are retooled.
âWhen we step back and look at these calculations, that’s $ 10 billion to $ 15 billion we don’t have to spend,â he said. “This imprint is an asset, it is not an anchor point.”
Johnson calls GM workers “our experienced industrial problem solvers” and says frontline workers at the GM plant are already teaching engineers how to design electric vehicles to be easier to build.
âThe skill is not so much whether you can drive a screw in,â he said. “It’s you know what to do when the screw isn’t turning.”
Reporting by Joe White and David Shepardson; Editing by Leslie Adler
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