AUTOMOTIVE OUTLOOK

by Royce Lowe GM’s Trillions

This month sees the usual EV news giving way to an announcement from GM about a new ICE engine. The company will invest almost a trillion dollars in capital investment for four U.S. plants; in fact, $918 million, mainly for the production launch of a new, small block V-8 engine, but also to increase output of GM’s battery electric vehicle (EV) products. The company made it clear that these investments confirm its “commitment to continue providing customers a strong portfolio of ICE (internal combustion engine) vehicles well into the future, while continuing to accelerate its transformation to an all-electric future.” The new V-8 will be installed in pickups and SUVs.

Over half the new investment, $579 million, will go to production of the new V-8 engine at GM’s Flint (Mich.) Engine Operations. This will include machining of engine blocks, cranks, and heads. The expansion effort will begin immediately, according to GM’s announcement. The Flint plant will continue building the 3.0-liter turbodiesel engines for light-duty trucks as the new installations are ongoing. Casting of the new V-8 engine blocks will be done at the GM foundry and machining complex at Defiance, Ohio, under a new investment of $55 million.

The Defiance operation casts aluminum four-cylinder, V-6, and V-8 engine blocks and four-cylinder heads for a continued range of Chevrolet, Buick, GMC, and Cadillac models.

GM’s Bay City, MI, Global Propulsion Systems plant will receive $216 million to produce camshafts and connecting rods, machine engine blocks, and heads for the new V-8. Its Rochester plant will see $68 million to produce intake manifolds and fuel rails for the new V-8 engine, and to produce batterypack cooling lines for EVs.

So what’s in store for EVs and anything to do with them in 2023? Bloomberg’s BNEF is looking for a continued rise in EV sales, but at a slightly lower pace than in the last two years, when sales went from 3.2 million in 2020, to 10 million in 2022. They see 13.6 million plug-in passenger vehicle sales in total for the year, with some 75% being fully electric.

China will continue to dominate the market, with what looks like some 8 million sales in 2023. The U.S. will likely reach 1.6 million units in 2023, still well behind Europe, but starting to narrow the gap. Chinese automakers already have over 10% of Europe’s EV market.

There are presently 27 million EVs on the road globally, and this should surpass 40 million by the end of this year. This is still only 3% of the global total, but much more than the 1% at the end of 2020. Plug-ins are at 15% of global car sales. In light of the shaky world economy we’re going through, what effect will this have on EV sales?

There’s also a forecast of almost 600,000 electric trucks and vans being sold in 2023, with the U.S. joining in the fray. Buyers have placed orders and some deliveries have been made for GM’s BrightDrop, Tesla, and others. The number of public charging stations more than doubled in 2022, and BNEF expects annual installations to reach 1.3 million in 2023, with an accumulative global total of 4.1 million chargers. Global growth depends heavily on the Chinese industry, which has been installing a huge number of chargers. Europe and North America are much further behind but will also post record years for public installations. Gridconnection issues will continue to be one of the hurdles to faster growth, and carbon credit schemes will become of greater interest to operators.

The Inflation Reduction Act, passed last August, (The Inflation Reduction Act of 2022 is a landmark United States federal law which aims to curb inflation by reducing the deficit, lowering prescription drug prices, and investing into domestic energy production, while promoting clean energy) has already succeeded in attracting automakers and, particularly, battery manufacturers, to the tune of almost $28 billion. Battery manufacture accounts for $16.6 billion, cathode and anode material production $5.4 billion, battery recycling $3.5 billion, and EV manufacture $2.2 billion. BNEF expect that more than $80 billion will be committed to the North American battery supply chain in 2023, although how much of that might be a result of the IRA is not presently clear.

As we’ve gathered over the past few years, there are a lot of companies in the EV business, some of whom are struggling. Any slump in the business will surely see some of them being forced to decamp from the race. But the fittest will thrive.

Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook. n

FEBRUARY 2023