Retooling auto plants for EVs will cost billions. Biden wants to help

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DETROIT, Nov. 17 (Businesshala) – General Motors Co. (GM.N) in Detroit is on the front line of the battle for the American electric vehicle market amid “Factory Zero” aging, unionized factories and new, non-federal plants. by young electric vehicle companies.

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President Joe Biden’s administration wants to boost the older part of the American auto industry.

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Biden’s scheduled visit to Factory Zero on Wednesday will put a spotlight on his administration’s proposals to bring in billions in federal aid to help older auto factories and the Midwestern communities that depend on them as part of their “Build Back Better” spending bill.

The Biden administration and fellow Democrats in Congress have proposed nearly $50 billion in tax breaks, incentives for government agencies to buy electric vehicles, loans to retrofit factories, and aid to automotive plant communities.

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This does not count the billions in new subsidies to boost sales of electric vehicles, such as a 30% tax credit for commercial electric vehicles.

A proposal by union activists to pass up to $12,500 in tax credits to consumers who buy an electric vehicle assembled in the United States so far appears to lack votes to pass the closely divided US Senate.

Build Back Better will also allocate $3.5 billion to convert US factories to produce electrified or fuel cell vehicles, and revive incentives that could generate $3.7 billion for automotive communities by 2031.

Auto manufacturers could also benefit from the $3 billion allocated to the Department of Energy Advanced Technology Vehicle Manufacturing Loan Program.

GM’s head of global manufacturing, Gerald Johnson, told Businesshala that federal spending could accelerate demand for electric vehicles, which is one reason the automaker has prioritized flexibility at Factory Zero.

If the Build Back Better law is passed, GM will include it in its plans, he said. “What we’re doing doesn’t change.”

Factory Zero, opened in 1985, is one of 21 GM assembly and powertrain operations in the United States, and the first to begin assembling electric vehicles.

Biden is expected to take a look at one of the first GMC Hummer EVs assembled at the plant. The first Hummer model will have a starting price of over $100,000 – too much to qualify for the proposed EV tax credit.

GM said it was saving billions by repurposing its factories and retraining its current employees, rather than following rivals such as Tesla Inc. (TSLA.O) and building new factories in southern and western states. could.

Tesla captured about 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 annually. Factory workers at GM start at $28 an hour, or about $56,000 a year, under their United Auto Workers agreement.

Mike Tracy, president of manufacturing consultancy Agile Group, said plants where battery manufacturing and vehicle assembly takes place in a complex — such as the Tesla factory in Austin, Texas — could be more efficient, cutting transportation costs for batteries.

“GM is trying to avoid putting union workers out of business,” Tracy said.

Rival Ford Motor Company (FN) added an assembly line for an electric F-150 pickup at a plant in Dearborn, Michigan. Ford has also announced plans to build a massive electric vehicle assembly and battery complex in Tennessee.

Johnson said GM is trying to take advantage of a US factory system that has excess capacity. Managing the mix of combustion and electric vehicles over the course of the coming decade could mean using extra space now to avoid disrupting production as plants are replanted.

“When we go back and look at that math, it’s 10-15 billion dollars we don’t have to spend,” he said. “That footprint is an asset, it’s not an anchor.”

Johnson calls GM’s employees “our experienced industrial problem solvers” and says front-line GM plant workers are already telling engineers how to design electric vehicles easier.

“The skill is not so much that you can drive a screw,” he said. “Do you know what to do when the screw doesn’t move.”

Reporting by Joe White and David Shepardson; Editing by Leslie Adler


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