GM investing $7 billion to build new battery factory in Michigan

Yahoo Finance's Rick Newman details GM's plan to invest in EV battery production plants, the auto manufacturer's outlook for future EV product lines, and the prospects for charging infrastructure.

Video transcript

AKIKO FUJITA: General Motors is taking aim at Tesla, announcing a roughly $7 billion investment in EV battery manufacturing in a larger effort to dethrone the top EV maker, that $7 billion number, by the way, the largest investment for the company. Let's bring in Yahoo Finance's Rick Newman, who's following this story. It's clear that GM has these grand ambitions for EV makers. How significant is this announcement today to help them get to that ultimate goal of zero ICE cars?

RICK NEWMAN: It's a big deal, Akiko. So as you mentioned, GM says this is the largest single investment they've ever made, nearly $7 billion to build a new battery factory and expand some other production facilities where they will make electric pickups and electric SUVs in Michigan. All the automakers are doing this.

And this is the biggest transformation going on in transformation in probably a century. And just about every automaker is putting down this kind of money to catch up to Tesla on EVs. Tesla right now is selling about 930,000 electric vehicles a year. That's a major ramp up for them. GM says it wants to be producing 1 million EVs by 2025, obviously just a couple of years away. That would be a big ramp up for GM.

And of course, they say that by 2030 to 2035, they want to be producing only electric vehicles with no gasoline model. So everybody is going in the same direction. And it's quite a race.

AKIKO FUJITA: 4,000 jobs is what GM says they will create as a result of this announcement today. But their first rollout on EVs, specifically the Volt, wasn't exactly a smooth one, with issues with the battery as well as the fires. I know the company has said that this is not the same battery technology they're relying on for the future. But how big of a-- how much damage control have they been able to do? You know how--

RICK NEWMAN: Right so youre question is about-- you're talking about--

AKIKO FUJITA: How much have they kind of been able to rebuild trust?

RICK NEWMAN: Yeah, so you're talking about the Chevy Bolt with a B. That came after the Chevy Volt with a V. And the Bolt has basically been in suspension. Chevrolet has not been selling any of those because of this battery problem. The batteries catch fire. It's a defective battery. So GM is trying to fix all the Bolt batteries that are in people's garages and get that technology straightened out.

That in itself is a setback for General Motors. But I also think it's important to point out, it's early days for EVs. Tesla had a lot of problems with manufacturing quality. They got that ironed out. And I think that problem GM is having with the Bolt batteries, better to have it now at the very beginning of the electrification revolution and learn from whatever went wrong and then incorporate those learnings into future technology.

We are going to see GM coming out with a new electric vehicle in just a couple of months. That's going to be the Cadillac LYRIQ. That is an SUV that's supposed to go into production around March. And then we're going to see more EVs coming online. The big Hummer, that's going to be a big introduction for GM. And hopefully for GM, they learned what they needed to learn from the disaster with the Bolt fires. And that's not going to be a problem in the future.

- Yeah, any type of battery issue with a Hummer, much larger scale of course, at that point. Rick, where does that put us on the roadmap? The timeline to when the batteries can, from the consumer perspective, be beyond this type of concern, even if you will, prior to making a purchase, either on the mass market end of the spectrum with this broader automotive ambitions that we've seen from multiple companies and across the market. Where does that put us within this roadmap?

RICK NEWMAN: Well, electric vehicle sales are still less than 5% of all new vehicle sales. And most people have the same concern, which, you can charge these at home, and you can install the charging to get all the power that you need at home. The problem is when you hit the road, there are not electric vehicle charging stations everywhere they need to be.

Now, We are in the process of building up this infrastructure. But it's just going to take time. And there are whole stretches of the Midwest that don't have any electric vehicle chargers. So if you want to make a long trip an electric vehicle, it's still not nearly as simple as finding a gas station, which you can find at just about every highway exit.

This is going to change over time. I mean, this revolution is clearly underway. Everybody in this industry thinks this is the future, which means they're all putting money into it. And it's going to be transformative. It's just going to take a while.

- Yahoo Finance's Rick Newman, Thanks so much for breaking this down, this news around GM and the broader space as well for the automotive industry moving swiftly towards those EV ambitions here.