General Motors Co. GM 3.30% has set a 2035 target date for phasing out gasoline- and diesel-powered vehicles from its showrooms globally, among the first major auto makers to put a timeline on transitioning to a fully electric lineup.
GM’s goal, disclosed in a social-media post Thursday from chief executive Mary Barra, would mark a striking transition from its current business model. Vehicles that run on fossil fuels and emit pollution account for roughly 98% of GM’s sales today and all of its profit. The large pickup trucks and sport-utility vehicles that are the company’s biggest moneymakers are also among its least-fuel-efficient vehicles.
The nation’s largest auto maker by sales called the 2035 date to eliminate all tailpipe pollution an aspiration. Even so, many governments around the world, from California to Japan and the United Kingdom, have pledged to ban gas- and diesel-powered cars by then.
GM previously had said it expects its own portfolio and the broader car market to go all-electric eventually, but company executives had not discussed a time frame.
The auto maker is making one of the car industry’s biggest bets on electric vehicles. In November, it said it would lift its investment in plug-in vehicles as well as driverless-car technology by one-third from earlier plans, to $27 billion by mid-decade. That represents more than half its planned capital expenditures during that time, the company has said.
GM also said Thursday that it aims to be carbon-neutral by 2040, which would mean eliminating carbon emissions from all of its operations as well as the vehicles it makes and sells. About three-quarters of GM’s carbon output comes from the emissions produced by the cars and trucks it puts on the road.
GM shares rose sharply following its declaration, rising about 4% in midday trading Thursday.
The company’s plan to go fully electric by 2035 would mark a considerable acceleration of electric-vehicle adoption beyond what most industry forecasters expect.
Research firm LMC Automotive predicts electric vehicles will account for only 20% of global sales by 2032. RBC Capital expects electric-vehicle penetration to be 43% by GM’s 2035 target.
Last year, about 2.2 million fully electric vehicles were sold globally, accounting for only about 3% of overall sales, according to research firm EV Volumes. Analysts point to several hurdles to broader adoption, including the need for more charging stations and other infrastructure. There also are questions about whether there will be a supply crunch for raw materials needed to produce batteries, such as cobalt and lithium, should electric-vehicle adoption take off.
Today, the higher cost of plug-in cars relative to gas or diesel vehicles is a deterrent for many buyers. GM expects that gap to close by mid-decade from advances in battery technology. It is investing in a $2.3 billion battery factory in Ohio in a joint venture with South Korea’s LG Chem.
Because of high battery costs, GM and other auto makers have focused their early efforts on luxury or sporty electric cars and trucks with higher price points to preserve profit margins. For example, GM’s first vehicle to use its new battery technology, the GMC Hummer pickup truck, will go on sale for about $113,000 when it hits showrooms later this year.
“We believe that with our scale and reach we can encourage others to follow suit and make a significant impact on our industry and on the economy,” Ms. Barra said in a post on LinkedIn.
On Thursday, GM’s sustainability chief, Dane Parker, said GM’s goal of going all-electric within 15 years hinges partly on government incentives and other support to nudge consumers toward plug-in cars.
Incentives “really help with consumer acceptance and overcoming some of the initial hurdles consumers might have with first cost, as well as things like charging infrastructure,” Mr. Parker said.
Write to Mike Colias at [email protected]
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