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It isn’t often that Detroit gets a multi-million-dollar reprieve, but this is the auto revolution 2.0, and there is some hope yet for the Motor City, with General Motors unveiling plans to spend $2.2 billion to produce autonomous and electric vehicles at its Detroit Hamtramck plant, recently on the brink of closing down entirely.
The announcement came just a week after GM’s Cruise subsidiary unveiled Origin, its first self-driving car without a steering wheel or pedals.
In addition to the Origin, the facility will also produce all-electric SUVs and pickup trucks.
GM plans to release 20 electric vehicles by 2023, the first of which will be an electric truck slated to go into production in 2021. The production is expected to include a Hummer pickup under the GMC brand.
The fact is that GM is lagging behind its competitors, particularly in the luxury EV market. The company hasn’t released a new electric vehicle since the Chevy Bolt nearly four years ago. Yet, over the last year, Audi, Mercedes-Benz, Jaguar, and BMW have all introduced high-end electric vehicles.
With that in mind, GM plans to turn Cadillac into its leading EV brand to go all electric by 2030 in hopes that this will enable it to catch up with the others.
Detroit-Hamtramck currently employs about 900 people and was slated for shutdown last summer until the company changed course after discussions with the union. The factory will still be shut down at the end of next month, when renovations are set to start. The plant will have 2,000 employees once it is at full capacity.
In December, also in line with plans to play catchup, GM announced a joint venture with LG Chem to mass-produce batteries for electric cars. Two companies are planning to invest a total of $2.3 billion to build a new facility in Lordstown, Ohio. The factory will supply cells to vehicles made at the Detroit plant.
GM noted that the recent support received from the state of Michigan was a key factor for the new $2.2-billion investment decision.
The announcement came just a few days after the Michigan Strategic Fund agreed to revise tax breaks for GM in exchange for the company’s commitment to invest at least $3.5 billion more over 10 years in the state.
“This investment helps ensure that Michigan will remain at the epicenter of the global automotive industry as we continue our journey to an electrified future,” GM president Mark Reuss said in a statement.
Earlier this month, GM reported that its customer deliveries for the fourth quarter of 2019 declined 6.3 percent from year, due to the 40-day United Auto Workers (UAW) work stoppage.
Back in 2018, GM announced plans to cut up to 14,000 jobs, close five factories by the end of last year and shift the company’s workforce and lineup to build more electric and autonomous vehicles. The strike was negotiating a new labor contract that could save some of those factories from closing down and preserving the jobs in the state.
The UAW expects the move away from gas engines could cut 35,000 jobs over the next several years, according to a research study conducted by the union last year.
As a result of GM and UAW deal, some factories and jobs will be saved, but there is still room for GM to layoff quite a few workers.
The Michigan Strategic Fund agreement requires GM to maintain 34,750 employees in Michigan in order to receive 100% credit for the remaining credit term. GM currently has 48,000 employees in the state.
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Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations