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General Motors and General Electric are joining forces

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General Motors and General Electric have announced a collaboration on materials procurement. Consequently, GE will source all the magnetic materials required to create GM’s electric motors.

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On Wednesday, General Motors held an investor event, in which it unveiled its sales strategy. By 2030, the auto giant intends to double its sales to about $280 billion.

In addition, General Motors and General Electric will work together on materials procurement. General Motors will turn to GE to source all the magnetic materials it will need to produce its electric vehicles.

“We’ll also need more rare earth materials for the magnets that are built into the motors in the audio drive units,” said Kenneth Morris, GM’s vice president for electric and autonomous vehicle programs. “To that end, we are collaborating with General Electric Company through its GE Renewable Energy business, as adjacent industrial customers, to develop a secure value chain for rare earth magnets.”

A press release from GE Renewable Energy states, “This collaboration with General Motors will help us secure a reliable, sustainable and competitive source of key materials in the future, helping to reduce the cost of renewables and allow electric vehicles to be a more viable option for consumers.”

Ben Kallo, analyst at Baird, wrote Thursday that the GM/GE deal indicates the auto industry is concerned about the availability of materials for EVs. “It might not be possible for the world to transition to EVs in the timeframe we hope.”

An overall slow supply chain

Although, if the industry catches up with its supply chain, there is a possibility of material shortages. In the coming years, automakers and investors will have to pay close attention to that trend.

As part of its proactive approach, GM says it has worked with all parts of the EV materials supply chain to build relationships. Materials, cathodes, and battery manufacturers all comprise this.

As for Tesla, it is taking steps in this direction. It has invested in a Piedmont Lithium (PLL) project.

As EVs take market share away from traditional gasoline-powered cars, investors should expect more deals and announcements like these.

GM’s goal of doubling sales suggests that by 2030, there will be about 10 million electric cars sold annually. In contrast, this year’s current sales are likely to be less than one million. Therefore, the supply chain should prepare for significant growth.

General Motors stock rose 4.7 percent the day after the event. Meanwhile, the S&P 500 and Dow Jones gained 0.8% and 1%, respectively.

For MetaNews.

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Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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