American legacy automaker General Motors announced plans to invest 7 billion reais ($1.4 billion) in Brazil from this year to 2028 as it seeks to accelerate electric vehicle production, Bloomberg reports.
The investment is indeed a major boost to the South American nation, which has lagged behind electric vehicle adoption due to its reliance on flex-fuel cars.
Plan details
GM aims to use the fund for a “complete renewal” of its vehicle lineup in the largest economy of Latin America. In addition, the investment will also support the company’s plans to develop new technologies and establish new businesses.
However, GM omitted to disclose the specific timeline for its plans to produce battery-electric and hybrid vehicles in Brazil. According to the company, it has yet to determine these details depending on the local market’s progress.
“Our investments in Brazil are focused on sustainability. Our future is all electric.”
Fabio Rua, GM South America VP, said during a Wednesday press conference in Brasilia
Skepticisms
GM is apparently among the few automakers with skepticism about Brazil’s technologies. According to the report, the country heavily relies on flex-fuel vehicles.
For context, this technology incorporates polluting gasoline and ethanol, causing the country to lag behind the global push for more sustainable mobility.
After meeting with the Brazilian government, GM reportedly received legal certainty regarding the country’s Green Mobility and Innovation program (Mover).
“We are very positive, very excited about the perspectives that opened up for GM after the conversation we had with President Lula.”
Fabio Rua, GM South America VP, said during a Wednesday press conference in Brasilia
That said, GM is the first of the legacy OEMs present in Brazil to announce fresh investments since the current administration imposed new guidelines for the country’s auto industry last month.
Government initiatives
President Luiz Inacio Lula da Silva’s government launched the Mover program in December, which covers fleet sustainability requirements and tax incentives for companies investing in decarbonization and developing new technologies.
According to Agencia Brasil, the tax incentives will cost “BRL 3.5 billion in 2024, BRL 3.8 billion in 2025, BRL 3.9 billion in 2026, BRL 4 billion in 2027, and BRL 4.1 billion in 2028.” However, companies interested in accessing these tax credits must invest at least 0.3%-0.6% of their Gross Operating Revenue in these initiatives. In return, the program will offer them BRL 0.50-BRL 3.20 in credits, which they can deduct from their taxes.
The new program is a crucial part of the President’s efforts to pave the way for a more sustainable economy and keep up in the rapidly growing electric vehicle industry.
Such initiatives are indeed a significant factor in encouraging even foreign automakers to invest in Brazil, Latin America’s largest economy. GM’s move to solidify its footprint in the country will aid its efforts to hit carbon neutrality by 2040.
GM did not announce more details about the planned investment. However, it previously disclosed plans to launch six models in Brazil this year, starting with the revamped Spin seven-seater minivan.
