GM aims to end sale of gasoline, diesel-powered cars, SUVs, light trucks by 2035

WASHINGTON (Reuters) - General Motors Co said on Thursday it was setting a goal to sell all its new cars, SUVs and light pickup trucks with zero tailpipe emissions by 2035, a dramatic shift by the largest U.S. automaker away from gasoline and diesel engines.

GM, which also said it plans to become carbon neutral by 2040, made the dramatic announcement just over a week after President Joe Biden took office pledging to tackle greenhouse gas emissions and boost sales of electric vehicles (EVs).

GM sold 2.55 million vehicles in the United States last year, but only about 20,000 were EVs, the Chevy Bolt hatchback. It said in November it was investing $27 billion in electric and autonomous vehicles over the next five years, up from $20 billion planned before the coronavirus pandemic.

GM’s stock, which climbed as much as 7.4% on Thursday, closed up 3.5%.

Chief Executive Mary Barra has aggressively pushed GM to embrace electric vehicles and shift away from gasoline-powered vehicles.

She said in a statement the automaker had worked with the Environmental Defense Fund (EDF), an environmental advocacy group, to “develop a shared vision of an all-electric future and an aspiration to eliminate tailpipe emissions from new light-duty vehicles by 2035.”

Morgan Stanley auto analyst Adam Jonas said the decision is “based principally on economic grounds... Would GM decide to wind down a business in under 15 years if it truly felt it would spin off cash and provide positive economic value?”

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Jonas added that investors should look for most if not all automakers “to follow GM’s precedent.”

In September, California Governor Gavin Newsom said the state plans to ban the sale of new gasoline-powered passenger cars and trucks starting in 2035. Several states, including Massachusetts, say they plan to follow suit.

Newsom called GM’s announcement a “gamechanger” but the California Air Resources Board said “if GM is serious about cleaning up the air our children breathe today, it must also drop its defense of the Trump administration’s rollbacks of federal vehicle emissions standards.”

GM and other major automakers sided with Trump last year in a legal challenge to his rollback of federal vehicle emissions standards through 2026.

However, in November, GM withdrew from a separate legal case in which it had sided with the Trump administration effort to bar California from setting its own vehicle emissions rules.

Last week, Biden directed U.S. agencies to reconsider the Trump emissions rollback and the revocation of California’s emissions authority.

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GM is “open to working with California and the Biden Administration to achieve agreement on a national standard and complementary policies to accelerate the electrification of the light-duty transportation sector,” the company said in a separate statement.

However, in announcing the change, GM reaffirmed a commitment to producing zero-emission vehicles.

“We’re taking actions so that we can eliminate tailpipe emissions by 2035,” Dane Parker, GM’s chief sustainability officer, said at the media briefing. “Setting a goal for us 15 years from now is absolutely reachable.”

EDF President Fred Krupp said in a statement: “with this extraordinary step forward, GM is making it crystal clear that taking action to eliminate pollution from all new light-duty vehicles by 2035 is an essential element of any automaker’s business plan.”

GM also said it will source 100% renewable energy to power its U.S. sites by 2030 and global sites by 2035, five years ahead of a prior goal.

David Friedman, a vice president at Consumer Reports and a former Obama administration auto regulator, said “strong aspirations are important and inspirational, but firm production plans and strong policies are what move the market and the climate.”

More than half of GM’s capital spending and product development team will be devoted to electric and electric-autonomous vehicle programs, GM said.

Biden on Monday vowed to replace the U.S. government’s fleet of roughly 650,000 vehicles with electric models as the new administration shifts its focus toward clean energy.

Reporting by David Shepardson; Editing by Dan Grebler and Christian Schmollinger