General Motors emphasizes faster EV launches after positive 2021 results
General Motors (NYSE: GM) is bracing for a major shift in 2022 with its evolving electric vehicle program, predicting record earnings levels that could propel the company into fuller placement in an increasingly competitive industry. . The automaker is gearing up for faster vehicle launches, according to CEO Mary Barra, who said more models will hit the market at a faster pace. GM released its fourth quarter results and guidance for 2022 last night, sharing extensive details for the coming years, including new models, production plans and start dates, as well as further information regarding the GM’s investment in Cruise.
Overall, General Motors reported a strong fourth quarter and full year 2021 financially. GM’s earnings for the year 2021 included net income of $10.019 billion, a net profit margin of 7.9% and revenue of more than $127 billion, an increase of $4.5 billion from compared to 2020. For the fourth quarter, GM had a weaker quarter than the same quarter. period in 2020. The company reported Q4 ’21 revenue of $33.584 billion, nearly $4 billion less than Q4 ’20. Net profit also fell, but the full year numbers and profits undoubtedly outweighed the quarter’s losses.
“For the full year, we generated $127 billion in revenue, $14.3 billion in adjusted EBIT, 11.3% adjusted EBIT margin, $7.07 diluted adjusted EPS and 2 $.6 billion in adjusted automotive free cash flow,” GM chief financial officer Paul Jacobson said. “In the fourth quarter, we generated $34 billion in revenue, $2.8 billion in EBIT-adjusted margin, 8.5% EBIT-adjusted margin, $1.35 diluted adjusted EPS and $6.4 billion in adjusted automotive free cash flow Free cash flow in the quarter was largely driven by lower working capital as we were able to complete and wholesale more than 80,000 vehicles that had been built before without certain components, as well as dividends from GM Financial.
GM’s earnings call was the highlight of the evening, as it shed new light on the automaker’s planned expansion of its electric vehicle lineup. “We also recognize that we need to launch more electric vehicles faster,” CEO Mary Barra said on the call. GM plans to start deliveries of the Cadillac LYRIQ in “less than 60 days”. The LYRIQ will join the GMC Hummer EV, which recently began deliveries, as GM’s two newest consumer electric vehicles. In the commercial sector, GM said production of the BrightDrop EV600 will begin later this year at the company’s CAMI assembly plant in Ontario, Canada. The automaker said the site currently has a production capacity of 30,000 vehicles and is expected to double by the middle of the decade.
GMC Hummer EV flaunts its massive size alongside a full-size SUV
GM said the Silverado, Equinox and Blazer electric vehicles will all begin deliveries in 2023. The three vehicles will contribute to GM’s plan to deliver 400,000 electric vehicles in North America in 2022 and 2023. These plans are complemented by investments in battery cells and assembly capacity in Michigan, which were announced recently. These new facilities “will give [GM] over one million units of electric vehicle capacity in North America by the end of 2025, and that includes 600,000 full-size trucks,” added Barra.
Interestingly, Barra had a high regard for Cruise, a fully self-driving rideshare company with investors including GM, Honda, Softbank, Microsoft and Walmart. Barra said riding in a cruiser a few weeks ago was “the high point of my career as an engineer and as a General Motors executive.”
“It’s like having an experienced, attentive driver behind the wheel,” Barra said. “Now, as Cruise announced this morning, it is inviting members of the public to sign up for their own driverless rides through a waitlist on Cruise’s website. This is the first real driverless VTC service offered to the public in dense urban areas. To maximize its learnings, Cruise will prioritize use cases that are a natural fit for self-driving ridesharing.
Barra estimates that early revenue rides for Cruise could generate $50 billion by the end of the 2020s.
“We saw an improvement in semiconductor availability in the fourth quarter compared to the third quarter, which allowed us to sequentially increase our wholesale while significantly reducing our inventory of vehicles built without certain components,” said Jacobson added. GM expects semiconductor availability to improve throughout 2022, noting that the company has seen a stabilization in the semiconductor environment. This leads GM to believe it can reach a “normalized operating rate around the start of the third quarter.  with a target of approximately 800,000 units in North America on a quarterly basis. This figure includes GM’s combustion engine vehicles.
Deutsche Bank analyst Emmanuel Rosner’s questions prompted Barra and other GM executives to offer more insight into their views on the semiconductor shortage and when it might start to ease. Barra believes that by the third and fourth quarters of 2022, “we’re really going to start to see semiconductor stresses come down.”
GM’s earnings call has been strong, giving investors more reason to be excited about its electric vehicle plan and its ability to avoid semiconductor issues. “We’re big supporters of GM’s EV strategy because it’s about converting 10% to 15% of its customers into electric vehicles by 2025 with 30 new EV models,” Dan Ives, analyst at Wedbush. “There are clear challenges, however, with massive resources dedicated to electric vehicles, we see this as the right move at the right time for Barra & Co.” In terms of tracking competitors, namely industry leader Tesla, Ives believes battery technology and GM’s proprietary Ultium platform are the roadmap to success for the Detroit company. “Ultium is the fundamental building block of GM’s battery strategy and the key to keeping pace with this EV arms race with Tesla in the lead,” Ives added.
Ives has a “Buy” rating on GM shares with a price target of $85. Ives is ranked 59th out of 7,776 analysts on TipRanks.
GM shares were down 3.43% at the time of writing, trading at $52.22 per share.
Disclosure: Joey Klender is not a GM shareholder.
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