new York The US car company General Motors (GM) is expanding its partnerships with battery manufacturers for the construction of battery factories. Together with the South Korean battery cell manufacturer Samsung SDI, GM plans to invest at least three billion dollars in the construction of a battery plant for electric vehicles (EV) in the USA. Production at the new plant is scheduled to start in 2026 and reach an annual capacity of 30 gigawatt hours, as the group announced on Tuesday.
Among other things, the USA is promoting electromobility with high subsidies from the “Inflation Reduction Act”. President Joe Biden wants to build up his country in climate-friendly technologies as a counterweight to China.
GM also presented quarterly figures and raised its own annual forecast. The group did better than expected at the beginning of the year thanks to higher selling prices. Sales climbed 11 percent to nearly $40 billion. In addition, the announced reduction in fixed costs by two billion dollars by 2024 is progressing faster than expected, said CFO Paul Jacobson at the presentation of the quarterly balance sheet. Operating profit (EBIT) fell to $3.8 billion in the first quarter from $4 billion in the prior-year quarter due to increased costs.
As far as can be foreseen at the moment, the demand for vehicles is also continuing, from which GM is benefiting in particular with lucrative pick-ups and SUVs. For 2023 as a whole, the board of directors around CEO Mary Barra is now anticipating an operating profit of between $11 and $13 billion, half a billion more than before.
GM expects cash flow to be between $5.5 billion and $7.5 billion, also $500 million more than previously forecast. Investors reacted positively to the numbers, and GM shares were up premarket.
Chevrolet Bolt: GM is retiring first all-electric model
As General Motors boss Mary Barra explained in a conference call on Tuesday, the group plans to end production of its all-electric Chevrolet Bolt models by the end of this year. This marks the end of an era for the group’s electrical division.
The Chevy Bolt EV, in production since 2016, and the EUV, a larger version of the vehicle, were the company’s first all-electric models. They make up the majority of GM’s electric vehicle sales to date. However, their battery cells are considered obsolete compared to newer vehicles like the GMC Hummer EV and Cadillac Lyriq.
Evercore ISI analysts praised the “very solid earnings growth” in the outlook. The net result adjusted for one-off effects is also higher than expected.
US President and General Motors CEO Mary Barra at the Detroit Auto Show in September 2022.
(Photo: Reuters)
GM announced in early April that around 5,000 employees and executives had accepted severance offers. The group announced that this would result in a charge of around one billion dollars in the first quarter.
The largest US automaker largely offset the costs with higher prices for its vehicles. GM reported that markups of approximately $1,800 per vehicle contributed to earnings in North America. In international business it was even more than 2100 dollars. “We’re really comfortable with our prices, and our products are popular with consumers,” said Jacobsen. GM will not get involved in the price war instigated by the electric car manufacturer Tesla.
GM has managed to gradually raise prices and thus “normalize” them, praise the Evercore analysts. However, the “price war” launched by Tesla could become a burden in the coming months. In particular, the cheaper Tesla models 3 and Y are now “mass marketable” – and are thus aimed directly at GM’s electrical sales, according to the experts.
Weaker development in China
GM had recently achieved success with its Silverado pick-up truck, among other things. Its all-electric variant, which will be presented in early 2022, has already received more than 170,000 orders. Pick-up trucks are among the most popular cars in America. According to registration statistics, around two million pick-up trucks were sold in the USA in 2022.
In China, where General Motors led the market alongside Volkswagen for a long time, the US group fell behind. The proportionate operating profit from the Chinese joint ventures collapsed by almost two-thirds to a good $80 million. Brands like Buick and Chevrolet are now under pressure because buyers are switching to electric cars from Chinese manufacturers.
CFO Jacobson was nevertheless confident: in the long term, the aim is to bring the business back to where it once was, he said. According to experts, it is not yet clear how this will succeed in view of the increasing competition from Chinese manufacturers.
With material from Reuters.
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