Key takeaways from GM’s Q4 results and 2022 guidance
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DETROIT – General MotorsWall Street was pleasantly surprised by fourth-quarter results. The 2022 guidance also pleased analysts. Mary BarraAnalysts were assured that the company will make near-record profits in this year’s fiscal year, even though it invests billions of dollars on autonomous and electric vehicles.
Barra stated Tuesday that “we can” and would continue to pursue our aggressive pace, backed up by solid results. We expect to continue our record EBIT-adjusted earnings of 2021 and to add another year with record- or near-record results for 2022. In order to increase our growth, we will also invest significantly more each year.
Barra announced, among others, that GM will make “significant investments” in the second half decade. $35 billion investment planIn electric and autonomous cars through 2035. According to her, the goal is for the company to sell approximately 400,000 electric vehicles in North America by 2023.
GM plans to expand the Chevrolet EV line-up in Fall 2023, adding the Equinox EV. The price will be around $30,000.
GM
Wall Street analysts were pleased with the plans, but they did not do much for GM stock. Midday trading Wednesday saw shares fall by 3%. Chris McNally, Evercore analyst, said that GM was “out swinging” while RBC Capital Markets increased its price target of the automaker to $85 per share.
“While the guidance for 2022 is generally in line with our expectations (even though it may have a different structure), we are still encouraged. RBC analyst Joseph Spak said Tuesday that GM is showing strong profitability and investing in the future.
Below are additional details about GM’s new EV programs and key points from the fourth-quarter earnings report.
Guidance
GM expects an operating profit between $13 and $15 billion for this year. That’s $6.25- $7.25 earnings each share. It is consistent with its earnings and Wall Street’s expectations.
Analysts were shocked by GM’s predicted production growth of 25-30% this year. This is as the firm continues to address a global shortage in semiconductor chips.
GM stated that net income for this year will fall between $9.4 and $10.8 billion. This is in line with the $10 billion profit it made in 2021.
Paul Jacobson, GM’s Chief Financial Officer, said that some profits could be affected by the increase in lower-margin vehicles sales as chips supplies improve. Over the past year, the company has prioritised building high-profitable pickups and SUVs rather than smaller crossovers or cars.
No dividend
Barra indicated that GM does not intend to reinstate its dividend in order to keep capital available to invest in its autonomous and electric vehicle projects. In the medium term, GM will spend approximately $9 billion to $10 billion per year (including 2022).
Barra stated that while we are moving forward we will look at all options to return capital to shareholders but will not reinstate dividends. “Our priority is to speed up our electric vehicle plan and increase growth.”
GM cut its dividendDuring the initial stages of the April 2020 coronavirus pandemic.
Reserving EVs
Barra provided Tuesday the best look yet at GM’s electric vehicles reservations. According to Barra, the company currently has 110,000 reservations. its electric Silverado$59,000 for GMC Hummer Electric Vehicle Pickup and SUV, and 25,000 cargo vans to support its BrightDrop electric vehicle business.
Barra explained that GM’s initial “strong demand”, is one of the main reasons it has accelerated its EV plans. She stated that the company would announce in the near future a third production plant to make battery-electric trucks and the site of the fourth facility for lithium-ion battery cells at LG Energy Solution. This announcement will be made during the first quarter of 2011.
GM will soon open its first production plant for battery cells through a joint venture in Ohio with LG Energy Solution. It will be followed in subsequent years by two additional plants in Tennessee, and one in Michigan.
1 Million EV Sales
GM has previously indicated that its electric vehicles will be ready for production. sales to top 1 million globallyBy 2025. The new targets include increasing North America’s production to 1 million cars by the middle of the decade. This makes it unlikely that this sales target will be reached.
A GM spokesperson referred to Barra’s remarks about accelerating its EV plan when asked Wednesday about Wednesday’s sales goal. Although the goal of 1 million was announced in 2009, she did not refer to it.
2024 Chevrolet Silverado EV RST
GM
Barra explained that they will continue to work hard because there is potential for significant EV volume growth over the next few years.
GM’s joint venture partner Wuling Motors has sold more than 400,000 fully electric four-seat compact vehicles in China alone last year.
Cruise
On Tuesday’s call, Cruise showed that GM’s autonomous vehicle subsidiary Cruise is becoming more important.
Barra specifically addressed Cruise’s operations and announced that it would be opening up its fleet of self-driving vehicles to the public on Tuesday.
Kyle Vogt, cofounder of Cruise and interim CEO was also present on Tuesday’s earnings call. This signaled more alignment between both companies. the ousting last monthDan Ammann is a former GM executive, who was tasked to lead Cruise.
Cruise is currently awaiting the final permit from San Francisco regulators to market its robotaxi fleet.
GM expects the operations to potentially contribute up to $50 billion in annualized revenue by the end of this decade.
– CNBC”s Michael BloomContributed to the report.
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