Q1 Profits Slip But GM Optimistic About 2022 Finances

General Motors is promising to step up efforts to electrify the company’s product line, including a battery-electric version of the Chevrolet Corvette, while working more closely with suppliers and protecting the value of vehicles with internal-combustion engines. 

GM reaffirms its guidance for the full year, reiterating it expects full-year 2022 net income of between $9.6 billion and $11.2 billion after reporting net income dropped during the first quarter to $2.9 billion from $3 billion in first-quarter 2021, shrinking its profit margin to 8.2% from 9.3% even as revenue increased to $36 billion from $32.5 billion. 

The automaker also discloses its costs increased by more than $4 billion, climbing from $25.1 billion in the first quarter of 2021 to $29.4 billion in the first three months of 2022, according to the company’s quarterly financial report. 

Chairman and CEO Mary Barra says despite rising costs, GM is expediting its introductions of electric vehicles and other vehicles with internal-combustion engines, such as new versions of the Chevrolet Silverado and GMC Sierra. At the same, GM is adding a third shift at its assembly plant in Oshawa, ON, Canada, this summer to build ICE-powered pickup trucks.

 “We are now in a rapid launch cycle because of the investments we’ve made over the last several years,” Barra says, noting the launch of the Cadillac Lyriq BEV was pulled forward by nine months and the new GMC Hummer was delivered “on time.” 

GM’s plans include more affordable BEVs priced below the competition, Barra says during a conference call with analysts. The automaker expects to build 50,000 Chevrolet Bolt BEVs and EUVs at its assembly plant in Orion Township, MI, which reopened recently after a long hiatus that followed the recall of 141,000 vehicles with faulty batteries and was extended to include every Bolt ever built since its introduction in 2017. 

“In North America, we expect to deliver record U.S. sales for the Bolt EV and Bolt EUV in 2022,” Barra says, “even as we service customer vehicles now that production has resumed. And between now and mid-2023, Cadillac, Chevrolet and GMC will rapidly scale production of six Ultium (battery)-based vehicles. 

“Launching more EVs faster is the catalyst for growth, and we are accelerating our volumes, growing to 1 million units of EV capacity in North America by the end of 2025, and expanding from there,” she says.

In North America alone, GM is targeting production of 400,000 battery-electric vehicles over the course of 2022 and 2023. “We will begin building pre-production Silverado EVs in a manner of weeks,” Barra says. “Our product portfolio is every strong.”

Barra says the supply chain supporting GM’s BEV production will be a competitive advantage. “To control our own destiny we started early, establishing strategic, long-term relationships, and we are sourcing as much as possible from North America and strong trading partners like Australia,” she says. 

GM wuling-hongguang-mini-ev_0

In China, GM and its joint venture partners are seeing rapid growth in EV demand, with the Wuling Hongguang Mini (pictured, above) now the country’s best-selling electric vehicle, Barra says, and this summer the Cadillac Lyriq will be the first Ultium-based BEV to launch in China.  

Barra says overall demand for GM’s products is very strong, which provides GM with the pricing power required to keep pace with rising commodities costs.

Paul Jacobson, chief financial officer, says while GM is facing higher costs, the availability of semiconductors is continuing to improve. The automaker has “contractual protection” against increases in the price of some commodities, he adds.