After delivering a record full-year, pre-tax profit of $14.3 billion for 2021, General Motors said it could see even bigger earnings this year, with much of that due to growing supplies of semiconductor chips that will help production rebound.
The largest of the domestic automakers expects to see its pre-tax operating profit run between $13 billion $15 billion in 2022, though Chairman and CEO Mary Barra added a note of caution during separate calls with analysts and reporters.
There are still plenty of potential “headwinds” facing the industry said Barra, with the risk of new COVID flare-ups, additional chip shortages and other disasters. “I don’t know if there’s anything normal right now,” said Barra. “It’s going to take a little while before we declare ‘normal.’”
Setting an upbeat tone
Nonetheless, Barra and other GM officials took a decidedly upbeat tone during two hours of media and analyst calls. Among the most important takeaways was GM’s target of delivering solid double-digit profit margins.
To get there, the automaker expects to steadily ramp up production, quarter by quarter, as it gets more of the semiconductors that caused it to slash production throughout 2021. The situation grew increasingly dire as the year ended and resulted in such a severe lack of dealer inventory that GM fell behind Toyota to lose its nearly centurylong position as the best-selling automaker in the U.S. market.
The one positive was the automaker’s ability to curb incentives, sharply driving up transaction prices and resulting in unexpectedly strong earnings for the year. GM also was able to shore up the bottom line by diverting what chips it could get to its highest-profit products, models like the Chevrolet Sierra pickup.
There had been some expectations GM would forecast even strong earnings for 2022 as production rebounded. But officials noted that it plans to now boost production of less profitable small SUVs and sedans.
An increased focus on EVs and robotaxis
That said, updated versions of the Silverado and GMC Sierra are coming in mid-2022 and, GM is betting, that will help rebuild demand that had fallen behind key competitors like Ford and Ram.
The coming year will see GM boost spending, primarily on its new high-tech operations. It will reveal the location of a fourth Ultium battery plant by mid-year, said Barra. And it plans to accelerate the rollout of new, all-electric vehicles.
“We’ll be pulling ahead significant investments (in technology) into the 2022-2025 timeframe,” said Barra noting that “We also recognize the need to launch more long-range EVs faster.”
During a meeting with the Automotive Press Association in Detroit in December, the CEO revealed several upcoming BEV models, including an electric version of the Chevy Equinox SUV set to start at $30,000. During Tuesday’s analyst call, Barra confirmed that saying, “We plan to follow the Equinox with an even more affordable EV.”
On the whole, the automaker is sticking to plans to launch 20 BEVs in North America by 2025, and 30 worldwide.
Exciting growth opportunities
GM also is upping its push into autonomous driving, Barra opening her comments to analysts by referring to the carmaker’s San Francisco-based Cruise subsidiary as “one of our most exciting growth opportunities.”
The autonomous vehicle unit recently received authorization from California regulators to begin operating fully driverless shuttles on public roads and, as of Tuesday, it had logged more than 600 trips racking up 20,000 miles. Up until now, the passengers have been Cruise staff, but the unit today opened up a waiting list and quickly saw a flood of requests from the public.
“It’s going to be a pretty long list pretty quickly,” said Cruise CEO Kyle Vogt, adding that “it could be some time” before everyone has a chance to actually take a ride.
Shareholders and hourly workers celebrate
During the call, Barra confirmed that Cruise will continue focusing on robotaxis for now, but will shoot to have retail technology available around “mid-decade.”
The Detroit automaker released its earnings report just as Wall Street closed trading for the day. The weak sales during the fourth quarter initially sent its shares tumbling in after-hours trading — falling from a closing price of $54.12 to a low of $52.47. But the numbers quickly rebounded as analysts and investors got a closer look — and then heard from the GM management team. Barely 90 minutes later, GM shares were up to $55.20.
Investors aren’t going to be the only ones pleased. The 42,500 GM hourly workers in the U.S. will be eligible to receive profit sharing bonuses of as much as $10,250 in their Feb. 25 paychecks.
