General Motors delivered mixed quarterly results late Tuesday, but sees a sharp EV ramp in 2022 as chip supplies improve Ford Motor earnings are due Thursday. GM stock fell Wednesday.
In opening remarks on a late Tuesday earnings call, CEO Mary Barra zeroed in on electric vehicles. Barra disclosed a target to deliver 400,000 EVs in North America through 2023, while predicting a "steep inflection" in EV demand by mid-decade. In 2021, GM delivered fewer than 25,000 EVs in the U.S. amid a massive battery recall.
The electric Chevy Silverado will be key to Barra's EV sales goal. On Tuesday, General Motors reported 110,000 reservations for the fully electric truck unveiled in January. It also revealed 59,000 reservations for the premium Hummer electric pickup, which went on sale in late 2021. GM reported strong customer interest in the upcoming Cadillac Lyriq electric SUV and promised to reveal an affordable, $30,000 Equinox EV later this year. It also will reveal a fourth U.S. battery factory sometime in the first half of 2022.
Accelerating On Electric Cars
"Our clear priority is to accelerate our EV plan and drive growth," Barra said on the call. Semiconductor availability improved in Q4 2021 and is further expected to improve throughout 2022, she added. In fact, GM sees vehicle volumes rebounding as much as 25%-30% in 2022, as chip supplies improve, particularly in the latter half of the year.
Barra's comments contrasted with those of Tesla CEO Elon Musk, who last Wednesday warned chip constraints could continue throughout 2022.
But GM's expectations for improving chip supplies dispel a cloud hanging over its bold EV shift. Increasingly sophisticated electric vehicles need more semiconductors than do traditional gas or diesel vehicles. And GM has been increasingly vocal about seeking to unseat Tesla as the EV sales leader.
On Wednesday, Wedbush analyst Dan Ives called GM's expectations for strong volume recovery "a bullish data point ... as the supply chain issues have been a major Street worry." Ives maintained an outperform rating and $85 price target on GM stock.
Deutsche Bank's Emmanuel Rosner said GM earnings "could enable investors to refocus on GM's ambitious electrification and autonomous driving strategy, including steering most of its capital toward these technologies, which could ultimately give it a strong market position in Autos 2.0." He reaffirmed a buy rating and raised his price target by $4 to $75.
But CFRA's Garrett Nelson warned "many of GM's new models will not be coming to market until 2023 or beyond," in an increasingly crowded EV market. He kept a hold rating and cut his price target by $5 to $60.
For automakers broadly, the global chip shortage due to the pandemic severely hit vehicle production and sales.
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Separately on Tuesday, GM's Cruise said it will "soon" begin offering self-driving car rides to the public in San Francisco. Japan's Softbank Vision Fund is investing a further $1.35 billion in Cruise, adding to a $900 million investment in 2018, the autonomous vehicle company said. Getting often-wary consumers into driverless taxis is a milestone for any AV company.
Late Tuesday, GM posted a 30% earnings decline to $1.35 per share, easily beating Wall Street views. Revenue fell 10.5% to $33.584 billion, a big miss.
In Q4, GM earnings rose despite lower volumes due to improved car pricing, partially offset by higher commodity and logistics costs, the automaker said in a release. Free cash flow of $6.4 billion rose year over year, while margins fell. General Motors delivered roughly 1.5 million vehicles over the quarter, down 600,000 year over year, as sales plunged in both the U.S. and China, its main global markets.
Offsetting weak sales, GM's average transaction prices continue to rise. Average U.S. prices in Q4 2021 rose by $8,608 vs. a year ago to $53,788 per vehicle, according to Edmunds.
For 2022, General Motors guided earnings of $6.25-$7.25 per share, slightly below analyst forecasts and 2021 EPS of $7.07 at the midpoint. It expects big investments in electric vehicles and autonomous vehicles (EVs and AVs), as well as new software-based businesses, to weigh on earnings in years to come.
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Tesla, Stellantis, Toyota And GM Stock
Shares lost 1.05% to 53.50 in Wednesday's stock market trading. GM stock collapsed out of an early-January breakout attempt, triggering the automatic sell rule as it fell well below its 10-week and 40-week moving averages. Last week, GM stock hit its lowest level since September.
Shares of Ford, which reports late Thursday, dipped 0.2% Wednesday. Ford stock is trying to get back above its 10-week line. Ford recently round-tripped a double-digit gain from a late-December entry, a sell signal.
Tesla fell 2.75%. Stellantis — which owns Fiat, Chrysler and Peugeot — gained 1.4%.
Toyota stock, which found support Friday at its 50-day line near the top of a prior consolidation, rose 1.6%. Toyota's U.S. sales fell 5% in January vs. a year earlier, the company said Tuesday.
Ford, Stellantis, Toyota and many other automakers are releasing January U.S. sales this week, but not GM or Tesla.
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EV And AV Shift
In January, General Motors unveiled the first fully electric version of its bestselling vehicle, the Chevy Silverado pickup truck, a key piece of its $35 billion investment on EVs and AVs. Through 2025, GM plans to roll out 30 new EVs globally. It aspires to go all-electric by 2035.
The upscale Cadillac Lyriq will launch in late spring.
Automakers are shifting to EVs and AVs amid a global chip shortage. The shortages, fueled by the coronavirus pandemic, cost automakers $210 billion in lost revenue in 2021, with 7.7 million fewer vehicles rolling off production lines, the consulting firm AlixPartners estimates.
Both GM and Ford idled or shut key plants, including those making some of their most popular and profitable vehicles. While managing through the chip crisis, GM focused on maximizing production of its money spinners: full-size trucks and SUVs, including the Silverado.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
