General Motors reported much stronger-than-expected fourth-quarter earnings, lifting annual results to record highs for the second year in a row.
The largest U.S. automaker also announced on Tuesday that it is buying a $650 million stake in Lithium Americas, which will give it access to the raw material needed to build batteries to power 1 million electric vehicles a year around the world. the first phase of production.
For the quarter, GM posted adjusted earnings of $3 billion, or $2.12 per share, from $1.35 per share a year earlier and much better than analysts’ forecast of $1.69 per share. surveyed by Refinitiv. That brought adjusted profit for the full year to $11 billion, from $10.4 billion in 2021, which had been its previous record high.
The company said it expects strong profits in 2023, although it expects them to slip a bit from just-reported levels of between $8.7 billion. of dollars and 10.1 billion dollars. But the company’s chief financial officer, Paul Jacobson, said its automotive business should remain strong, with much of the decline likely to come from GM Financial. This is due to the hit that he will take from higher interest rates and the falling value of used cars, as well as the higher interest rates that will cause an accounting hit to retirement income.
“In fact that [guidance] is a strong statement about the direction in which we see things, stronger than others,” he told reporters on a call on Tuesday.
Jacobson told reporters that GM did not expect to follow Tesla and Ford in reducing the prices of its electric vehicles.
“I don’t think there’s any surprise that there’s growing competition in the electric vehicle space,” he said. “Our customers say we have a good price based on the demand we see.”
The company’s investment in Lithium Americas is part of the company’s effort to lock in the supply of raw materials it will need to convert traditional gasoline-powered cars to electric vehicles. The deal with Lithium Americas won’t supply the company with lithium until 2026, but Jacobson told media that “we’ve already reached all the lithium we need through 2025.”
GM plans to build 70,000 electric vehicles this year, a small fraction of its overall vehicle production. It sold 5.9 million vehicles in 2022, down about 6% from 2021 due to shortages of parts needed to build all the vehicles for which there was demand.
“We continue to face supply chain and logistics issues, but overall things continue to move in the right direction,” Jacobson said.
But the company plans to rapidly increase its electric vehicle supply and offerings, with a new battery factory opening last year, two more under construction and a fourth planned soon. GM aims to build 400,000 electric vehicles by mid-2024 and 1 million a year by 2025.
CEO Mary Barra predicted that more deals like Lithium Americas will be announced soon.
“We continue to seek strategic supply agreements and partnerships to further secure our long-term needs,” she told investors.
GM said it would cut staff in 2023, as part of its effort to cut costs by $2 billion over the next two years. But unlike a number of large companies that have announced layoffs in recent months, company officials have stressed that GM will not shrink through layoffs. Instead, the reduction would be managed through attrition.
GM did not disclose how many jobs could be cut, with Jacobson saying the company would end this year “slightly down” in terms of headcount.
GM has 167,000 employees worldwide, including 124,000 in North America. This includes more than 42,000 members of the United Auto Workers union. These workers will receive profit-sharing bonuses averaging $12,750 for the year, up nearly 25% from the $10,250 they received a year earlier.
Shares of GM (GM) soared more than 5% in premarket trading on earnings.
This story is growing and will be updated.