CNBC by Michael Wayland 11/17/2022
GM expects EV profits to be comparable to gas vehicles by 2025, years ahead of schedule
Key Points• General Motors expects its new electric vehicles to be in-line with traditional cars and trucks with internal combustion engines by mid-decade.
• GM CEO Mary Barra on Thursday said the significant increase in profits factors in federal incentives under the Biden administration’s Inflation Reduction Act.
• GM also boosted its 2022 cash flow guidance to between $10 billion and $11 billion and tightened its adjusted earnings range.
General Motors expects its new electric vehicle profits to be in-line with cars and trucks with traditional engines by 2025 – years ahead of schedule and what many thought was possible.
GM CEO Mary Barra on Thursday said the updated forecast factors in federal incentives under the Biden administration’s Inflation Reduction Act, which includes money back for companies that produce EVs in North America as well as for consumers and fleet customers that purchase the vehicles.
“It’s clear these credits are going to help usher in a new era of technology innovation and job creation that’s going to achieve what was intended,” Barra said during an investor day. “It will be good for the American economy. It’ll be good for American families. It’ll be good for the environment, and frankly, General Motors is well poised.”
The incentives are expected to increase profit margins on GM’s EV portfolio an additional five-to-seven basis points from the “low- to mid-single digit” margins by then without the federal stimulus, according to CFO Paul Jacobson. He said GM expects to be among the first, if not the first, to be eligible for the full $7,500 consumer tax credits that will take into account stricter sourcing of EV battery materials.
Such profits are expected to assist in growing GM’s revenue at a 12% compound annual rate to more than $225 billion, including $50 billion from EVs, in 2025, the company said Thursday.
Ahead of the event in New York, investors and analysts had expected GM to shed light on its near-term profitability plans for EVs as well as its outlook for the business during a period of rising interest rates, surging inflation and recessionary fears.
Shares of GM swung from red-to-black during the event but closed Thursday up by less than half a percent to $38.64 per share. The company’s stock is off 34% in 2022, amid fears of an economic downturn impacting consumer demand.
More:
https://www.cnbc.com/2022/11/17/gm-investor-day-ev-guidance-updates.html
