General Motors (GM) CEO Mary Barra said she is disappointed in EV production this year due to constraints. Meanwhile, GM’s leader believes new, affordable EVs like the Equinox and Bolt will help drive adoption.
After announcing a historic $10 billion buyback plan, GM’s stock is soaring on Wednesday. The company also revealed it would boost dividends by 33% and slash spending on Cruise.
The company’s biggest buyback plan comes after signing a new labor contract costing $9.3 billion through 2028.
GM’s new contract includes 25% wage increases, increased retirement and healthcare, a signing bonus, and paid leave. Barra said in an interview with Bloomberg that she is confident GM will be able to offset it “completely” with the plan in place.
With labor contracts taken care of, Barra said GM must remain balanced across stakeholders, stressing owners are also important.
The automaker reinstated full-year guidance with $9.1 – $9.7 billion expected in net income, compared to the previous $9.3 – $10.7 billion. Capital spending is expected at the low end of prior guidance with around $11 – $11.5 billion.
Barra said the company’s liquidity is “at record levels.” GM’s stock is up 10% following the news Wednesday.
Barra says affordable EVs will drive adoption
“Although I am disappointed with our Ultium-based EV production in 2023,” Barra said that GM has made “substantial improvements.”
GM expects significantly higher Ultium EV production in 2024. Barra explained the company was constrained by the automation to build modules. She stressed it was not an Ultium issue but rather a manufacturing hurdle.
GM is working through it and making improvements each quarter. The company expects to overcome it in the middle of next year. In the third quarter, GM delivered 4,222 Ultium-based EVs, compared to 15,835 Bolt EV/EUV models.
It’s still not a lot, but it’s over 200% more than the 1,395 delivered in Q2. Although GM “never saw EV adoption as a straight line,” Barra explained, the market is still growing. Barra believes new products, like the Blazer EV, and more access to charging will help drive EV adoption.
More importantly, affordable GM EV models like the upcoming electric Chevy Equinox and next-gen Bolt will be key in gaining market share.
Electrek’s Take
Top comment by Les Inanchy
I’m sure most people thought that legacy car manufacturers would have a big advantage in going to EV’s because they had all that history building cars. The problem is really that they have to keep making ICE cars to stay in business and for most of them it’s easier than switching over to EV‘s. Companies like Tesla and Rivian have no choice but to be successful selling EV’s only. They have to succeed.
Despite headlines claiming automakers overestimated with EVs, the market is just going through a transition.
The EV market is still growing and expected to accelerate. As GM’s Barra explained, the key to this will be affordable EV models. Charging infrastructure is rolling out, and cheaper models that will drive adoption are coming.
Meanwhile, GM is pushing back the production of key models, including the Equinox, Silverado RST, and GMC Sierra Denali EVs.
I understand pleasing stakeholders, but if GM were really “all in” on EVs, it would show investors by doubling down to get these affordable models on the market.
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