General Motors’ first-quarter earnings report and accompanying analyst call on Tuesday underscored the company’s big ambitions for electric vehicles and autonomous vehicles — and the money it’s willing to throw in. devote to it.
The initial financial contribution in the first quarter report was a message of profits despite supply constraints. However, the call offered some other interesting commentary, as well as a substantial change to its compensation-based plan and a spending forecast for Cruise — all of which are aimed at ensuring GM’s success in electric and audio-visual vehicles.
First the financial aspects. GM said net income fell to $2.9 billion in the first quarter from $3.02 billion in the same period a year ago. Revenue rose 11% to $35.9 billion, but beat analysts’ expectations.
Like automakers around the world, GM faces pressures such as supply chain disruptions, semiconductor shortages and rising inflation. These headwinds caused GM’s vehicle sales to fall 20% in the first quarter compared to the same period last year. And yet, the automaker managed to close the profit gap.
“We delivered a very strong first quarter, with revenue growth of more than 10% year over year, fueled by strong demand for our products, particularly for our full-size trucks and SUVs,” said Chief Financial Officer Paul Jacobson said on a call with analysts on Tuesday.
A few other elements stood out. Here are the first three.
Low-cost electric vehicles
GM relies on electric pickup trucks and a new line of affordable battery-electric models to help it sell 1 million electric vehicles in North America by 2025.
CEO Mary Barra said the automaker’s biggest growth opportunity in North America is in electric trucks, with the battery-electric version of the Chevrolet Silverado set to begin production early next year. However, this is an increasingly competitive segment with rivals from newcomer Rivian as well as Ford, which announced its own new electric truck hours before GM’s earnings call.
Ford’s all-electric F-150 Lightning went into production on Monday. Ford CEO Jim Farley announced during a live streamed event to celebrate the launch of the Lightning on Tuesday that the automaker plans to launch a second electric truck soon.
GM said it also plans to focus on lower-priced electric models.
“Another area where we are building competitive advantage is in affordable electric vehicles – a part of the market that our competitors are not focusing on,” Barra said, adding that the segment “will be a major source of growth for Chevrolet and Buick”.
The roughly $30,000 Chevrolet Equinox EV expected in late 2023 “will shatter the perception that sleek, practical, long-range electric vehicles are luxury items.” A partnership with Honda is expected to add more models to GM’s portfolio in 2027.
GM said it plans to tie a significant portion of its long-term compensation to its EV goals. Barra didn’t provide a breakdown of what “significant part” means, except to say the company added metrics for North American EV volume, EV launch timing, and launch quality. electric vehicles to existing financial measures.
Additional details will come April 29 in GM’s proxy statement.
The change illustrates Barra and the council’s ambitions to dominate electric vehicle sales in North America.
Barra’s total compensation in 2020 was $23.7 million, including $2 million in salary, $13.1 million in stock and a performance bonus worth $3.78 million.
General Motors said it plans to spend $2 billion this year on its self-driving subsidiary Cruise. While GM and Cruise haven’t shared exactly what this eye-popping figure will be used for, we can assume it’s related to their marketing plans.
Cruise is also aiming to begin mass production of its purpose-built Origin AV in 2023 and is trying to set up a robotaxi service in San Francisco.
Looking at the breakdown in the earnings report, one can already see an increase in losses compared to last year. Cruise’s losses were $325 million in the first quarter, compared to losses of $229 million in the same period last year. But GM is betting its investments in Cruise will pay off big. The automaker said it expects Cruise to bring in $50 billion in annual revenue by the end of the decade.