General Motors’ first-quarter earnings report and accompanying analyst call Tuesday highlighted the company’s grand ambitions for electric vehicles and autonomous vehicles — and the money it is willing to put behind them.
The initial financial takeaway in the first-quarter report was a profits-despite-supply-constraints message. However, the call offered up other interesting comments, as well as a substantive change to its compensation-based plan and a spending forecast for Cruise — all of which are focused on ensuring GM’s success in EVs and AVs.
First the financial bits. GM reported that net income fell to $2.9 billion in the first quarter from $3.02 billion the same period a year ago. Revenue rose 11%, to $35.9 billion, but missed analyst expectations.
Like automakers worldwide, GM faces pressures including supply chain disruptions, semiconductor shortages and rising inflation. Those headwinds pushed GM’s vehicle sales down 20% in the first quarter compared to the same period last year. And yet, the automaker did manage to close the gap on earnings.
“We delivered a very strong first quarter, including over 10% year over year revenue growth, fueled by robust demand for our products, especially for our full-size trucks and SUVs,” CFO Paul Jacobson said on a call with analysts Tuesday.
A few other items stood out. Here are the top three.
GM is counting on electric pickup trucks and a new slate of affordable battery-electric models to help it sell 1 million EVs in North America by 2025.
CEO Mary Barra said that the automaker’s biggest growth opportunity in North America is in electric trucks, with the battery-electric version of the Chevrolet Silverado scheduled to begin production early next year. However, that’s an increasingly competitive segment stacked 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 Monday. Ford CEO Jim Farley announced Tuesday at a livestreamed event to celebrate the launch of the Lightning 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 a competitive advantage is in affordable EVs — a part of the market where our competitors are not focused,” 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 stylish, practical, long-range EVs 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 part of its long-term executive compensation to its EV goals. Barra didn’t provide a breakdown of what “significant part” translates to except to say the company has added metrics for EV volume in North America, EV launch timing and EV launch quality to existing financial measures.
Additional details will come April 29 in GM’s proxy statement.
The change illustrates Barra’s and the board’s ambitions to dominate in EV sales in North America.
Barra’s compensation package in 2020 was $23.7 million, which includes $2 million in salary, $13.1 million in stock awards and a performance award worth $3.78 million.
General Motors said that it expects to spend $2 billion this year on its autonomous driving subsidiary Cruise. While GM nor Cruise shared exactly what that eye-popping number will be used for, we can surmise that it is tied to their commercialization plans.
Cruise also aims to begin mass production of its purpose-built Origin AV in 2023 and is trying to ramp up a robotaxi service in San Francisco.
Looking at the breakdown in the earnings report, one can already see an increase in losses from 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 that its investments in Cruise will have a big pay off. The automaker has said it expects Cruise to bring in $50 billion in annual revenue by the end of the decade.