GM’s profits fell 3% amid chip shortage issues
By Neil E. Boudette
General Motors said earlier this week that its profits dipped in the first three months of the year. But the company said it expected to grow rapidly as it started selling a wider range of electric cars and trucks.
Although it has sold only a small number of electric vehicles this year, GM has several new models nearly ready for production and aims to sell 400,000 such automobiles by the end of next year, its chief executive, Mary T. Barra, said.
“We are installing the most manufacturing capacity to meet demand,” she said in a conference call to discuss the company’s first-quarter results.
Barra also said a global shortage of computer chips that had hindered production and raised car prices was easing. GM expects auto production this year to rise 25% to 30% from 2021.
“There is still volatility in chips,” Barra said, but “we think we will see stronger chip supply in the second half over the first half.”
GM said it had a profit of $2.9 billion in the first quarter, down 3% from a year earlier. But revenue for the three months jumped nearly 11%, to $36 billion. GM sold 831,000 vehicles globally in the quarter, 10,000 more than a year earlier.
The company said its outlook for 2022 was unchanged — it expects its profit to be between $9.6 billion and $11.2 billion.
GM has been spending billions of dollars to develop electric models and build factories for those cars and their batteries. But it is still far from catching up with Tesla, and it recently lost ground to Ford Motor, too. Tesla is expected to sell about 1.5 million electric cars this year. Ford’s electric Mustang sport utility vehicle has sold well, and production of an electric version of its popular F-150 pickup truck started this month.
GM has taken 140,000 reservations for an electric Chevrolet Silverado pickup truck that it will start producing next year, Barra said. The company also plans to introduce electric versions of its Chevrolet Blazer and Equinox SUVs next year.
The company said it was on track to begin producing batteries at a new factory in Lordstown, Ohio, this summer and is building three more battery plants in the United States. The automaker has recently started making an electric GMC Hummer truck and an electric luxury SUV, the Cadillac Lyriq. It also resumed making the Chevrolet Bolt this month after working to fix a defect in the car’s battery. And by the end of the year, GM will make electric delivery vans at a plant in Ontario.
Barra is counting on building up enough electric vehicle production capacity to drive down costs and offer affordable electric vehicles — “a part of the market our competitors are not focused on,” she said.
The cheapest Tesla, the compact Model 3, starts at more than $48,000, and Tesla’s Model Y starts at nearly $65,000. GM says its Equinox will sell for around $30,000. The company is also working with Honda, the Japanese automaker, on affordable electric cars.