Investor day impresses analystsGM held its long-awaited investor day last Wednesday, detailing its boldest financial target in years, which will see the company bringing in revenues of over $280 billion by 2030 if successful. GM plans on reaching its goal by expanding profits on its combustion vehicles, as well as through the growth of its electric vehicle segment – prices lifted 4.65% on the news. The update has analysts feeling bullish, and on Friday the stock continued its gains with a lift of 3.77% after Credit Suisse analyst Dan Levy reiterated his outperform rating on the stock. The analyst argued that the automaker made a “compelling case” for multiple expansion at this year's investor day.
The company ended the week up over 10%, having spent every week in the green since the end of August and lifting 11% in October so far.
General Motors aims highGeneral Motors is planning on shifting things up a gear, laying out an extensive revenue expansion plan and taking on Tesla as the EV leader.
General Motors is coming for Elon Musk as the automaker takes its EV plans up a notch and announces its ambitious plans to double its annual revenue by 2030. GM held its long-awaited investor day on Wednesday, detailing its boldest financial target in years, which will see the company bringing in revenues of over $280 billion by 2030 if successful. GM plans on reaching its goal by expanding profits on its combustion vehicles, as well as through the growth of its electric vehicle segment.
To that end, the automaker took aim at leading EV maker Tesla (TSLA) by saying that it plans to take the lead in electric car sales in the U.S., and released details on its new $30,000 eclectic sedan – which is $12,000 cheaper than Tesla’s (TSLA) lowest priced car. GM CEO and Chair Mary Barra said:
When you look at all of the investments we’ve been making for five years plus, that’s what positions us today to really be in execution mode,” GM CEO and Chair Mary Barra told reporters during a briefing ahead of the event. “We have great confidence in our ability to grow revenues.
Analysts are optimistic about the update, with Engine No. 1 founder Chris James saying:
We think this is a real opportunity for people to pay attention and look how a company can disrupt itself in an industry going through transition. General Motors is unique in that we think they’re doing the right things.
As a part of its investment into EVs, GM is also working on its Robotaxi efforts, and its Cruise autonomous vehicle unit recently reported that its business is on track to reporting revenues of over $50 billion in the next few years if keeps going at the rate it is.
It's all about the electricThe competition is heating up in the EV space, and in a bid to keep up, General Motors is upping its spending on EVs to $35 billion over the next few years.
There’s no doubt about it, the electric vehicle market is booming nearly as quickly as some of these cars get from 0-60mph, and GM has no intention of getting left in its dust. Global EV sales were up 43% in 2020, and 18 of the world's top 20 vehicle manufacturers have recently announced their foray into the electric side of life. So you can see why GM, which recently had a logo revamp to represent its journey into an all-electric future,is investing in its market stake by upping its spending on electric and autonomous vehicles by 30% to $35 billion by 2025. In fact, GM has one of the most ambitious electrification plans in the auto industry: aiming to only sell EVs by 2035 and to be completely carbon neutral by 2040, so this is a promising step in that direction.
We want to lead in this space. We don’t just want to participate, we want to lead,
said Doug Parks, GM Executive Vice President of Global Product Development in late 2020.
The automaker must be doing something right, as its stock has nearly tripled since its 12-month low last July, and higher profits are what made this not-so-little increase possible. GM also boosted its projected profits for the first half of the year from $5.5 billion to up to $9.5 billion, a rosy outlook that has made space to increase its EV spending plan by about $8 billion. Some of that will also be put towards adding another two lithium cell production plants, which produce EV batteries with more range per charge. That will take its total to four cell production plants (more than any other automaker right now) and keep it well in line with competition.
The announcement comes less than a month after established automaker Ford Motors upped its own spending to more than $30 billion by 2025. Looks like the race is on.
GM knocks it out of the parkDespite the semiconductor chip woes that have been plaguing auto companies recently, General Motors (GM) manages to release banging first quarter earnings and gets rewarded with a 6% jump in share price.
We’ve all heard by now of the semiconductor shortage that is panicking the U.S. economy and tech companies around the world. Things ain't looking good. However, GM’s quarterly earnings most certainly are, having blown away expectations and laid the ground for a super strong first half. The automaker reported adjusted earnings per share of $2.25 on revenue of $32 billion, compared to expectations of $1.04 in adjusted earnings per share on $32.67 billion in revenue.
Looks like GM is going for the “under-promise, over-deliver” strategy though, and isn’t raising its guidance despite the blowout quarter. Operating profit is still set at $5.5 billion for the first half of the year, even though Q1 saw $4.4 billion of that taken care of already.
Guiding towards the high end of its range, GM expects $10 billion to $11 billion, or $4.50 to $5.25 per share, in adjusted pretax profits; and adjusted automotive free cash flow of $1 billion to $2 billion for 2021. This forecast apparently takes into consideration the worsening chip shortage, the potential damage of which includes a hit of between $1.5 billion and $2 billion to earnings, and a decline of $1.5 billion to $2.5 billion in its free cash flow.
CEO Mary Barra said while the company was likely to see some production downtime in the second quarter, she still expects to have a strong first half.
“The speed and agility of our team are front and center as we move from managing through a pandemic to managing the global semiconductor shortage,”
she said in a letter to shareholders.
“This remains a challenging period for the company as we emerge from 2020, but the team continues to demonstrate its ability to manage complex situations.”
The EV side of lifeGeneral Motors is jumping back onto the EV bandwagon with an electric version of its classic Chevy Silverado pickup, sending prices up 1.47%.
GM will electrify its best-selling vehicle, powered by the company’s new EV battery that lets cars run about 400 miles on a full tank – almost 100 miles more than Tesla’s Model 3. The company has been teasing an electric car for a while now, but earlier warned it might not be released until mid-decade, so the latest news came as something of a surprise. GM announced in January that it had set itself the goal of selling all new cars with zero tailpipe emissions by 2035 – making it the first carmaker to establish a specific goal for the end of diesel and petrol vehicle sales. Clearly, they’re not messing about.
The car will be built at “Factory Zero”, the newly rebranded Detroit-Hamtramck plant that is now dedicated to building electric vehicles. The switch is part of a $2.2 billion investment into the plant, which will also play host to the building of the all-electric Hummer SUV and Hummer pickup. The company seems to be keeping up with the curve, and will release its electric Hummer pickup in 2021 – to compete alongside Tesla’s new Cybertruck and EV start-up Rivian’s new electric pick-up truck. By comparison, Ford is slated to release its first foray into EVs only in late 2022.
However, the current semiconductor shortage has been making its mark on automaker production plans for the coming year. A few weeks ago, GM was forced to shut down production at three plants and slow production at a fourth, and said that its 2021 production targets were facing pressures.
Semiconductor supply for the global auto industry remains very fluid.