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GM releases game plan and raises guidance for its EV transition

Published by MEXEM News

March 2, 2023 11:10 AM
(GMT+2)
Published - November 18, 2022 @ 11:47 AM (EET)

At its investor day in New York City on Thursday, General Motors (NYSE:GM) raised its full-year guidance, saying it expects its portfolio of electric vehicles in North America to be "solidly profitable" by 2025.


The automaker, in its presentation, predicted annual revenue growth of 12% over the three years, answering a defining question about its long-term strategy.


Achieving those goals, for 2022, GM guided for adjusted automotive free cash flow to increase to $10 billion and $11 billion, compared with its previous guidance of $7 billion to $9 billion.


THE GAME PLAN


Incentives for battery-making facilities in the US combined with revisions to the EV tax credit will boost GM's margins, company executives said Thursday.


GM also expects to improve profitability on these models by bringing down costs and shaving roughly $2,000 per vehicle off the expense of selling cars through dealerships.


Over the next several years, even as it increases capital investment to pave the way for a broader EV lineup, GM expects operating-profit margins in North America would remain in the 8% to 10% range.


According to Chief Financial Officer Paul Jacobson, GM expects to be among the first, if not the first, to be eligible for the full $7,500 consumer tax credits under the Biden administration's Inflation Reduction Act, taking into account stricter sourcing of EV battery materials.


The automaker told investors it's aiming to scale its EV capacity to more than 1 million units annually, increase its software revenue opportunities, generate greenhouse gas benefits, and realize the positive impacts of new clean energy tax credits.


"GM's ability to grow EV sales is the payoff for many years of investment in R&D, design, engineering, manufacturing, our supply chain, and a new EV customer experience that is designed to be the best in the industry,"

said Chief Executive Mary Barra.


FIXING TESLAS


More surprisingly, General Motors said fixing Teslas (NASDAQ:TSLA) is a growing business for the 114-year-old automaker.  Since last year, GM dealers have repaired more than 11,000 electric vehicles from Tesla, according to GM President Mark Reuss.


"I gotta say it's a new business," Reuss said.


Though GM doesn't own its dealers, a dealer network has many advantages for a traditional automaker, such as adding charging ports at its dealers to create its proprietary network of EV chargers.


GM shares closed little changed on Thursday at $38.64.

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