General Motors Corp. executives and their suppliers think their access to semiconductors will continue to improve and no longer be a production constraint come mid-summer, CEO Mary Barra said Feb. 1.
Speaking to analysts and investors after GM reported a fourth-quarter profit of $10.0 billion – with adjusted margins climbing to 11.3% from below 8% in late 2020 – Barra and CFO Paul Jacobson said the company’s chip outlook has them (barring a nasty COVID surprise or natural disaster) eyeing global production growth of 25% to 30% for 2022, with much of that growth coming from July on.
“With the plans we have in place now, by the time we get to third and fourth quarter, we're going to be really starting to see the semiconductor constraints diminish,” Barra said. “That's what we're working to achieve across all of our platforms and across the globe – frankly, with all of our suppliers – but that's our best current outlook that we're sharing.”
GM secured a steadier supply of semiconductors in the fourth quarter than in the three months prior and Barra said that trend has carried over into the first few weeks of 2022. Jacobson said the greater number of chips allowed GM to trim its inventory of nearly-finished vehicles late in the year.
The GM team is preparing to add to its list of investments in electric vehicles, which includes among other things battery cell plants (via a joint venture with LG Energy Solutions) in Ohio and Tennessee as well as the conversion of an internal combustion plant and the company’s third U.S. battery cell plan—both slated for Michigan. On Feb. 1, Barra said her team is formulating plans for a third truck EV factory as well as a fourth battery plant, which the company will announce by summer. In addition, she said, the Ohio battery facility will launch with seven-day operations, giving it an additional 10% capacity.
Those investments will grow GM’s EV annual capacity in North America to well more than 1 million units by the second half of the decade. For 2022 and 2023, the company aims to deliver 400,000 EVs across North America.
Helping drive those investments will be GM’s cash flow, which totaled $6.4 billion in Q4 (and $2.6 billion for the year) after various adjustments and is expected to grow in the coming years. Jacobson said the company’s capital spending budget for this year is between $9 billion and $10 billion and said that range likely will apply to “the next several years” as well.
GM shares (Ticker: GM) rose slightly to $54.60 after hours Feb. 1 after climbing 2.5% in the regular session. They are down about 4% over the past six months.