22/04/28
Lead
The rise of Tesla has aroused the high vigilance of global automakers, especially traditional automakers such as GM, how to outperform the next decade or even decades, has become a new topic and challenge.
Author 丨 North Shore
Responsible editor 丨 Luo Chao
Edit 丨 Chic
On Wednesday, GM released its first-quarter earnings data, the company's net profit for the past three months was $2.94 billion, down slightly from $3.02 billion in the same period last year, and operating income increased by 11% year-on-year to $35.9 billion.
Based on final data for the first quarter and previous business outlook for fiscal 2022, GM expects full-year cumulative net profit to be between $9.6 billion and $11.2 billion, and adjusted EBIT to be between $13 billion and $15 billion.
Like all automakers around the world, GM faced multiple pressures in the first quarter, including supply chain disruptions, semiconductor shortages, and rising inflation. Under the influence of these unfavorable factors, GM's new car sales in January and March fell by 20% compared with the same period last year, but the Detroit giant still managed to narrow the profit gap at the profit level.
Chief Financial Officer Paul Jacobson said on Tuesday's conference call that the more than 10% year-over-year revenue growth was mainly due to strong demand at the product level, especially the hot sales of full-size trucks and SUVs. Supply chain and semiconductor chip issues will continue to impact the entire 2022 fiscal year, and the company will strive to secure a leading position in pickup trucks, electric vehicles and autonomous driving to drive new growth in its core business.
The company's head, Marry Barra, also highlighted the strategic importance of electric vehicles, "This is a catalyst for the growth of our business, and we must accelerate the growth of its sales to increase the production capacity of electric vehicles in North America to 1 million by the end of 2025." In the North American market alone, we aim to produce 400,000 pure electric vehicles between 2022 and 2023. ”
In fiscal 2022, GM will focus on the following three aspects.
First, entry-level low-cost electric vehicles.
In the early stage of the transformation, GM set a benchmark with the electric Hummer and Cadillac's mid-to-high-end models, but in the critical stage of the sprint market, the company will focus on releasing new electric models of more affordable electric pickup trucks, and strive to sell 1 million electric vehicles in North America by 2025 in a volume-driven manner.
Mary Bora has always believed that GM's biggest growth opportunity in North America is electric trucks, with an EV version of the Chevrolet Silverado scheduled to begin production early next year. However, this is a highly competitive segment in North America, with GM's models competing with rivals such as the Ford F-150 Lightning, and Ford CEO Jim Farley has announced that their second electric pickup will soon be available.
Given the current competitive landscape, GM plans to focus on lower-priced electric models this year and build its competitive advantage in this area. Marie Bora added on the conference call that this segment will be a major source of growth for Chevrolet and Buick brands.
The second is the adjustment of the salary system.
GM plans to pursue a new strategy that links a large portion of its executive compensation to the market performance of its electric vehicles. Although the new rules have not yet been officially released to the public, according to information revealed by Marie Bora in recent interviews, the impact on executive salaries will include electric vehicle sales, new car production cycles and delivery times, and product quality.
The change is a sign of the highest priority that GM's top policymakers and the company's board of directors place on the electric vehicle business, with Mary Bora's compensation for $23.7 million in 2020, including $2 million in base salary, $13.1 million in stock awards and $3.78 million worth of performance awards, according to the company's past earnings reports.
The rise of Tesla has aroused the high vigilance of global automakers, especially traditional automakers such as GM, how to outperform the next decade, or even decades, has become their new topic and challenge. GM plans to overtake Tesla around 2025 and become the best-selling electric vehicle maker, at least in its home market in North America.
Marie Bora revealed on Tuesday's conference call that GM expects to make up to $50 billion in profits from the North American electric vehicle market.
Third, automatic driving continues to increase.
GM expects to invest a cumulative $2 billion in its self-driving subsidiary Cruise this year, but the company did not say exactly what aspects of the high spending would be spent on autonomous driving.
Just from the financial report data, GM's loss in the field of autonomous driving increased from the same period last year, Cruise's loss in the first quarter was $325 million, compared with a loss of $229 million in the same period last year. Still, GM is unwavering in its bet on autonomous driving and firmly believes that its current investment in Cruise will eventually pay off handsomely.
GM has made simple predictions about the future development of the autonomous driving business, and it is expected that Cruise will bring GM $50 billion in annual revenue returns by the second half of 2020-2030. But at this stage, its autonomous driving business is still in the climbing stage of crazy money.
In the face of the conflict between Russia and Ukraine, the shortage of chip supply and some supply chains caused by the epidemic, GM is still optimistic about the production of new cars throughout the year, and expects global production to increase by 25% to 30% year-on-year in 2021.
"The chip impact is still volatile, and we are studying it every day," Mary Bora said at the earnings conference, and from the final data presented, the impact of the chip on the first quarter has improved compared to the fourth quarter of last year, so GM believes that the chip problem in the second half of the year will be further alleviated.
In Marie Bora's view, GM has made great progress in responding to the chip crisis, in addition to the previous large SUVs and pickups that prioritize the supply of chips, GM will also consider the normal supply of chips in more product portfolios. Because for most of last year, the company left limited chips to more profitable and higher-selling pickups and SUVs, and this year's "frugality" situation will be greatly improved.
North Shore
A sommelier who doesn't love cars is not a good editor.