GM 'Came Out Swinging' At Its Investor Day: Automaker Raises 2022 Guidance, Lays Out Plans For EV Profitability In 2025

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  • General Motors lays out expectations for its North American electric vehicle portfolio to reach profitability in 2025.
GM 'Came Out Swinging' At Its Investor Day: Automaker Raises 2022 Guidance, Lays Out Plans For EV Profitability In 2025

At its Investor Day in New York City Thursday, General Motors Co GM took on a more favorable outlook for the remainder of the year and raised longer-term expectations for electric vehicle profitability

What Happened: General Motors on Thursday laid out expectations for its North American EV portfolio to reach profitability in 2025.

The company said it plans to scale EV capacity in the region to more than 1 million units annually as it moves aggressively toward EV leadership. GM noted that EV adoption is now expected to be close to 20% of U.S. industry sales in 2025. 

"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 Mary Barra, chair and CEO of GM.

EV Growth Plans: GM said it plans to offer multiple EV entries in the pickup, SUV and luxury segments. The company also plans to launch a new digital retail platform to help improve its shopping experience. The platform is expected to reduce GM's costs by $2,000 per vehicle.

GM expects to have five different assembly plants that will be building EVs as well as three facilities for battery cell production by 2024. A fourth U.S. cell plant is also in the works. 

GM told investors that it has secured all battery raw materials it needs to deliver on its 2025 capacity target. The company is also securing its needs beyond 2025 with strategic supply agreements and direct investments in natural resource recovery.

"Our multi-brand, multi-segment, multi price point EV strategy gives us incredible leverage to grow revenue and market share, and we believe our Ultium Platform and vertical integration will allow us to continuously improve battery performance and costs," Barra said.

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Updated GM Guidance: GM also raised its outlook in combination with its ambitious EV plans. The company now expects full-year 2022 adjusted automotive free cash flow to be in a range of $10 billion to $11 billion, up from previous guidance of $7 billion to $9 billion.

GM also narrowed its full-year adjusted EBIT expectations from a range of $13 billion to $15 billion to a range of $13.5 billion to $14.5 billion.

GM even provided a set of performance indicators that investors can use to track the company's progress from 2023 to 2025. 

Total revenue is expected to grow at a 12% compound annual rate through 2025, reaching more than $225 billion. EV revenues are expected to grow to more than $50 billion in 2025.

GM expects to build 400,000 EVs in North America from 2022 through the first half of 2024 on its way to 1 million units annually in 2025.

Battery cell capacity is expected to reach 1.2 million cells per day by 2025. The company said it's focused on reducing cell costs to under $70 per kilowatt hour by that time.

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Early Analyst Reaction: Following GM's Investor Day, Wedbush analyst Dan Ives said the company showed confidence in its targets during the "impressive" event. GM could have been more cautious given supply chain issues and broader macro concerns, but it "came out swinging," Ives said.

"While the macro remains volatile, GM is setting the stage for the EV transformation that should start to take place in the US in 2023," the Wedbush analyst wrote in a note to clients.

GM Price Action: GM has a 52-week high of $67.21 and a 52-week low of $30.33.

The stock closed Thursday up 0.55% at $38.68, according to Benzinga Pro.

Photo: courtesy of GM.

Posted In: Dan Iveselectric vehiclesMary BarraAnalyst ColorLong IdeasNewsGuidanceEventsTop StoriesAnalyst RatingsTrading Ideas