Mohit Oberoi
General Motors (NYSE: GM) stock is trading higher in early US price action today as markets give a thumbs up to its Q4 2022 earnings and 2023 guidance. Here are the key takeaways from the automakers’ earnings report.
General Motors reported revenues of $43.1 billion in Q4 2022 which was above the $40.65 billion that analysts were expecting. The company’s revenues increased 28.4% YoY in the quarter as supply chain issues eased.
In 2021, General Motors faced significant supply chain issues. It also lost its position as the largest US automaker after having held the title since 1931. Looking at the full-year 2022 numbers, General Motors reported revenues of $156.7 billion—a YoY rise of 23.4%.
GM’s Q4 2022 adjusted EPS came in at $2.12 which was above the $1.69 that analysts were expecting. It posted an adjusted EBIT of $14.5 billion in 2022 which was 1.3% higher than in 2021. The company’s adjusted EBIT hit a new record last year amid a strong market for new cars.
The company also provided healthy guidance for 2023 and said that it expects adjusted EBIT between $10.5 billion-$12.5 billion. The company called for an adjusted EPS between $6-$7. While the guidance would imply a YoY fall in profits, it is nonetheless ahead of the $5.73 that analysts were expecting.
In the shareholder letter, GM’s CEO Mary Barra said, “We expect that our momentum will help us deliver strong results once again in 2023.”
General Motors Stock Rises Following Strong Earnings
General Motors stock is trading higher today after reporting better-than-expected earnings. Ford, which would report its earnings later this week is also in the green. Yesterday Ford announced a price cut for its Mustang Mach-E in order to remain “competitive.”
Ford’s price cut announcement comes a couple of weeks after Tesla lowered Model Y and Model 3 prices in US and Europe. Ford is looking to strengthen its second position in the US EV (electric vehicle) market. There is a guide on how to buy Ford stock.
General Motors is also ramping up its EV production and as part of the process, it is also trying to secure raw material supplies.
General Motors to Invest $650 Million in Lithium Americas
Today, GM announced a $650 million equity investment into Lithium Americas. General Motors said that the investment is the “largest-ever investment by an automaker to produce battery raw materials.”
To be sure, other automakers are also scrambling to secure supplies of key raw materials like lithium and cobalt as the automotive industries transitions toward electric cars.
At its investor day last year, GM said that it has secured the raw materials to reach its 2025 EV production capacity of 1 million and is working to secure raw materials even beyond 2025.
Automakers Are Looking to Secure Raw Material Supplies
During Tesla’s Q2 2022 earnings call, its CEO Elon Musk called upon entrepreneurs to set up lithium refining businesses.
Musk said, “So it is basically like minting money right now. There’s like software margins in lithium processing right now. So, I would really like to encourage, once again, entrepreneurs to enter the lithium refining business. You can’t lose.”
NIO is also looking to secure lithium supplies and bought a stake in Greenwing Resources, a lithium miner in Australia.
Recently, Baillie Gifford also increased his stake in NIO. Many analysts see NIO as a worthy competitor to Tesla. There is a guide on buying NIO stock.
Global EV sales rose 68% YoY to 7.8 million units in 2022 even as overall automotive sales fell around 1% in the year. EVs accounted for almost 10% of total car sales last year.
In 2022, Tesla sold 1.31 million EVs globally and was the market leader. However, BYD is the largest seller of NEVs (new energy vehicles) globally. NEVs also include plug-in hybrid cars. BYD almost sold 1 million EVs last year and many expect its EV sales to surpass Tesla in 2023.
Legacy automakers like General Motors are also ramping up their capacity to meet the soaring demand for electric cars.
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This article was written for Business 2 Community by Mohit Oberoi.
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