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General Motors' Profit Hit by Unsold EVs and Strike, Uncertainty Looms

General Motors' Q4 2023 profit impacted by unsold electric vehicles and strike costs
G.M. expects 2024 profit of $9.8 billion to $11.2 billion, highlighting uncertainty in demand for cars
2024/01/30 (Jan 30th, 2024 11:45 am)
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Challenges Faced by General Motors

During a conference call, G.M.’s Chief Financial Officer, Paul Jacobson, expressed concerns over the slowdown and the resulting uncertainty. The company booked a charge of $1.6 billion for unsold electric vehicles. Additionally, the strike by the United Automobile Workers union cost G.M. $1.1 billion, while an $800 million settlement with LG Energy Solution, a battery supplier, was associated with a mass recall of electric Chevrolet Bolts.

Other automakers, including Tesla and Ford Motor, have slashed prices to combat lower-than-expected demand for battery-powered cars. G.M. has also faced setbacks in producing a substantial volume of such vehicles due to manufacturing issues with its new battery technology, known as Ultium.

Full-Year Performance and 2024 Projections

Despite the challenges, G.M. reported an almost 9% year-on-year increase, achieving a profit of $10.1 billion in 2023. Looking ahead to 2024, the automaker forecasts a profit of $9.8 billion to $11.2 billion, acknowledging the increasing uncertainty surrounding car demand and the overall industry’s health. In response to safety concerns, G.M. plans to decrease its spending on the Cruise autonomous driving division by approximately $1 billion compared to the previous year.

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Furthermore, G.M. had initially projected the production of 400,000 electric vehicles by mid-2024. However, the consumer response to battery-powered cars has not matched the expectations of auto executives. Consequently, G.M. directed dealers to halt sales of the electric version of the Chevy Blazer until further notice. Despite selling over 19,000 electric vehicles in the fourth quarter, the majority consisted of older Bolts utilizing outdated battery technology. Only a third of the electric vehicles sold incorporated the newer battery packs produced at an Ohio factory, which G.M. believed demonstrated considerable demand.

G.M. remains cautious about manufacturing additional vehicles until customer demand aligns with supply capacity. Despite the challenges faced, the company remains optimistic about its position in the market.

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