GM - General Motors Company

10/27/2021 | Press release | Distributed by Public on 10/27/2021 05:34

Q3 2021 Letter to Shareholders

Q3 2021 Letter to Shareholders

2021-10-27


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Dear Shareholders:

This month, General Motors took another major step toward our vision of a world with zero crashes, zero emissions and zero congestion.

More than 100 of GM's largest institutional investors gathered Oct. 6-7 at our Global Technical Center and Milford Proving Ground, and thousands of others joined online, as we outlined our plans to deliver a decade of unprecedented growth. This includes doubling our annual revenue by 2030 and expanding our EBIT-adjusted margins to 12 to 14 percent.

Equally important, the event was our opportunity to showcase what sets us apart from both traditional automakers and startups, including the expertise of our team, our platforms and vehicles, new technologies and businesses, and our manufacturing leadership.

The path we outlined shows GM transforming from automaker to platform innovator, driven by steady growth in our core automotive businesses, the scaling of EV production and the rapid growth of Cruise, BrightDrop, GM Defense, OnStar Insurance, connected services and more.

By the end of the decade, we envision that connected vehicles and other new businesses will drive more than $80 billion in new, incremental revenue. At the same time, revenue from EVs is expected to grow from about $10 billion in 2023 to $90 billion. A summary of the event is available here.

Alongside these opportunities, we continue to strengthen our team to help deliver growth. This includes creating a new Digital Business Team to establish digital market leadership for GM. We also continue to bring deep and relevant experience to our Board, including three directors this year.

Here are some key milestones happening on this journey now and in the very near future. Each is an insight into our ability to advance quickly, boldly and confidently:

  • This year, GM is well-positioned to lead the U.S. industry in full-size pickup sales for the seventh consecutive year. And early next year, our pickups raise the bar even higher. The Chevrolet Silverado will offer truck buyers more choices, more technology and more off-road capability. GMC adds the new Sierra Denali Ultimate, the most advanced and luxurious truck in its class. Both Silverado and Sierra will offer Super Cruise with industry-first hands-free trailering, and achieve a 5.8-percent reduction in greenhouse gas emissions.
  • We've started building the BrightDrop EV600 electric light commercial vehicle for our launch customer FedEx Express, and we announced that Verizon will be the first customer for the new, smaller BrightDrop EV410.
  • Next month, we'll host the grand opening of Factory ZERO in Detroit-Hamtramck, which will build the GMC HUMMER EV, the Cruise Origin and the Chevrolet Silverado EV. Factory ZERO, Orion Assembly, CAMI in Ontario and Spring Hill Assembly in Tennessee are the first traditional assembly plants we are converting to EV production.
  • This month, we have begun scheduling Bolt EV and EUV battery replacements. And to support our customers and dealers during the recall, we are restarting limited production at Orion Assembly in early November.
  • We will reveal the highly anticipated Chevrolet Silverado EV in January at the Consumer Electronics Show (CES) in Las Vegas. Later, Chevrolet will introduce an electric crossover priced around $30,000 that will underscore our commitment to field the best and broadest EV portfolio in the business, with entries from affordable, high-volume segments up to the top of the line.
  • In 2022 and 2023, we will open battery plants in Lordstown, Ohio, and Spring Hill, which will have a combined capacity of 70 gigawatt hours.
  • By 2025, we forecast that our North American EV vehicle assembly capacity will reach 20 percent and climb to 50 percent by 2030. Leveraging these established assets for EV production means we can avoid capital expenditures of about $1 billion to $1.5 billion per assembly plant, and save months or even years compared to developing an all-new site.
  • Also by 2025, we will source 100-percent renewable energy to power our U.S. sites, five years earlier than our previous projection. This is the third time we've pulled ahead that target.

A common thread through all of this is our clear commitment to U.S. EV leadership. For example, we will have four U.S. battery cell plants by mid-decade, which will double our overall capacity and scale EV production faster. In addition, we plan to build EV motors and our first dedicated EV truck facility here in the U.S. I look forward to sharing more about these plans soon.

Our third-quarter 2021 results clearly illustrate the strength of the underlying business that is funding our future, especially when you put them in the context of the calendar year.

In the third quarter, our EBIT-adjusted was $2.9 billion, with a 10.9-percent margin. The quarter was challenging due to continuing semiconductor pressures. But it also includes very strong results from GM Financial, the recall cost settlement we reached with our valued and respected supplier and JV partner LG Electronics, and $0.3 billion in equity income from our joint ventures in China.

As a result, we now believe GM's full-year results will approach the high end of our guidance, which is for EBIT-adjusted in the range of $11.5 billion to $13.5 billion, well above the $10 billion to $11 billion outlook we shared in February.

I am very proud of the team that has delivered these results and committed so strongly to our growth strategy. This includes our dealers and suppliers, who are critical to our success. Together, we are developing new technologies, incubating new businesses, delivering great products and services for our customers, and generating strong results that we can reinvest in our future.

Our team is energized by our bold vision, building momentum despite the challenges we've faced. I have never been more confident or more excited about the opportunities ahead.

mtb

Cautionary Note on Forward-Looking Statements: This letter and related comments by management may include "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements represent our current judgement about possible future events and are often identified by words such as "anticipate," "appears," "approximately," "believe," "continue," "could," "designed," "effect," "estimate," "evaluate," "expect," "forecast," "goal," "initiative," "intend," "may," "objective," "outlook," "plan," "potential," "priorities," "project," "pursue," "seek," "should," "target," "when," "will," "would," or the negative of any of those words or similar expressions. In making these statements, we rely upon assumptions and analysis based on our experience and perception of historical trends, current conditions, and expected future developments, as well as other factors we consider appropriate under the circumstances. We believe these judgements are reasonable, but these statements are not guarantees of any future events or financial results, and our actual results may differ materially due to a variety of factors, many of which are described in our most recent Annual Report on Form 10-K and our other filings with the U.S. Securities and Exchange Commission. We caution readers not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events, or other factors that affect the subject of these statements, except where we are expressly required to do so by law.

Non-GAAP Reconciliations

The following table reconciles net income attributable to stockholders under U.S. GAAP to EBIT (loss)-adjusted (dollars in millions):

Three Months Ended

September 30, 2021

Net income (loss) attributable to stockholdersa

$

2,420

Income tax expense (benefit)

$

152

Automotive interest expense

$

230

Automotive interest income

$

(38)

Adjustments

Cadillac dealer strategyb

$

158

Total adjustments

$

158

EBIT (loss)-adjusted

$

2,922

EBIT-adjusted margin

10.9 %

Net income margin

9 %

aNet of net loss attributable to noncontrolling interest.
bThese adjustments were excluded because they relate to strategic activities to transition certain Cadillac dealers from the network as part of Cadillac's electric vehicle strategy.

Guidance Reconciliations

The following table reconciles expected Net income (loss) attributable to stockholders under U.S. GAAP to expected EBIT-adjusted (dollars in billions):

Year Ending
December 31, 2021

Net income attributable to stockholders

$ 8.1-9.6

Income tax expense

2.3-2.8

Automotive interest expense, net

0.8

Adjustmentsa

0.3

EBIT-adjustedb

$ 11.5-13.5

aThese adjustments relate to strategic activities to transition certain Cadillac dealers from the network as part of Cadillac's electric vehicle strategy, and the unique events associated with recent Supreme Court of Korea decisions related to our salaried workers.
bWe do not consider the potential future impact of adjustments on our expected financial results.