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GM faces EV production constraints and Cruise accident effects in 2024

Credit: GM

Ahead of the General Motors (GM) earnings call this week, the automaker has new union contracts and is expected to report around $10 billion in earnings. However, challenges remain for GM, including electric vehicle (EV) production constraints and the ongoing effects of an accident involving one of its self-driving subsidiary Cruise’s robotaxis in October.

GM will report Q4 and FY 2023 earnings on Tuesday, and the company said in November it expected to earn almost $10 billion throughout 2023—despite around $1.1 billion being lost during historic six-week strikes from the United Auto Workers (UAW) union.

Analysts will be looking to see how GM plans to manage its upcoming launch of the Equinox EV, despite past production issues. In addition, onlookers will want to see how the automaker can navigate its self-driving unit Cruise this year, after an accident with a pedestrian in October rocked operations at the startup.

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Morningstar U.S. Auto Equity Analyst David Whiston says he hopes to see what kind of tone CEO Mary Barra and CFO Paul Jacobsen are setting for 2024 during the call, along with the company’s financial expectations given the recent events (via Automotive News).

According to Whiston, this year “should be at least a solid year for them, if not better.”

Other analysts expect the effects of the UAW strikes to have a larger impact on GM’s 2023 numbers, as highlighted by Bank of America analysts in a BofA Global Research note published last week.

“GM and Ford are likely to post a lighter finish to 2023 given pressures from the UAW strike, which impaired production,” the note said. “The greatest focus [will] be on EV expectations since sentiment on electrification has quickly soured.”

In November, GM also announced a $10 billion share buyback plan to help boost Wall Street confidence following the new UAW labor agreement.

EV Production Constraints at GM

GM has struggled to ramp up production of its Ultium EV platform, partially due to an issue with an automation equipment supplier that significantly delayed assembly of battery modules. Last month, the automaker was forced to issue a stop sale on the Blazer EV to address software quality issues.

In November, Barra highlighted the recent production issues, saying that GM “didn’t execute well this year as it relates to demonstrating our EV capability.” In 2024, however, Barra said she expects production to be “significantly higher.”

GM plans to begin production of its upcoming Equinox EV later this year, expected to be a mass-market vehicle priced around $35,000 with shipping.

“That needs to be a flawless launch,” Whiston added. “There’s a space of affordable EVs that Tesla is not in yet, and you don’t want Tesla to be first.”

GM Self-Driving Subsidiary Cruise Runs into Trouble

Along with GM’s need to smooth things out on the production side, the company’s robotaxi company Cruise has been spiraling since one of its driverless vehicles dragged and pinned a pedestrian in October. The startup’s license to operate self-driving vehicles was immediately revoked by the California Department of Motor Vehicles (DMV), which went on to say that the company “misrepresented” and “omitted” critical details about the accident in its follow-up correspondence with the state.

Since then, the company founders have resigned along with several executives, and the GM subsidiary has laid off almost a quarter of its workforce. Following an independent review of the accident from GM-hired law firm Quinn Emanuel, the results of which were shared last week, it was discovered that a lack of internet connectivity may have hindered Cruise’s ability to share video from the incident with regulators.

Cruise is set to appear before the California Public Utilities Commission (CPUC) in a hearing on February 6.

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GM faces EV production constraints and Cruise accident effects in 2024
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