GM Profits Tank in 2021. Can GM Leverage EVs to Increase Income?

February 2, 2022
2024 Silverado EV RST
2024 Silverado EV RST

GM continues to sink under the weight of the chip shortage. It’s hitting all automakers, however the latest numbers from GM reveal the extent of the impacts. Automotive News reported that General Motors’ net income is down 39% in the fourth quarter to $1.7 billion. On the bright side, GM achieved a record full-year operating profit. That’s no surprise if you’ve been on the market for a GM vehicle.

GM’s Operating Profits Are Thanks to Higher Prices

In 2021, GM’s annual net income surged 56% to $10 billion. GM’s income is up despite the fact that total vehicle sales were DOWN by 13% over 2020 to 2.2 million. The automaker met previous projections with adjusted earnings of $14.3 billion. Total revenue increased 3.7% to $127 billion.

Although total sales and quarterly profits were down, vehicles sold for much higher prices. In the fourth quarter, GM’s average transaction price was $50,149. That’s up 15% year-over-year. At CarEdge, we’ve been pointing out the disappearance of incentives as dealers and automakers look to squeeze every dollar out of every sale. In Q4, incentives fell 65 percent to $1,813 per vehicle, according to TrueCar.

Get the most when you sell your car.

Compare and choose multiple offers in minutes:

GM cited lower-margin cars as a contributing factor to profit declines. Could this be a side effect of the massive capital investments in electric vehicles? Probably. All those batteries and rolling computers can’t build themselves…yet. GM plans to spend $35 billion in just four years on electrification. 

As 2021 came to a close, GM had just 199,662 vehicles in stock or in transit to dealers. That’s less than half of what GM had this time last year, and one-third of inventory at the end of 2019.

Looking Ahead: 400,000 EVs in North America, More Profits

2024 Silverado EV
2024 Silverado EV RST

The automaker said it expects its 2022 adjusted earnings “to remain at or near record levels,” between $13 billion and $15 billion. 

General Motors CEO Mary Barra sees electric vehicles as essential to GM’s growth strategy. Automotive News reported that GM aims to deliver 400,000 EVs in North America through 2023. During the recent quarterly shareholder meeting, Barra reiterated the automaker’s commitment to spending $35 billion on electric vehicle development by 2025. She said that this will culminate in the launch of 30 EV models globally by the end of the same year. 

General Motors finds itself in a bit of an odd situation. Profits are down by 39%, yet they’re selling vehicles for a lot more money. If the chip shortage fades away quickly (as unlikely as that may be), would GM shoot to the top of the pack? We’ll learn a lot about GM’s path forward as Q1 progresses. 

COVERAGE YOU CAN TRUST

CarEdge Extended Warranty

Peace of mind without the markup.
Flexible terms & pricing.
Coverage details

 

Discover the right insurance for you

Compare different providers with no spam phone calls:

Call us 855.786.1144

M-F: 8AM – 9PM EST
Sat: 10AM – 6PM EST

Save more with CarEdge+

CarEdge+ Membership pays for itself for all things auto.

Unlimited access to CarEdge car buying tools, our team of Auto Experts, savings on maintenance, and repairs, and more.

Join CarEdge+
Learn More

Join CarEdge for Free

Get instant access to members-only resources.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Consultations

$50 per 15-minute live session

Chat with a CarEdge Auto Expert to make sure you’re negotiating a fair deal.

  • Connect live on video or call.
  • Get live advice on any part of the buying process.
  • Ask us anything about your journey.

CarEdge Coach

$99 one-time

Partner with a dedicated coach to help you save thousands on your car deal.

  • Your coach will guide and assist through your journey.
  • Access to all premium resources, like Deal School 3.0, email templates and market pricing!
  • Learn how to buy a car with leverage and confidence.

CarEdge Concierge

$999 one-time

A dedicated concierge to handle all aspects of your car deal for you.

  • Concierge handles all communication with the dealer.
  • We negotiate the selling price, trade in, financing, warranties and insurance.
  • We listen, do the leg work and secure your deal.

Auto insights. Right in your inbox.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Get the latest trends and money-saving strategies, once a week.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Related articles

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Share This