General Motors Raises 2022 Guidance, Signs Long-term Nickel Supply Agreement

General Motors Co. in Detroit reported that it expects its portfolio of electric vehicles (EVs) to be profitable by 2025 and raised its full-year adjusted automotive free cash flow guidance, which will increase to between $10 billion and $11 billion from its previous guidance of $7 billion to $9 billion.
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GM announced it expects its portfolio of EVs, including the 2023 Cadillac LYRIQ, will be profitable by 2025. // Courtesy of Cadillac
GM announced it expects its portfolio of EVs, including the 2023 Cadillac LYRIQ, will be profitable by 2025. // Courtesy of Cadillac

General Motors Co. in Detroit reported that it expects its portfolio of electric vehicles (EVs) to be profitable by 2025 and raised its full-year adjusted automotive free cash flow guidance, which will increase to between $10 billion and $11 billion from its previous guidance of $7 billion to $9 billion.

“GM’s ability to grow EV sales is the payoff for many years of investment in R&D, design, engineering, manufacturing, our supply chain and a new EV customer experience that is designed to be the best in the industry,” says Mary Barra, chair and CEO of GM.

“Our multi-brand, multi-segment, multi price point EV strategy gives us incredible leverage to grow revenue and market share, and we believe our Ultium Platform and vertical integration will allow us to continuously improve battery performance and costs.”

In the next three years, GM plans to move aggressively toward EV leadership as EV adoption is expected to approach 20 percent of U.S. industry sales in 2025:

  • GM will have multiple entries in pickup, SUV, and luxury segments that represent about 70 percent of EV industry volume, including the Chevrolet Silverado EV, Blazer EV and Equinox EV, the Cadillac LYRIQ, and the GMC Sierra EV.
  • GM is launching a new digital retail platform with its U.S. dealer partners to enhance the shopping and purchase experience for EV customers and reduce costs to GM by an estimated $2,000 per vehicle.
  • Five GM assembly plants in the U.S., Canada, and Mexico will be building EVs
  • BrightDrop — GM’s tech startup creating EVs, eCarts, and software — is on track to reach $1 billion in revenue in 2023, as GM’s CAMI plant in Ontario launches full production of the BrightDrop Zevo 600 delivery van next year, and scaling to a projected 50,000 units annually by 2025.
  • GM’s battery cell joint venture Ultium Cells will be operating plants in Ohio, Tennessee, and Michigan by the end of 2024; a fourth U.S. cell plant is planned.
  • GM has secured binding commitments for all the battery raw material it needs to deliver its 2025 capacity target.
  • The company continues to secure its needs beyond 2025 with strategic supply agreements and direct investments in natural resource recovery, processing and recycling.

In 2023, Chevrolet and GMC release the 2024 Chevrolet Silverado HD and GMC Sierra HD, which will be available in the first half of 2023, as well as the new Chevrolet Colorado and GMC Canyon mid-size pickups.

“We’ve built the foundation to rapidly scale our EV portfolio, make it profitable and maintain strong margins during a period of high investment,” says Paul Jacobson, executive vice president and CFO at GM.

“Our Ultium Platform and battery technology will only get better and less expensive over time, and we have enterprise-wide momentum in EVs, Cruise, software-defined vehicles, and new businesses like BrightDrop that will help us achieve our revenue and margin targets by the end of the decade.”

GM also adjusted its projection for 2022 earnings before interest and taxes (EBIT)-adjusted will be in a range of $13.5 to $14.5 billion, compared to its previous guidance of $13-$15 billion.

GM’s 2023-2025 key performance indicators include:

  • Total company revenue is expected to grow at a 12 percent compound annual rate through 2025, reaching more than $225 billion as EV volumes and software revenue grow. Revenue from EVs is expected to be more than $50 billion in 2025.
  • GM expects to build 400,000 EVs in North America from 2022 through the first half of 2024 and grow capacity to 1 million units annually in North America in 2025.
  • GM expects to reach U.S. battery cell capacity of more than 160 GWh and 1.2 million cells per day by mid-decade.
  • GM is focused on reducing the cell costs for the next generation of its Ultium batteries to under $70/kWh by mid- to late-decade.
  • Total capital spending is expected to be $11 to $13 billion per year through 2025, funded by ongoing healthy cash flows.
  • GM expects to maintain its historical EBIT-adjusted margins of 8 to 10 percent in North America through this growth investment period.
  • GM expects to earn low- to mid-single-digit EBIT-adjusted margins on its EV portfolio in 2025, before the positive impact of clean energy tax credits.

In related news, the company announced a partnership with Vale Canada Limited, a subsidiary of Vale S.A., for the long-term supply of battery grade nickel sulfate from Vale’s proposed plant in Québec, Canada.

Under terms of the agreement, Vale will supply battery grade nickel sulfate, equivalent to 25,000 metric tons per year of contained nickel, for use in GM’s Ultium battery cathodes, which will power a broad portfolio of EVs. The amount of contained nickel is sufficient to supply approximately 350,000 EVs annually. Deliveries are targeted to commence in the second half of 2026.

This initiative highlights Vale’s uniquely strategic position to be the supplier of choice to the EV industry, leveraging its low-carbon footprint and market-leading position as North America’s largest producer of finished nickel. Nickel sulfate is the chemical compound used in the production of pre-cathode active materials for nickel-based lithium-ion batteries.

“This is a momentous agreement for Vale Base Metals that brings a key partner in GM into this first-of-its-kind facility for Canada and North America,” says Deshnee Naidoo, executive vice president of base metals at Vale.

“The proposed nickel sulfate project would utilize high purity, low-carbon nickel from our Canadian refineries and is a natural extension for the business, offering diversified sales and a fast entry and anchor point into the North American electric vehicle market. We look forward to continuing engagements with the governments of Canada and Quebec on this strategic critical mineral project.”

Vale and GM have also agreed to study collaborative ways to partner on advanced technology development and commercialization pathways to harvest recycled metals.

“This announcement between Vale and GM builds on Canada’s world-leading EV battery industry,” says François-Philippe Champagne, Canada’s minister of innovation, science, and industry. “It’s become even more clear that Canada can be the supplier of choice for the electric cars of the future. By leveraging Canadian critical minerals, we will see more jobs for Canadians, a growing economy, and a greener and cleaner future for everyone.”

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