General Motors Co. in Detroit today reported its financial results for the second quarter (Q2) of 2022, which showed a 39 percent drop in net income year-over-year. The automaker also announced supply agreements with Livent and LG Chem to help ensure its ability to meet its goal of 1 million units of annual EV capacity in North America by 2025.
The drop in net income from $2.8 billion in Q2 2021 to $1.7 billion this year and in EBIT-adjusted income from $4.1 billion to $2.3 billion, is a result of the impacts of supply chain disruptions the company experienced throughout the quarter, and particularly in June, Mary Barra, chair and CEO of GM, says in a letter to shareholders.
“There are concerns about economic conditions, to be sure. That’s why we are already taking proactive steps to manage costs and cash flows, including reducing discretionary spending and limiting hiring to critical needs and positions that support growth,” writes Barra.
“We have also modeled many downturn scenarios and we are prepared to take deliberate action when and if necessary. Regardless of the circumstances, we will continue executing from a position of strength.”
GM North America earned $2.3 billion in Q2 2022 down from $2.9 billion last year. GM International is the only segment that saw growth, earning $209 million in Q2 this year, up from $15 million in last year. GM Financial’s earnings decreased from $1.5 billion to $1.1 billion. Cruise, GM’s self-driving car subsidiary, went from losing $332 million in Q2 of 2021 to $543 million this year.
“We have strong earnings and cash flow, an investment-grade credit rating, historically low pension obligations, great vehicles and services, and record pricing,” writes Barra. “All of this will help us continue to execute our EV- and AV-powered growth strategy and insulate it from short-term challenges.”
The multi-year sourcing agreement between GM and Livent, a fully integrated lithium company based in Philadelphia, will supply GM with battery-grade lithium hydroxide over a six year period made primarily from lithium extracted at Livent’s brine-based operations in South America.
Lithium hydroxide is crucial to GM’s plans to make higher performance, higher mileage EVs. The lithium hydroxide from Livent will be used in GM’s Ultium battery cathodes, which will power electric vehicles such as the recently revealed Chevrolet Blazer EV, Chevrolet Silverado EV, GMC Hummer EV, and Cadillac Lyriq.
“We are building a strong, sustainable, scalable, and secure supply chain to help meet our fast-growing EV production needs,” says Jeff Morrison, vice president of global purchasing and supply chain for GM.
“We will further localize the lithium supply chain in North America over the course of the agreement. In addition, it is aligned with our approach to responsible sourcing and supply chain management and demonstrates our commitment to strong supplier relationships.”
Over the course of the agreement, Livent will increasingly supply battery-grade lithium hydroxide to GM from its manufacturing facilities in the U.S., with the goal of transitioning 100 percent of its downstream lithium hydroxide processing for GM to North America.
“We are excited to begin this long-term relationship with GM, one of the most iconic brands in the automotive industry and a leading force in the transition to electrification,” says Paul Graves, president and CEO of Livent.
“With a shared commitment to sustainability and responsible operations, we look forward to building a broad partnership that will support GM’s electric vehicle strategy, its supply chain goals, and the future requirements of its growing EV fleet for reliable, high-performance lithium products.”
GM’s agreement with LG Chem will supply the company with cathode active material (CAM), which consist of components like processed nickel, lithium, and other materials, representing about 40 percent of the cost of a battery cell.
Through the long-term supply arrangement, LG Chem plans to supply more than 950,000 tons of CAM to GM beginning the second half of 2022 through 2030, enough for approximately 5 million units of EV production.
The CAM secured by GM will be used by Ultium Cells, a joint venture between GM and LG Energy Solution, at its battery cell plants in Warren, Ohio; Spring Hill, Tenn.; and Lansing.
GM and LG Chem will also explore the localization of a CAM production facility in North America by the end of 2025.
“This agreement builds on GM’s commitment to create a strong, sustainable battery raw material supply chain to support our fast-growing EV production needs,” says Morrison. “LG Chem has demonstrated technical expertise, high-quality, and mass production capabilities of cathode active materials over the last decade. At the same time, this agreement demonstrates GM’s commitment to strong supplier relationships, and compliments our many other recent EV supply chain announcements.”
The materials that LG Chem plans to supply are nickel, cobalt, manganese, and aluminum (NCMA) cathode material. NCMA cathode material is a product that combines LG Chem’s best material technology and is characterized by its excellent stability and output. Aluminum was applied to the material technology to strengthen stability while decreasing the amount of cobalt used in GM’s previous generation of batteries by 70 percent.
