GM’s profits jumped in 2021 despite global chip shortage
After a year of production disruptions due to a global shortage of computer chips, General Motors said on Tuesday that its factories will be operating at a normal pace again by the second half of the year.
The automaker said chip supply was improving and it expected car and truck production to follow.
“We expect to see production improve,” GM chief executive Mary T. Barra said on a conference call. “We said the first quarter improvements would continue throughout the year. Certainly, by the second half of this year, we will be able to get closer to full capacity.
Along with the optimistic production outlook, GM announced a profit of $10 billion for 2021, a 55% increase from 2020 and its highest total ever. Its previous peak year was 2015, when the company earned $9.7 billion.
The chip shortage forced GM and other automakers to shutter factories for weeks last year, limiting sales. The company sold 2.9 million vehicles in 2021, compared to 3.4 million in 2020.
Despite the drop in sales, the company’s revenue in 2021 fell to $127 billion from $122.5 billion. GM used the chips it had to produce the most popular and expensive models, especially large pickup trucks and sport utility vehicles, the company said.
A return to near-full production by GM and other automakers could help revive the U.S. economy and create jobs in manufacturing, sales and related jobs.
In a statement, GM said it expected to make $9.4 billion to $10.8 billion in profit this year.
Barra expressed optimism about GM’s efforts to increase production of electric vehicles, one of the fastest growing segments in the industry. The company has taken 59,000 reservations for its electric GMC Hummer and 110,000 reservations for an electric version of the Chevrolet Silverado pickup truck.
While the Hummer has just entered production, GM won’t start making the Silverado until spring 2023. By comparison, Ford Motor is expected to start selling an F-150 electric pickup truck in the coming months, and said so. more than 200,000 reservations for the vehicle.
GM aims to produce one million electric vehicles a year by 2025 and expects sales to increase rapidly. “One million units is not enough for the strong inflection in demand for General Motors electric vehicles that we expect,” Ms. Barra said.
Last week, Tesla announced it had earned $5.5 billion in 2021 as sales of its electric cars nearly doubled. Ford will release its 2021 results on Thursday.