General Motors Reveals Financial Benefits of its All-Electric Future

General Motors expects to double its annual revenue and expand margins to 12% to 14% by 2030, as it moves ahead with its transformation into a growth company driven by electric vehicles, connected services and new businesses, GM executives told analysts during a day-long presentation to financial analysts at the company’s technical center in Warren, Michigan. 

Mark Reuss, GM president, also told analysts the company has no plans to develop a separate brand to sell electric vehicles even though they are expected to power the company’s near- and long-term growth. 

GM will also stick with its existing dealer network; however, the company plans to put an additional $759 million into building out a charging network to support the development of the EV market through 2025, Reuss said. 

The spending will cover various domains, including home, workplace, and public charging throughout the U.S. and Canada. This investment is designed to significantly increase access to reliable, public charging with the superior customer experience of Ultium Charge 360, GM officials said. 

“We’re going to lean into this transformation” said Paul Jacobson, GM’s chief financial officer, who said the company is waiting for more stability before the board of directors considers re-instating the dividend, which was dropped when the pandemic hit in 2020. 

GM also expects to maintain its investment-grade credit rating, he said. 

New businesses to help grow top line

Jacobson predicted GM would increase its revenues from $175 billion now to more than $315 billion by 2030 as its Cruise subsidiary starts operations, sales of subscriptions services grow and new businesses such as the company’s new Defense unit and the Bright Drop delivery service add new revenue to the company’s top line. 

“GM is unlocking a secular growth story that is changing the trajectory of our business,” he said. “Simply stated, we are at an inflection point in which we expect revenue to double by 2030 while also expanding our margins.”

GM projects EV revenue to grow from about $10 billion in 2023 to approximately $90 billion annually by 2030 as the company launches several compelling EVs in high volume segments. GM envisions a path where connected vehicles and other new businesses drive more than $80 billion in new, incremental revenue with most of the growth accelerating through the back half of the decade as they scale. 

GM’s annual capital spending, including investments in Ultium joint ventures with LG Energy, are expected to be in the $9 billion to $10 billion range in the medium-term as the company transitions to a majority EV product portfolio. Due to GM’s strong earnings and expanding margins, the company expects to fully fund these investments through internally generated funds. 

The automaker believes its transformation can deliver margins of 12% to 14% by the end of the decade with core auto business margins expanding as EVs scale, battery costs drop and the company ramps up higher margin software and new business platforms. 

Cruise ready to roll in 2023

With Cruise, GM has a market-leading position in autonomous services with the potential to deliver $50 billion in revenue annually by the end of the decade, Cruise CEO Dan Ammann said the AV venture is in the initial phase of commercialization. The pace of commercialization will pick up in 2023 when the Cruise Origin, a self-driving shuttle, goes into service in several markets around the world. 

GM projects annual software and services revenue opportunities in the $20 billion to $25 billion range from a projected 30 million connected vehicles by the end of the decade. OnStar is already the industry’s leading connectivity platform with more than 16 million connected vehicles on the road today, with software and services generating a projected $2 billion in annual revenue. 

BrightDrop, a new GM business that is building a connected and electrified ecosystem of delivery products and services for commercial customers, expects to deliver $5 billion in revenue by mid-decade and potentially $10 billion by the end of the decade when it is planned to approach 20% margins. 

GM also now controls a portfolio of 20 new startup businesses — several already launched, others nearing launch — helping to provide a constant pipeline of innovation

Source: https://www.thedetroitbureau.com/2021/10/general-motors-offers-insight-into-financial-benefits-of-its-all-electric-future/