General Motors (GM) is gearing up to report for the first quarter Wednesday, after the global chip shortage forced GM to extend factory downtime as it prepares to unleash a flood of electric vehicles. What will GM earnings look like?
Along with GM earnings, Wall Street will look for any impact of the chip shortage on the automaker’s production. In February, GM said it would be “premature” to discuss volume impact, but Ford Motor (F) warned on April 29 that it expects to produce 1.1 million fewer vehicles this year, due to the semiconductor shortage.
Investors will also wait to see if GM’s highly awaited Hummer EV, its first all-electric truck, remains on track for this fall, despite the chip crunch.
Estimates: Early Wednesday, Wall Street expects GM earnings to jump 65% to $1.02 per share as revenue rises nearly 2% to $33.26 billion, according to Zacks Investment Research. That would mark the strongest sales growth in at least eight quarters.
Last quarter, General Motors grew vehicle sales 4% year over year in the U.S. on the back of SUV and truck demand, and 69% in China after a big pandemic hit to sales in the year-ago quarter.
Results: Check back later.
Outlook: In February, GM warned of a short-term hit to production, with EBIT down by $1.5 billion to $2 billion this year. On April 1, GM said that it expects to recover lost vehicle production in the second half of the year.
Since then, an intensifying chip drought forced GM to extend factory downtimes, including plants in Tennessee, Michigan, Kansas and Canada. Ford made similar moves.
Shares dipped 0.5% to 56.94 in Monday’s stock market trading, reversing lower from modest morning gains.
In March, GM stock offered a 54.75 entry from a pullback to the 10-week line, according to MarketSmith chart analysis.
General Motors stock is now trying to find support at its 50-day and 10-week lines once again. Shares are several weeks into a new possible shallow consolidation, but there’s no new buy point yet.
If GM rebounds solidly from its 10-week line on earnings, investors could use that as an early entry.
Ford stock eased 0.3%. Volkswagen rose 0.6%. Tesla (TSLA) fell 3.6% amid a report that the key Berlin plant won’t start production until 2022. Shares are once again testing the 50-day line. On Friday, Tesla stock rebounded above that important level after initially tumbling following earnings last week.
On Thursday, Volkswagen is likely to see earnings vault 578% to 61 cents as sales grow almost 10% to $66.64 billion.
On Monday, Volkswagen (VWAGY) warned that the chip shortage will curb output of vehicles overall, while sparing EVs. The German auto giant, along with GM and Ford, is pivoting to an emissionless future.
Legacy automakers continue to play catch-up with Tesla (TSLA). Meanwhile, hot EV startups like Nio (NIO) reported blistering sales in April vs. a year earlier, but deliveries were generally little changed vs. March.
Now GM CEO Mary Barra calls all-electric vehicles “a supercycle opportunity,” with plans to only sell EVs by 2035.
On the back of a $27 billion EV and AV investment, GM’s all-electric Hummer truck is supposed to arrive in late 2021. A luxury electric Cadillac SUV follows by mid-2022, and an electric Hummer SUV by early 2023.
An entirely new EV platform called Ultium underpins those vehicles, as well as GM’s goal to sell one million EVs annually by 2025.
On Monday, rival Ford also sharpened its EV and EV battery plans. The automaker announced it led a $130 million funding round in Solid Power. The Colorado-based startup makes solid-state batteries, which it touts as lighter and more efficient.
Last week, Ford said it would invest $185 million in a new battery lab, as a step toward making its own batteries for electric vehicles. By 2025, Ford plans to invest $22 billion in EVs, including past investments.
VW is a big investors in solid-state startup QuantumScape (QS). Volkswagen also is ramping up in-house battery production.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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