Perhaps it was a lesson learned from being caught short when semiconductor chips became scarce, crippling vehicle production. General Motors
GM
Co. announced deals Tuesday aimed at ensuring it will have all the raw materials it needs to produce batteries to support its growing portfolio of electric vehicles with the intention of selling EVs exclusively by 2035.
In a letter to shareholders sent in conjunction with the automakers second quarter financial results, GM chair and CEO Mary Barra wrote, “GM has also done something unique in the industry to help secure our future EV production. We have binding agreements securing all battery raw material to support our plan for 1 million units of annual EV capacity in North America in 2025. These are commitments with strategic partners for key materials like lithium, cobalt and nickel. This includes new multi-year agreements announced today by Livent Corp., for lithium, and LG Chem, for cathode material.”
The company said it also has partnering and component sourcing agreements with Posco Chemical Co., Glencore and Controlled Thermal Resources.
GM previously said it intends to increase its investments in electric and autonomous vehicles to $35 billion through 2025, a 75% increase from the commitment announced prior to the onset of the Covid-19 pandemic.
News of the additional battery component sourcing deals comes a day after the U.S. Department of Energy’s Loan Programs Office announced a “conditional commitment” to grant a $2.5 billion loan to Ultium Cells LLC, the joint venture between GM and LG Chemicals, to help finance the construction of new lithium-ion (Li-ion) battery cell manufacturing facilities in Ohio, Tennessee, and Michigan.
The conditional commitment to the loan comes through the Advanced Technology Vehicles Manufacturing program which supports U.S. production of vehicles, components and other materials that improve fuel economy.
“While this conditional commitment demonstrates the Department’s intent to finance the project, several steps remain, and certain conditions must be satisfied before the Department issues a final loan,” wrote Jigar Shah, Director of the Loan Programs Office in a DOE blog post on Monday.
The positive news regarding GM’s march into its electric future came as the automaker released negative numbers on its second quarter financial performance.
For the three months ending June 30, net income came in at $1.7 billion, down from $2.8 billion during Q2 in 2021. That, despite revenues of $35.7 billion during the quarter, an increase of $1.6 billion over Q2 2021 revenues of $34.1 billion.
In her letter to shareholders, Barra blamed the decline in the bottom line to “impacts of the supply chain disruptions we experienced, especially in June.”
Barra said demand for GM vehicles remains high, but there just aren’t very many cars or trucks from which to choose.
The company said inventory on GM dealer lots is only a 10-15 day supply compared with an optimal inventory of about 60 days.
However, Barra said the company is sticking with positive projections for now, writing, “Our outlook for the second half is strong, and we are reaffirming our full-year earnings guidance that includes EBIT-adjusted of between $13 billion and $15 billion. This confidence comes from our expectation that GM global production and wholesale deliveries will be up sharply in the second half.”
This story will be updated to include remarks from Mary Barra during a conference call with industry financial analysts Tuesday morning.
