General Motors on Wednesday said the global semiconductor chip shortage could hit the automaker’s profits up to $2 billion from 2021, but the U.S. automaker’s highly profitable big pickups and SUVs won’t be affected by any production cuts.
After reporting a fourth-quarter profit of $2.8 billion and a 2021 profit outlook some observed as conservative, GM shares showed a decline of 4.5% in early trading.
CEO Mary Barra, in a media briefing, said GM “won’t lose any production” of its high-profit full-size pickup trucks and SUVs, although the supply of computer chips “is still a bit fluid.”
However, she added that the automaker is going to be able to meet the production schedules for the year. GM officials have repeatedly stressed they will safeguard the production of its highest profit vehicles.
On Tuesday, the automaker extended production decrease at three North American plants and said it would partially build and later complete assembling vehicles at two other factories because of the chip shortage.
GM expects the shortage to trim $1.5 billion to $2 billion from its 2021 operating profit, or up to about 90 cents per share.
The worldwide chip shortage also will have a short-term impact on production and cash flow, the automaker said.
Asked whether the automaker would invest in a chipmaker to secure supplies, Barra said the automaker is frequently looking at what to integrate into its operations. She added, however, that taking a stake in a semiconductor company was a longer-term solution the automaker would evaluate.
GM said it expects to speed up spending on electric and autonomous vehicles in 2021. Projected capital expenditures this year are $9 billion to $10 billion, including over $7 billion for EVs and AVs.
GM earned $2.8 billion, or $1.93 per share, in the fourth quarter, compared with a loss of $194 million, or 16 cents per share, in the prior year.
The automaker ended the year with $22.3 billion in cash and $40.5 billion in overall liquidity, including untapped credit lines.
