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GM's profits hurt due to unsold electric vehicles and strike

GM's profits hurt due to unsold electric vehicles and strike

General Motors said on Tuesday that its profit in the final three months of 2023 was hit by losses from unsold electric vehicles and the cost of a 40-day strike at some of its US plants.

The automaker, which is counting on rapid growth in sales of battery-powered models, earned $2.1 billion in the fourth quarter, up from $2.0 billion a year earlier. GM's revenue rose nearly 10 percent to $171.8 billion.

“The pace of EV development has slowed, which has created some uncertainty,” Paul Jacobson, the company's chief financial officer, said in a conference call.

GM took a $1.6 billion charge related to unsold electric vehicles. The United Automobile Workers union strike cost the company $1.1 billion, and GM spent $800 million on a settlement with battery supplier LG Energy Solution related to a mass recall of the electric Chevrolet Bolt.

Many carmakers, including Tesla and Ford Motor, have lowered prices for battery-powered cars in response to weaker-than-expected demand. GM has also struggled to produce such vehicles in large numbers due to problems manufacturing the new battery technology, which the company calls Ultium.

GM said it earned $10.1 billion for the full year, up nearly 9 percent from 2022.

The automaker said it expects profit of $9.8 billion to $11.2 billion in 2024. That range shows whether GM could enjoy a big jump in profits or suffer a smaller decline, highlighting growing uncertainty about demand for cars and the overall health of the auto industry. The company expects to spend about $1 billion less on its cruise autonomous driving division than last year, which has suspended testing and commercial service of its fleet across the country in response to growing safety concerns.

GM has also scaled back its electric vehicle ambitions. At one time, GM had hoped to produce 400,000 electric vehicles by mid-2024, but consumers haven't moved toward battery-powered cars as quickly as auto executives had hoped.

The company dropped that production target last year and delayed the introduction of some new electric models it was developing. Last month, it told dealers to stop selling the electric version of the Chevy Blazer until GM engineers could fix a software problem that could have caused some features of the sport utility vehicle to stop working.

In the fourth quarter, GM sold more than 19,000 electric vehicles, but most were Bolt, which are no longer produced and use older battery technology. Only about a third of the electric vehicles sold used new battery packs produced at a factory in Ohio that GM owns in a joint venture with LG.

Mr. Jacobson said GM had “a lot of demand” for its electric vehicles, but was cautious about building more vehicles than customers could handle. “We feel good about where we are,” he said.

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