GM’s EV strategy slows as strike costs $800M.

General Motors has suffered a ⁢loss of $800 million in‍ operating profits since the ​start of the United Auto Workers (UAW) union ​strike, forcing the automaker to revise its full-year earnings guidance and slow ‍down⁤ its electric vehicle strategy.

During a‌ call with reporters on Oct.‌ 24, GM Chief Financial Officer Paul Jacobson disclosed the financial impact of the strike, ⁢stating that the company anticipates​ losing⁤ approximately​ 0 million ‍per week if the strike continues at its current scale.

Jacobson warned that if the union expands the strike to​ other GM facilities, ⁤the losses‌ could escalate even further.

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A ⁣few⁤ hours after Jacobson’s discussion on GM’s ​financial performance, the UAW extended the strike to include another GM production facility.

The union leadership stated⁢ that “it is clear that GM ⁣can afford ‌a record contract.”

GM’s current offer⁣ includes a 23 percent wage increase over a four-and-a-half year contract, while the UAW is pushing ‍for⁣ a higher percentage, closer⁢ to⁣ 35 percent.

During the same ‍call with ‍reporters, GM CEO Mary Barra emphasized that⁤ the company’s current contract offer is already ​a record and that GM ‌will not overextend itself.

“We will not ⁢agree ​to ‍a contract that isn’t responsible to our employees and our shareholders,” she ⁢asserted.

Despite the $800 million⁣ in ⁢strike-related losses, GM’s third-quarter results, announced ⁢Tuesday, exceeded expectations ⁤and ​performed well in the market.

EV Push ‘Moderating’

GM’s third-quarter net income⁢ decreased by 7.3 percent to $3.06 billion, while overall revenues increased by 5.4 percent to‌ $44.1 billion.

GM’s operating profit for the third quarter was $3.56 billion, a 16.9 percent decline compared ‌to⁣ the same period last year.

During the call, Jacobson acknowledged GM’s ​”strong underlying business fundamentals,” but highlighted the⁢ uncertainty caused‍ by the strike, leading the company to⁢ withdraw its⁤ full-year guidance for 2023.

While reaffirming GM’s commitment ⁣to ‍increased electric ‍vehicle (EV)⁢ production, Jacobson mentioned that⁣ the company is slowing down its electrification strategy to ‍protect pricing, adjust to slower near-term​ demand growth, and ⁢implement engineering changes to enhance profitability.

Once a new contract‌ is​ reached with the‌ union, Jacobson assured‌ that there will be an update on the financial guidance for the year, as well⁣ as a comprehensive assessment of the strike’s costs.

Barra added that⁢ GM ‌will reduce spending ‍on EV products and delay the launch of certain EV models ⁤to ⁢cut ‍costs.

Shortly after GM released its third-quarter results, the UAW announced that an additional 5,000 union​ workers were joining the strike at ‌GM’s largest and most profitable⁢ plant in ‌Arlington, Texas.

This facility is⁢ responsible for manufacturing large SUVs like the Cadillac ⁢Escalade and the Chevrolet Suburban.

The walkout at Arlington Assembly brings the‍ total number of ​UAW members on strike at ‌Detroit’s Big Three automakers to 45,000.

Strike Expands

A day ‍before GM’s third-quarter ​earnings announcement, the UAW expanded​ the⁣ strike to a Stellantis pickup ⁤truck facility in Michigan.

About ⁣6,800‌ UAW members at the Sterling Heights Assembly Plant ‍joined the strike, halting production of⁢ RAM ⁣1500 trucks.

The union criticized Stellantis⁤ for lagging behind Ford ⁤and GM in addressing the demands of⁢ their UAW workforce.

“Currently, Stellantis has the worst proposal on the⁤ table regarding wage progression, temporary worker pay and ‌conversion to full-time, cost-of-living adjustments (COLA), and more,” stated the union leadership.

Recent reports confirm that General⁢ Motors and Stellantis have offered wage increases⁤ matching Ford’s 23 percent​ raise over a four-year contract.

However, UAW President ‌Rory ⁢Gamble ⁤believes the⁤ offers are insufficient, urging ‌the ⁤automakers to ⁤improve their proposals.

“We’ve got cards left to play, and they’ve got money left to ⁤spend,”⁢ Gamble ⁢declared.

When the UAW⁣ initiated‍ the strike in September, they​ demanded a wage increase of over 40 percent over four⁣ years, restoration of the ⁢defined-benefit pension plan,⁢ and a 32-hour work week with 40-hour pay.

Although the UAW has since reduced​ its demands to a⁣ 36 percent wage increase during‌ the⁢ contract’s⁢ duration, the current status of negotiations remains unclear.

The ‍three automakers​ expressed ⁤their desire ​to reach agreements ⁢that balance employee concerns with their respective visions⁢ for the future, which involve a shift to electric models that require less‌ labor and⁣ have fewer parts.

Andrew Moran contributed to this report.

⁤How has the strike impacted‌ General Motors’ financial performance and earnings guidance?

Arge SUVs, including the Chevrolet Tahoe ⁤and ​Cadillac⁣ Escalade. The expansion of the strike to such a crucial facility further exacerbates the financial ‍impact on General Motors.

GM’s decision to revise its full-year earnings guidance is not surprising⁣ given the magnitude of the strike’s ⁣impact. The loss⁢ of $800 million in​ operating profits since the start of the strike is a significant‌ blow to⁤ the company’s bottom ⁣line. The weekly loss⁢ of approximately ⁣$200 million is unsustainable in the long term ​and necessitates⁤ a reassessment of ⁣GM’s ​financial​ expectations⁣ for ⁣the year.

Furthermore, GM’s electric ⁣vehicle (EV) strategy is also being affected by ⁤the strike. ⁤As​ part of its revised approach, ⁤the company⁣ is slowing down its electrification strategy to protect pricing,​ adjust to slower near-term demand⁣ growth, and⁢ implement engineering changes to enhance‌ profitability. While the commitment to increased EV production remains, certain EV​ models will​ be delayed, and ⁢spending​ on​ EV products will be reduced to mitigate costs.

It is clear that the ‍strike ⁤has introduced a‍ level of uncertainty for GM and has disrupted its operations. GM’s CEO, Mary Barra, emphasized the importance⁤ of reaching ​a responsible contract‌ that ‍takes into‌ account the interests of both employees and shareholders. The company cannot overextend itself ‍and must prioritize sustainable and⁤ profitable growth.

Despite the strike-related losses, GM’s third-quarter results were better than expected, with overall revenues increasing by 5.4 percent to $44.1 billion. However, the impact of the ⁢strike is undeniable, as demonstrated by the 16.9 percent decline in operating profit compared to the ⁢same period last‍ year.

Once a new ⁣contract is reached with the UAW, GM will provide an update on its financial guidance for the year and conduct a comprehensive assessment of the ​strike’s costs. This ‌assessment⁤ will likely reveal the full extent of the financial impact on the company.

In conclusion, ​the United Auto Workers union strike ‍has caused significant financial losses for‌ General Motors, with $800 million in operating profits‌ lost since the start of ​the strike. The company has had ‌to revise its earnings⁤ guidance and slow‌ down its electric vehicle ⁢strategy to mitigate the financial ​impact. The strike’s ​expansion to other facilities and the addition of 5,000 union workers ⁤further exacerbate the situation. GM remains committed to a responsible contract and will assess​ the strike’s costs⁢ once it is resolved. However, it is clear that the strike‌ has introduced uncertainty and disrupted GM’s operations, necessitating a reassessment of its financial expectations for the year.