GM CEO: Chip shortage expected to ‘last until 2023’
At this year's Milken Institute's Global Conference, its 25th annual gathering, the overarching theme was “Celebrating the Power of Connection.”
America's largest domestic automaker by volume, General Motors (GM), would like to "connect" more with its customers as well, however vehicle supply has been hampering those efforts.
In a wide-ranging conversation with Yahoo Finance Editor-in-Chief Andy Serwer from the conference, GM CEO Mary Barra emphasized the impact of the global chip shortage on supply but also touched on electric trucks and the outlook for EV investment.
"We are still seeing some constraints in products," Barra says. "I think people are going to continue to see there's not a huge availability of vehicles, and that's leading to stronger pricing."
A big reason why supply is in such short demand is the ongoing global chip shortage, that has seen chip supply wax and wane as chipmakers based in Asian countries have been dealing with ongoing waves COVID outbreaks. "[The chip shortage] still is having an impact ... I think it will last into 2023," Barra says.
That being said, last week during GM's post-earnings analyst call Barra mentioned the global chip shortage that hit production capacity in 2021 was easing somewhat. Overall GM said it expects auto production to improve and rise 25%-30% compared to last year, despite the lingering concerns Barra mentioned lasting through 2023.
GM has a lot riding on the coming years, especially when it comes to electric vehicles (EV). GM plans to spend $35 billion to develop electric vehicles, convert and build new factories, and invest in its Ultium battery platform. "We knew we needed a dedicated architecture for EVs, one that was scalable, and one that would give us the speed to roll out a whole portfolio of electric vehicles," Barra says about the Ultium platform.
From a production standpoint, GM says it can produce 400,000 EVs over the course of 2022 and 2023 and aims to release 30 new EVs by 2025.
"We have the supply arrangements in place to meet our ramp," Barra said when discussing batteries and materials needed for GM's initial EV rollout.
Outlook for the Silverado EV pickup
One of the biggest upcoming releases that will be powered by that Ultium platform is the Silverado EV. GM says it has 140,000 reservations for its highly anticipated all-electric pickup.
"This is a truck with no compromises — from 400 miles of range, faster fast charging, the flexibility of the bed ... It's a truck worth the wait," Barra said.
When it comes out next year, Barra isn't concerned that the Silverado EV will be a niche product. She firmly believes traditional pickup truck buyers will flock to the Silverado.
“Yes, they are going to be buying electric trucks,” Barra says. GM's crosstown rival Ford (F) is also betting on those same buyers as its all-electric F-150 goes on sale in the coming weeks.
It will be an interesting time for investors and auto industry watchers to see if the Silverado EV pickup, and Ford's F-150 Lightning, do in fact connect with those traditional truck buyers.
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Pras Subramanian is a senior autos reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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