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The General Motors headquarters in Detroit, Michigan. (File photo) (Reuters)
The General Motors headquarters in Detroit, Michigan. (File photo) (Reuters)

GM expects battery recall cost recovery, sees semiconductor shortage easing

  • GM is in talks with battery supplier LG Chem for the cost of its Bolt electric vehicle battery recall. 

  • The recall has resulted in a $1.8 billion charge.

General Motors Co. shares jumped Friday after the company said it expects to be reimbursed for battery recall costs from its supplier and sees a “more stable year" for chip supply in 2022. 

GM is in talks with battery supplier LG Chem over the costs of its Bolt electric vehicle battery recall, which has resulted in a $1.8 billion charge.

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The company expects to get reimbursement from LG, Jacobson said, although it was unclear if that would be full or partial.

(Also read | GM recalls all Bolt EVs sold since 2019, will cost $1 billion)

The easing of the chip supply crunch, meanwhile, will likely come only after a further deterioration this year that has led to the idling of key truck plants. GM now expects the shortage to cut wholesale volume by about 200,000 cars in North America during the second half of the year, double the units it had expected earlier, Chief Financial Officer Paul Jacobson said Friday during a conference call held by RBC Capital Markets. 

The Detroit-based carmaker said pre-tax margins of 10% in North America will be “quite achievable" in 2022 amid its transition to produce more electric vehicles. In the second quarter, GM reported a 12% Ebit-adjusted margin, which excludes items like tax and interest. In a conference call at the time, Jacobson said a 10% margin in North America is sustainable. 

(Also read | GM to halt production in eight factories in North America due to chip crisis)

Used car prices, which have soared this year amid strong demand and low inventory, will also probably see a little “normalization" next year, Jacobson said. 

Shares of GM rose 2.3% to $49.53 at 11:54 a.m. in New York trading. The stock has advanced about 19% so far in 2021. 

 

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

  • First Published Date : 11 Sep 2021, 09:21 AM IST