GM 2Q net income drops 40% as chip shortage slows factories

By TOM KRISHER, AP Auto Writer

DETROIT (AP) — General Motors’ second-quarter net profit fell 40% from a year ago as shortages of computer chips and parts hampered plant production and slumped sales of the company in the United States by more than 15%.

The Detroit automaker said it earned $1.67 billion from April to June, in part because it couldn’t deliver 95,000 vehicles in the quarter because they were built without a part or another. Last year it grossed $2.79 billion.

The company reported adjusted earnings of $1.14 per share, below Wall Street expectations for $1.27. Revenue was $35.76 billion for the quarter, beating estimates of $33.9 billion, according to FactSet.

Like other automakers, GM has been forced to slow down its factories since late 2020, largely due to a global shortage of semiconductors.

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CEO Mary Barra said in a recent interview with the AP that GM will see supply chain challenges next year.

Most of GM’s incomplete vehicles were built in June, the company said, and it expects them to be finished and sold to dealerships before the end of the year.

Also on Tuesday, GM announced it has commitments for all the raw materials needed to meet its goal of building 1 million electric vehicles a year by the end of 2025.

The company also said it has reached an agreement with LG Chem to supply nickel, cobalt, manganese and aluminum to make battery cathodes for electric vehicles. LG Chem will supply more than 950,000 tons of material over the next eight years. The two companies will explore a cathode material production plant in North America by the end of 2025, they said in a statement.

GM also announced a contract with Livent to supply battery-grade lithium hydroxide from a brine operation in South America over a six-year period beginning in 2025. The Philadelphia-based company’s lithium will be also used in cathodes.

Cathodes are the negative terminal of a battery.

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