GM posts record profit in 2021 despite chip shortage

General Motors (GM) has posted record profits for 2021 despite struggling with shortages of computer chips and other parts that have hampered its ability to build and sell all the cars and trucks it wanted.

Quarterly earnings reached nearly $2 billion, excluding special items, beating the consensus forecast of $1.7 billion from analysts polled by Refinitiv. This allowed the company to earn $10.4 billion for the year, excluding special items, up from $7.1 billion a year ago.

The company achieved the results despite being forced to temporarily close several factories throughout the year due to parts shortages across the industry. The number of vehicles sold dropped to 6.3 million worldwide, an 8% drop from 2020 and an 18% decline from pre-pandemic 2019 sales.

That sales slump resulted in GM losing the lead in terms of US sales, a position it held for nearly a century during the Great Depression, wars, multiple recessions, and its own 2009 bankruptcy and federal bailout.

The company said it expects computer chip supplies to improve this year, but still gave a conservative guidance for 2022 sales and earnings similar to this year’s results.

GM is looking to shift its production from traditional internal combustion engine vehicles to electric vehicles by 2035 and has said it plans to build one million EVs by 2025.

CEO Mary Barra told reporters on Tuesday that she thinks demand for EVs will be higher than that, with models that will include a Hummer EV that just went into production, the Cadillac Lyriq, slated for late. this year, and EV versions of its best-selling Silverado and Sierra pickups through 2024.

The company said it has customer reservations for 59,000 of the Hummer EVs and 110,000 of the Silverado EVs.

GM has committed to invest $35 billion in the effort through 2025, including $7 billion for the Michigan plants announced last week.

Barra said that while the company is considering restoring the dividend it suspended in April 2020 during the depths of the pandemic-related recession, it will not yet take that action.

“Our clear priority is to accelerate our EV plan and drive growth, and we want to maintain maximum flexibility to invest as opportunities arise,” she said.

The company also faces the challenge of developing as-yet-unproven technology to enable autonomous vehicles, an expensive conversion.

Making that shift to its electric and autonomous vehicles, as the industry is still shedding the effects of the pandemic and supply chain issues, will be especially challenging, said Karl Brauer, executive analyst at iSeeCars, a car shopping website.

“The company’s profitability in recent years is encouraging, but its continued decline in sales and market share is not,” Brauer said. “Regaining these customers can be difficult as the industry is experiencing major disruption.”

The company’s profitability will mean that 42,500 United Auto Workers members at GM will receive profit-sharing payments of up to $10,250. Members received $9,000 in profit sharing a year ago.

GM shares rose slightly in trading after the results.