General Motors opts to maintain EV prices as competition with Ford, Tesla revs up
Yahoo Finance automotive correspondent Pras Subramanian joins Yahoo Finance Live to break down the latest from GM's earnings.
Video Transcript
[AUDIO LOGO]
DAVE BRIGGS: Let's get you up to speed now on the auto sector. Wall Street's concerns over weakening demand continued to grow after Tesla and then Ford announced EV price cuts. Meanwhile, GM CFO Paul Jacobson says it's staying out of the industry's EV price war. Listen.
PAUL JACOBSON: We've seen incredible demand for our EVs. And we're launching even more this year. And we've seen consumers really run towards them at the price levels that they are. So we feel quite confident with our strategy.
Look, competition in this business is no surprise. We've been dealing with it for more than 100 years. And one of the things that I think we've said over time, this isn't an easy business to get into but one that we're ready for.
DAVE BRIGGS: Translation, we're good. Our very own Pras Subramanian is here with more on this. So is there a pricing problem in the sector, or is it pretty isolated at this point?
PRAS SUBRAMANIAN: I think you could say it's company by company in terms of what they need to kind of get done to meet their goals, right? And speaking of GM, a huge quarter for them, strong results, strong guidance. I have some key takeaways here, like you mentioned.
So they blew the doors off 2022, record Q4 revenue. And then 2023 EBIT guidance, really strong there. Citi called it solid. Morgan Stanley said it was-- sets a high bar for the year. So a really strong performance financially there--
And like you said from what-- from Paul Jacobson, pricing not a problem. He said that we're-- they're not-- they don't need to compete on that level. Mary Barra really hit that hard, GMC on the conference call, saying that we've got the cheap Equinox coming out, the cheap EV Blazer, the Silverado work truck all coming out this year.
They're all going to be below that $55,000 EV tax credit price cap. So they're pretty happy with where they're at with these cheaper EVs. So they don't see the need to cut prices like Ford and Tesla are doing right now.
And then finally, demand is strong there. They're talking about how they're the number one large truck maker, large SUVs, midsize pickups, full-size pickups, number one in the-- over Ford. And then also the Chevy Bolt EV had its record-selling year this year. They're going to increase output next year. So they're confident that they have the right game plan in place, right portfolio in place to do that.
DAVE BRIGGS: And they've even invested $650 million in Lithium Americas, which popped 13% today, an interesting sidebar to their report, Seana.
SEANA SMITH: Yeah, Pras, it was interesting what you just said when you compared all three, when you compare Tesla to GM to Ford, what we're seeing in terms of pricing. Obviously, we got the news last week about Ford cutting the price of its Mustang Mach-E. Why were then they forced to cut prices? And does this signal that maybe we could see broader price cuts at Ford?
PRAS SUBRAMANIAN: So that Mustang Mach-E is taking-- really battling head-to-head with Tesla's Model Y. And after Elon Musk cut the price of that truck-- or that SUV by 20% at certain levels, Ford had to respond.
It seems that some of those trim levels might be selling at a loss for Ford, but they said that we're not going to cede ground in this battle. So they see it as a protracted, sort of winner-take-all, who can kind of live out these sort of margin compression type of battle. But I think Ford understands that this is just the beginning of this. And they're ready to do that.
But also the F-150 Lightning, they're not cutting that price. They've raised the prices. They can't sell enough. So it's only for specific, I guess, product models and product segments.
DAVE BRIGGS: It's one car!
PRAS SUBRAMANIAN: Yeah.
DAVE BRIGGS: Yeah, I think there was too much made of the cut at Ford. There was one automobile that they-- that they cut prices on and only because, to your point, it's a direct competitor with that Tesla model. I think a little bit too much made.
SEANA SMITH: Yeah, but it's also important to point out that GM did cut prices, what, six months ago, back last summer--
DAVE BRIGGS: In June.
SEANA SMITH: --in terms of some of their EVs. So there certainly has been a pricing war brewing now--
PRAS SUBRAMANIAN: Huge, huge price cut for Bolt.
SEANA SMITH: --for some time.
PRAS SUBRAMANIAN: Yeah, yeah.
SEANA SMITH: Yeah.
PRAS SUBRAMANIAN: And it ginned up sales.
SEANA SMITH: And they did, yeah. It certainly seems to be working out, at least in their favor for now.
