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General Motors' Profit Hammered in 2nd Quarter, Optimistic About Annual Sales Forecast

The Detroit automaker posted a profit of $1.67 billion (1.64 billion euros) over the April through June period compared with 2.79 billion (2.75 billion euros) over the same period last year.
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Photo: GM
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A portion of the fall in profits can be attributed to the company's inability to deliver 90,000-plus vehicles sitting incomplete by just a part or two. The parts shortages primarily involve semiconductors that have been in short supply since 2020.

GM did hold firm on its full-year net income guidance of $9.6 billion ( 9.35 billion euros) to $11.2 billion (10.97 billion euros) believing that global production and deliveries will increase sharply in the second half of the year. The company also gains confidence knowing that demand remains strong and vehicles are often sold quickly once they reach dealer lots.

Because of the limited supply coupled with strong demand, the basic laws of economics kick in and prices increase. Vehicle prices are up an average of $6,600 (6513.00 euros) from a year ago, easing some of the pain of current industry challenges, according to yahoo.com.

CEO Mary Barra explained in a letter to shareholders that the company is aware of looming economic headwinds including the expectation of further interest rate hikes by the Federal Reserve. Another hike in rates will further whittle away at the number of would-be car buyers.

While negotiating the current automotive manufacturing climate, GM has eyes firmly on the future with the next wave of its electric vehicle roll-out.

Just yesterday, GM announced the joint partnership it formed with LG Energy Solution will receive a conditional $2.8 billion ( 2.765 billion euros) loan from the U.S. Energy Department to help fund the construction of three facilities for the production of its Ultium battery. Their battery technology will be a key part of reaching the goal of producing one million electric cars annually by the end of 2025.

In addition, earlier his month GM announced a strategic partnership with EVGO, the largest builder of EV fast-charging stations, with plans to install charging stations at Pilot and Flying J Travel Centers throughout the U.S. and Canada.
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