Daily Management Review

Chip Supplies To Auto Industry To Be More Stable In 2022, Says GM CFO


Chip Supplies To Auto Industry To Be More Stable In 2022, Says GM CFO
Paul Jacobson, Chief Financial Officer at General Motors Co, reiterated the 2021 profit outlook of the company. He also stated that the company expects a more stable year in 2022 for a much steadier supply of auto semiconductors.
Jacobson stated during a conference with investors that GM still expects pre-tax profits in 2021 to be in the range of $11.5 billion to 13.5 billion that the company had forecasted last month. He also said that it is possible to attain 10 per cent pre-tax margins for GM's North American operations in 2022, even though the company is committed to continually increasing its investment in electric cars.
Jacobson stated that GM does not intend to reduce its investment plans because of the uncertainty caused by the on-going pandemic and wide ranging disruptions in global supply chains.
Jacobson warned that GM's wholesale deliveries for the third quarter could fall by 200,000 vehicles due to chip shortages and because GM moved some of its production into the second quarter while it was busy managing the semiconductor supplies to the company.
The company also said that it is hopeful of getting reimbursement from LG Chem, its electric vehicle battery partner, Jacobson stated, in relation to the costs to the company for the recalls of Chevrolet Bolt EVs because of battery fires and the consequent replacement of the defective batteries. 
One of the largest American automakers, GM has allocated $1.8 billion to the recall. Jacobson said that GM and LG were having "high-level conversations" about division of the costs of the recall.
On the other hand, Herbert Diess, Volkswagen's Chief Executive Officer, said that the German auto making giant is open for partnerships with other carmakers in order to develop software.
Volkswagen has combined all of its software development efforts into one single called Cariad. This is in an attempt to compete with Alphabet and Tesla in a field where it has never been active before.
Development of software and operating systems for autonomous driving is expensive. Diess explained to a German weekly that it is important to have as many vehicles as possible with the technology.
Diess said: "We are open for discussions and ready to share our platform."