GM’s earnings dragged down by Chevy Bolt recall
The twice-issued recall for 2017 to 2019 Chevrolet Bolt electric vehicles cost General Motors $800 million, the company said in its second quarter earnings statement Wednesday. Costs associated with fixing defective Bolt batteries make up the lion's share of GM's $1.3 billion in warranty expenses last quarter.
CEO Mary Barra specified on an investor call that the recall does not impact the Ultium platform, GM's battery cell technology it is developing in a joint venture with South Korea's LG Energy Solutions. [Ultium] is a different battery system and our joint venture plants that manufactures Ultium cells will follow rigorous quality processes," she said.
GM issued the second recall for the Bolt in July, telling customers it planned to replace defective battery modules to address fire risk. Until customers are notified that a replacement battery is ready for them, GM advised to charge their vehicle after each use and to not let the battery level drop below around 70 miles of range.
The numbers were posted part of the automotive giant's second quarter earnings release. It announced revenues of $34.2 billion, up $1.7 billion from the first quarter 2021, and $17.4 billion up from its year-ago quarterly result. GM also reported net income of $2.84 billion in the second quarter, up from a year-ago loss of $758 million, largely driven by the pandemic and associated economic fallout. GM's adjusted income of $4.1 billion, a figure that is inclusive of recall costs.
Income was boosted by used car prices, truck and SUV sales, and strong profits at GM Financial. GM's lending arm posted net sales of $3.4 billion and adjusted income of $1.58 billion for the quarter.
Used vehicle prices drove continued record results at GM Financial," GM CFO Paul Jacobson confirmed on the call.
The automaker is bullish the remaining year. GM raised its adjusted full-year guidance to between $11.5 billion and $13.5 billion, or $5.40 to $6.40 a share. That's up from their previous guidance of $10 billion to $11 billion, or $4.50 to $5.25 a share.
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