GM firm on EVs despite financial squeeze

DETROIT — The pandemic that has halted vehicle production and hampered consumer demand isn't shaking General Motors' commitment to aggressively invest in an electric and autonomous vehicle future.

Those plans have been "untouched," CFO Dhivya Suryadevara said last week as the automaker posted an 87 percent drop in first-quarter net income.

When its plants restart, GM will prioritize lucrative pickups and large SUVs, but the electric Cruise Origin AV, GMC Hummer pickup and Cadillac Lyriq crossover are being kept on track. Planned unveilings of the Lyriq and Hummer to the public, however, have been postponed.

Meanwhile, some updates to internal combustion engine vehicles are being pushed back. GM will assess freshenings on a vehicle-by-vehicle basis and make revisions to drive more customer value, CEO Mary Barra said.

"We have found areas of savings that ... as you go to a situation like this, things that seem to be incredibly important, when you really challenge them, you find opportunities to save. So we will do that, and we'll be focusing on our key product franchises," Barra said.

Despite the lost revenue from its plant closures, GM still made a $294 million profit in the first quarter globally and earned $2.2 billion in North America.

That compares with losses of $1.8 billion for Fiat Chrysler Automobiles and $2 billion for Ford Motor Co. Each of the Detroit 3 expects its results to worsen in the second quarter, which will include about six weeks of downtime vs. two weeks in the first quarter.

GM's ability to stay in the black during a challenging first quarter earned the company rare plaudits from Wall Street. Deutsche Bank analyst Emmanuel Rosner upgraded his rating of GM's stock to "buy" last week.

"GM's strong 1Q performance and forward-looking outlook, in our view demonstrate the benefit from its proactive actions to transform the business, right size its costs and boost profitability," Rosner said in a report to clients.

After drawing $16 billion from its existing credit lines in March, GM sold $4 billion in bonds last week and was talking with banks to borrow $2 billion more in an effort to maintain an investment-grade credit rating, Bloomberg reported. GM is rated one notch above junk status, and falling below that threshold could rattle shareholders and make it harder for the company to continue making all of its planned investments.

S&P Global Ratings downgraded Ford to junk status in March and placed GM on credit watch. Ford has since postponed its planned launch of an autonomous vehicle commercial service from 2021 to 2022. Ford also canceled a project to jointly develop an EV with Rivian.

But officials with Ford and FCA said their EV plans, which are less extensive than GM's, remain on track. Ford is moving forward on its 2021 Mustang Mach-E electric crossover, which is scheduled to launch this year. FCA said it remains focused on its Ducato battery-electric vehicle in Europe.

GM's commitment to Cruise, its AV subsidiary in California, is unchanged, Barra said. "Cruise is well capitalized, and this is especially important and an advantage for us during these volatile times," she said.

GM in March pledged $20 billion toward EV and AV programs through 2025. It plans to build 20 EVs globally by 2023 and is converting its Detroit-Hamtramck Assembly plant into an EV manufacturing hub with a $3 billion investment. GM also will help develop two EVs for Honda that will be powered by GM's proprietary Ultium batteries.

When it comes to EVs, "our commitment is unwavering," said Barra. "We think it's the right path forward. ... We are looking at every possible angle to continue to accelerate our EVs and our all-EV future."