General Motors Finds Itself in a Jam

livemint.com:

General Motors is still churning out healthy profit—just not on the electric vehicles or potentially autonomous ones that investors care most about. GM’s third-quarter results on Tuesday came in better than expected. Net income of roughly $3.1 billion was down 7% from a very strong quarter last year, but higher than the $2.5 billion consensus that analysts had penciled in, according to FactSet.

That is despite an estimated $200 million hit to operating profit from the continuing United Auto Workers strike. Another $600 million of costs is expected in the fourth quarter, and counting. After GM reported its results, the union asked workers to down tools at one of the company’s plants in Texas.

Throughout its campaign, the UAW has drawn an explicit link between its demands and the Detroit automakers’ strong financial results. GM reported record profit after the 2020 lockdowns, as American consumers splurged on the limited numbers of vehicles they could find. Wall Street has long assumed that business will normalize—or worse, in a highly cyclical industry—as better product availability and higher car-loan rates force manufacturers to discount while labor costs rise.

There were signs of normalization in GM’s numbers: The mix of vehicles it sold was less lucrative than a year ago, and lower used-vehicle values hit its leasing arm. But these effects were balanced by strong pricing and limited discounting, as well as the benefit of higher output as supply issues receded. GM’s revenue actually grew about 5% year over year to a third-quarter record.

Profit fell because of rising costs, and not just because of the strike. Among the reasons given by GM was its increased output of EVs. This is a point of particular sensitivity to