Analyst Note| David Whiston |
GM’s Nov. 17 electric vehicle day we feel was meant to remind investors that GM is well on its way to an all-electric future. The company also raised 2022 guidance and its 2025 total company revenue target of about $195 billion given in October 2021 is now over $225 billion. This increase is from expected EV revenue then of over $50 billion, up from $30 billion last October. We are now modeling about $201 billion of 2025 revenue excluding GM Financial up from $159 billion, which leads to a fair value estimate increase to $75 from $70. Offsetting some of the higher revenue is GM raised its annual capital expenditure spending for 2023-2025 to $11 billion to $13 billion from $9 billion to $11 billion. The company is accelerating EV and autonomous vehicle investments and previewed many EV offerings through 2024 in North America and China while maintaining a 2025 global EV production target of 2 million units split about evenly between North America and China. 2022 guidance is now for adjusted EPS of $6.75-$7.25, up from $6.50-$7.50 and adjusted auto free cash flow of $10 billion to $11 billion, up from $7 billion to $9 billion, we suspect on better working capital and continued strong pricing.