[Tom E-Tron]

After Selling 1 Hummer Ev in Q4 2021, GM is planning to increase production. What exactly does that mean? Going to 2 for Q1?

In all seriousness a few tidbits from the article,

• 95% of reservations are converting to orders
• Even at low production Hummer is profitable (thats a lie, gm cooking books)

GM looks to increase electric Hummer production as reservations top 65,000, exceeding expectations

The Hummer EV pickup is currently on sale, but new orders would not likely be fulfilled until 2024 due to the number of reservations.

www.cnbc.com

 

[theflew]

After Selling 1 Hummer Ev in Q4 2021, GM is planning to increase production. What exactly does that mean? Going to 2 for Q1?

In all seriousness a few tidbits from the article,

• 95% of reservations are converting to orders
• Even at low production Hummer is profitable (thats a lie, gm cooking books)

GM looks to increase electric Hummer production as reservations top 65,000, exceeding expectations

The Hummer EV pickup is currently on sale, but new orders would not likely be fulfilled until 2024 due to the number of reservations.

www.cnbc.com

They probably aren't cooking the books. They probably are spread the cost of the Hummer production to the Silverado and the Lyriq. I assume the front motor on the Hummer is the same they are using on the front and back of the Silverado and the rear of the Lyriq. A lot of the 4 wheel steering hardware and software for the Hummer will be used by the Silverado and I assume Sierra EV as well.

When people talk about development cost and how you allocate it to each vehicle you have to understand how they (GM) allocated the development cost.

 

[Tom E-Tron]

They probably aren't cooking the books. They probably are spread the cost of the Hummer production to the Silverado and the Lyriq. I assume the front motor on the Hummer is the same they are using on the front and back of the Silverado and the rear of the Lyriq. A lot of the 4 wheel steering hardware and software for the Hummer will be used by the Silverado and I assume Sierra EV as well.

When people talk about development cost and how you allocate it to each vehicle you have to understand how they (GM) allocated the development cost.

The Hummer producing 30 a month is not making money, just labor and the factory recurring costs are higher than the gross revenue 30 Hummers generates. That's before we get to parts, and development cost is a whole different issue. Right now at a 30 hummer per month rate Hummer are costing more than $1M ea to build, just factoring hard cost. 450 employees wages, utilities on the plant, remember batteries are being hand built which likely cost over $100K ea. Hummer might break even at 1000 a month, if Silverado and Sierra are paying their fair share of the factory recurring cost to lift that burden off the Hummer, but right now Hummer is carrying the torch, and it's heavy. Remember also GM's revenue off each Hummer sale is about $20K less than the price by the time they pay the dealer commission, shipping (3 per semi) , sending engineers to prep each for delivery. Hummer is likely losing right now $20M or so a month. Heck the power bill at that plant is likely 50-100K per day...

 

[theflew]

The Hummer producing 30 a month is not making money, just labor and the factory recurring costs are higher than the gross revenue 30 Hummers generates. That's before we get to parts, and development cost is a whole different issue. Right now at a 30 hummer per month rate Hummer are costing more than $1M ea to build, just factoring hard cost. 450 employees wages, utilities on the plant, remember batteries are being hand built which likely cost over $100K ea. Hummer might break even at 1000 a month, if Silverado and Sierra are paying their fair share of the factory recurring cost to lift that burden off the Hummer, but right now Hummer is carrying the torch, and it's heavy. Remember also GM's revenue off each Hummer sale is about $20K less than the price by the time they pay the dealer commission, shipping (3 per semi) , sending engineers to prep each for delivery. Hummer is likely losing right now $20M or so a month. Heck the power bill at that plant is likely 50-100K per day...

You hurt my head. It's like you didn't read anything I wrote. Yours trying to attribute all the cost of factory zero to the Hummer. I guarantee that isn't what GM did from a costing standpoint. They didn't put in almost a billion dollar paint shop to paint white Hummers.

I'm done. Good luck with your future monologues.

 

[Tom E-Tron]

You hurt my head. It's like you didn't read anything I wrote. Yours trying to attribute all the cost of factory zero to the Hummer. I guarantee that isn't what GM did from a costing standpoint. They didn't put in almost a billion dollar paint shop to paint white Hummers.

I'm done. Good luck with your future monologues.

You do not seem to understand business accounting... So when GM is going through development of a vehicle that cost goes to R & D, And the plant building cost goes to CapEX, once you announce production has started, the cost of the plant operation shifts from CapEX to Cost of Goods Sold. GM announced Hummer Production started 30 Sep 2021, so that means since then all the cost is accounted as cost of goods sold related to the Hummer, and Hummer systems. Now, some of the plant cost in the areas still under development for Silverado or other vehicles can still be applied to CapEX, but not the Hummer production areas by GAAP rules. That means every time they fire up the paint shop to run a batch of Hummers (likely once a week) all that operating cost is accounted as cost of goods sold, and applied to the revenue from those vehicles, and every time that paint shop fires up Cha Ching... that is a lot of natural gas, and electricity. Needless to say you need to run a lot of Hummers though the paint shop just to justify that start up cost, 100's or more to justify the start up cost. This is why automakers lose so much money when production of a vehicle is ramping... Its obscene how much it costs at the start of production. Point is, Hummer will not be profitable until production is over 1000 a month on a cost of good basis, and then it has to start paying back the amortized development cost, I doubt the Hummer program will ever be profitable on a program level unless they sell 500K or more them which I do not see.. This is why Adam Jonas said GM investments in EV are risky, there is no clear path to profit for shareholders, and if anything goes wrong (ala Bolt) this is a big loser for investors. Hence GM stock giving away 50% of its value in the last 2 1/2 months.

 

[HummerNowPlz]

95% of reservations converted to orders.. okay so 95% of 20 orders is 19. Cool. So out of their first 20 they have a high conversion rate.. what kind of stupidity is this. Let's see what that rate looks like over 5,000 units.. my guess.. less than 70%.

 

[Tom E-Tron]

95% of reservations converted to orders.. okay so 95% of 20 orders is 19. Cool. So out of their first 20 they have a high conversion rate.. what kind of stupidity is this. Let's see what that rate looks like over 5,000 units.. my guess.. less than 70%.

That was my point, high close rate on the first few orders is not usable data. I am waiting for Friday when GM announces Q1 sales, I hear will be a disappointment .

 

[HummerNowPlz]

That was my point, high close rate on the first few orders is not usable data. I am waiting for Friday when GM announces Q1 sales, I hear will be a disappointment .

To be fair.. this is the same company whose CEO said they were the domestic leader in EV production and sales with a straight face. Take it all with a grain of salt.

 

[Tom E-Tron]

To be fair.. this is the same company whose CEO said they were the domestic leader in EV production and sales with a straight face. Take it all with a grain of salt.

Haha, ya the leader, lets see if they can break 100 EV's in the USA in 2022 Q1? GM needs to stop talking about overtaking Tesla, and focus the manufactures that are directly ahead of them like Polestar, and Jaguar. Hyundai/Kia, Ford, Tesla and VW are long gone in that battle...

 

[azbill]

Tom, just wondering, what are your calculations for Rivian? They are obviously not profitable or even close to it, and their stock is not doing that well either.

 

[Tom E-Tron]

Tom, just wondering, what are your calculations for Rivian? They are obviously not profitable or even close to it, and their stock is not doing that well either.

Rivian stock up 17% today and 40% in the last couple weeks, not bad... Rivian is losing a crapload of money on each R1T right now but they have much higher production than GM, Rivian is near 1800 for Q1, which is about 20X GM's Q1 EV sales. GM needs to restart Bolt, to try to catch up.

One key point to remember Rivian gets capital for free, basically, like Tesla, Rivian rattles their zipper and investors come running to put money in, GM has to fight and scratch with ICE vehicles to get capital.

 

[azbill]

GM needs to restart Bolt, to try to catch up.

Hopefully soon. It will be interesting to see how many battery replacements were made in Q1 2022. There were 8000 replaced in Q4 of 2021. That has been the reason for the lack of new production.

With gas prices up, GM could likely sell a lot of Bolts right now, since they are the least expensive EV option on the market, with reasonable range.

 

[Tom E-Tron]

Hopefully soon. It will be interesting to see how many battery replacements were made in Q1 2022. There were 8000 replaced in Q4 of 2021. That has been the reason for the lack of new production.

With gas prices up, GM could likely sell a lot of Bolts right now, since they are the least expensive EV option on the market, with reasonable range.

For sure, GM sells Bolts at a loss, there is always demand for cars sold for less then they cost to make.

 

[seanrarey]

95% of reservations converted to orders.. okay so 95% of 20 orders is 19. Cool. So out of their first 20 they have a high conversion rate.. what kind of stupidity is this. Let's see what that rate looks like over 5,000 units.. my guess.. less than 70%.

Well... Those of us waiting can only hope... I'll take a 30% bump up in the line due to attrition 😎

 

[Tom E-Tron]

Well... Those of us waiting can only hope... I'll take a 30% bump up in the line due to attrition 😎

I doubt many will bail on 1st editions

 

[zer0t]

95% of reservations converted to orders.. okay so 95% of 20 orders is 19. Cool. So out of their first 20 they have a high conversion rate.. what kind of stupidity is this. Let's see what that rate looks like over 5,000 units.. my guess.. less than 70%.

As you point out this early data is statistically insignificant. We need a much larger sampling for a reasonable discussion.

 

[Coreytime]

I doubt many will bail on 1st editions

Hey tom. Can you message me? Thanks.

 

[theflew]

You do not seem to understand business accounting... So when GM is going through development of a vehicle that cost goes to R & D, And the plant building cost goes to CapEX, once you announce production has started, the cost of the plant operation shifts from CapEX to Cost of Goods Sold. GM announced Hummer Production started 30 Sep 2021, so that means since then all the cost is accounted as cost of goods sold related to the Hummer, and Hummer systems. Now, some of the plant cost in the areas still under development for Silverado or other vehicles can still be applied to CapEX, but not the Hummer production areas by GAAP rules. That means every time they fire up the paint shop to run a batch of Hummers (likely once a week) all that operating cost is accounted as cost of goods sold, and applied to the revenue from those vehicles, and every time that paint shop fires up Cha Ching... that is a lot of natural gas, and electricity.

I understand business accounting very well and I can guarantee there is no balance sheet entru that says Hummer (2,000,000,000).

How they internally allocate cost/vehicle and the actual credits and debits on a balance sheet are very different.

 

[wbrownie]

99 delivered in Q1

 

[travwill]

99 delivered in Q1

Wow, averages out to less than 1 per day. Sure hope they ramp up finally soon in Q2.