General Motors Co. (GM) plans to form a partnership with Germany’s Bayerische Motoren Werke AG (“BMW”) to develop fuel-efficient engine technologies in order to meet stringent fuel economy standards in the future. If the tie-up materializes, GM would be able to develop an extensive line-up of fuel-efficient vehicles at lower R&D costs.
Currently, major automakers in the U.S. are joining hands to develop engines that would help them meet fuel economy standards of 54.5 miles per gallon (mpg) for cars and light-duty trucks by model year 2025. In the near-term, the fuel efficiency standard will be raised to 35.5 mpg for vehicles with model years 2012-2016.
Through the partnership, GM intends to capitalize on its fuel cell and electric vehicle technology that is used in Opel Ampera electric vehicles, while taking advantage of BMW’s gasoline and diesel engines technology. Therefore, the partnership will lower capital expenditures and R&D costs of both the automakers and provide a competitive advantage in technology over other automakers.
Recently, Ford Motor Co.(F) and Toyota Motor Corp.(TM) have signed a memorandum of understanding on the equal product development collaboration in order to develop a gas-electric hybrid engine for pickup trucks and sport utility vehicles.
The development of electric hybrid engines would help both the companies meet stringent fuel economy and pollution standards in the U.S. and elsewhere in the near future.
GM, a Zacks #3 Rank (Hold) stock, posted a profit of $2.54 billion or $1.54 per share in the second quarter of the year, which almost doubled from $1.33 billion or 85 cents per share in the same quarter of 2010. With this, the automaker has beaten the Zacks Consensus Estimate by 33 cents per share.
Revenue in the quarter appreciated 19% to $39.37 billion (including $330 million from GM Financial) on worldwide sales of 2.32 million units versus 2.16 million a year ago thereby, establishing a market share of 12.2%. It also exceeded the Zacks Consensus Estimate of $36.61 billion.
Operating income rose to $2.45 billion from $1.90 billion a year ago. Earnings before interest and tax (EBIT) was $3.0 billion (adjusted) compared with $2.0 billion in the second quarter of 2010.
