(Bloomberg) -- General Motors Co. expects its earnings momentum to grow this year on higher output, shrugging off concerns that margins will be eroded by a price war for electric vehicles. 

The Detroit automaker sees continued demand for its highest profit margin SUVs and trucks and increased vehicle production levels as pandemic-era supply chain problems fade. Mary Barra, GM’s chief executive officer, dismissed concerns about price cuts after Tesla Inc. and Ford Motor Co. reduced EV sticker prices. 

“We’ve seen a very strong customer interest in our products,” Barra told analysts Tuesday on a conference call. “We think right now we’re priced where we need to be.”

In a letter to shareholders, she emphasized that strong earnings growth in 2022 will carry over into this year, noting GM’s forecast for adjusted earnings before interest and taxes is in a range of $10.5 billion to $12.5 billion, or $6 to $7 a share — above analysts’ projections for $5.70 per share. 

Shares of GM rose 8.5% — the steepest climb in nearly four months — to $39.37 as of 10:00 a.m. in New York. 

GM expects its sales volume to grow 5% to 10% this year but didn’t provide a revenue forecast. Chief Financial Officer Paul Jacobson said the rate of revenue growth would likely be below 2022 levels and that higher prices on vehicles would largely be offset by increased incentives spending.

“We do expect over time to increase from the record low levels we have seen” for incentive spending, Jacobson said, noting it’s been used to counter the impact of rising financing charges due to higher interest rates.  

The carmaker reported fourth-quarter adjusted profit of $2.12 a share, beating analysts’ projection for $1.67 a share. That also surpassed a $1.35 per share a year ago but came in below $2.25 per share in the third quarter. Full-year adjusted profit came to $14.5 billion, at the high end of an updated November forecast.

GM’s revenue in the latest quarter totaled $43.1 billion, above analysts’ projection for $40.5 billion, on a 41% increase in US vehicle sales volumes. Electric-vehicle market leader Tesla last week said its revenue in the three months to Dec. 31 came to $24.3 billion. Traditional rival Ford reports its earnings on Thursday. 

EV Price War

Ford cut prices on Monday of its Mustang Mach-E crossover EV just over two weeks after Tesla reduced sticker prices on its all-EV line-up. That has sparked concerns among investors about a negative price spiral for battery-powered cars that make up an ever-larger share of the US market. 

Read more: Ford Slashes Electric Mustang’s Price in Response to Tesla

Barra said GM would monitor the market but doesn’t see the need to cut prices for its EVs or other vehicles. She stressed in her letter to shareholders that the company is accelerating production of its newest electric vehicles, the Hummer EV pickup and SUVs and the Cadillac Lyriq, which are built using cells made by the Ultium battery joint venture with LG Energy Solutions.

The carmaker is on track to produce 400,000 EVs in North America from 2022 through the first half of next year, and will continue to invest in new capacity in addition to its current plans for three battery cell factories. 

“We’re going to need a fourth plant and more plants beyond that,” Barra said on the analyst call. 

No Job Cuts

Jacobson also said the company sees enough strength to avoid layoffs, showcasing GM’s operational strength at a time when other manufacturers, including 3M Co. and Goodyear Tire & Rubber Co., have begun to shed jobs.  

At the same time, GM plans to limit new hires and trim staffing levels through attrition as part of a $2 billion cost-cutting initiative. 

The automaker posted operating income from its home market in North America last quarter of $3.65 billion in the quarter, up from $2.17 billion in the year-earlier period. In China, the world’s largest market, it earned $201 million, down from $244 million a year earlier.

Cruise LLC, GM’s self-driving car unit, lost $524 million in the quarter and cost the automaker $1.9 billion for the year. The business is expanding to Phoenix and Austin, Texas, and rolling out a robotaxi business.

(Updates with CEO comments from third paragraph.)

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