General Motors is increasing several financial projections for 2024 after exceeding Wall Street’s expectations during its second quarter.
The automaker has raised its adjusted earnings forecast for the year to a range of $13 billion to $15 billion, compared to a previous estimate of $12.5 billion to $14.5 billion. Additionally, GM has adjusted its targets for operating cash flow and earnings per share, though net income expectations attributed to shareholders were slightly reduced by less than 1%, now estimated between $10 billion and $11.4 billion.
In the second quarter, GM reported revenue of $47.9 billion, a rise of over 7% from the previous year and surpassing the $45 billion anticipated by analysts, according to FactSet. Earnings per share were recorded at $3.06, exceeding the expected $2.71 and showing a 60% increase from 2023. Net income rose by 14% to reach $2.9 billion, up from $2.5 billion.
Following these announcements, GM shares surged nearly 5% in pre-market trading on Tuesday, contributing to an overall increase of more than 37% in stock value this year. Additionally, GM declared a cash dividend for the third quarter, further enhancing its stock appeal.
In a letter to shareholders, CEO Mary Barra highlighted the success of the company’s gas-powered trucks and SUVs, revealing plans to launch eight new or redesigned vehicle models in North America. She also mentioned that GM is ramping up production of the electric Chevrolet Equinox, emphasizing a commitment to disciplined volume growth despite earlier remarks indicating that GM would not meet its electric vehicle production target of 1 million units by the end of 2025.
Barra explained that this adjustment was due to a slowdown in the market. Although electric vehicle sales did increase in the last quarter, GM plans to “build to demand.”
Additionally, Barra announced that Cruise, GM’s self-driving unit that retracted its operations following an incident last year, will discontinue its Origin vehicle and focus instead on the next-generation Chevrolet Bolt for testing in Texas and Arizona. GM incurred a $600 million charge related to the halt in production of the Origin at its Detroit facility.
During an analyst call, Barra noted that utilizing the Bolt would address concerns from regulators regarding the unique design of the Origin, which lacked a steering wheel. This change is expected to reduce costs per unit and help GM make better use of resources.
“We remain committed to transforming mobility through autonomous technology, with each mile and simulation bringing us closer to that goal,” Barra stated.
Furthermore, GM is working on restructuring its joint venture in China with SAIC Motor due to ongoing losses, which included a $104 million loss reported for the second quarter. In June, production at SAIC-GM was reduced by 70%, resulting in deliveries of only 26,000 vehicles, a 50% drop from the previous year.