General Motors has updated its financial outlook for 2024 following an impressive performance that exceeded Wall Street’s predictions for the second quarter.
The automaker has increased its anticipated adjusted earnings for the year to between $13 billion and $15 billion, a rise from the previous estimate of $12.5 billion to $14.5 billion. It also adjusted its targets for operating cash flow and earnings per share while slightly reducing the forecast for net income attributable to shareholders to between $10 billion and $11.4 billion.
In the second quarter, GM reported revenues of $47.9 billion, reflecting a year-over-year increase of more than 7% and surpassing Wall Street’s expectations of $45 billion, according to FactSet estimates. Earnings per share reached $3.06, exceeding analysts’ predictions of $2.71 per share and representing a 60% increase from 2023. The automaker’s net income rose 14%, totaling $2.9 billion compared to $2.5 billion a year earlier.
Following the announcement, GM’s stock rose nearly 5% in pre-market trading and has gained over 37% in value this year. The company also declared a cash dividend for the third quarter, further boosting investor confidence.
In a shareholder letter, CEO Mary Barra highlighted the success of GM’s gas-powered trucks and SUVs, mentioning that the company is set to launch eight new or redesigned vehicle models in North America. She emphasized the ongoing production scaling of the electric Chevrolet Equinox, stating their commitment to disciplined volume growth alongside excitement for their electric vehicle (EV) initiatives.
However, Barra acknowledged that GM is unlikely to meet its goal of producing 1 million electric vehicles in North America by the end of 2025 due to a market slowdown. The company plans to remain adaptable by “building to demand,” although its EV sales did see growth last quarter.
Barra also revealed plans for Cruise, GM’s self-driving division, which had to scale back operations after an incident last October. The company will discontinue its Origin vehicle in favor of the next-generation Chevrolet Bolt for testing in Texas and Arizona. GM incurred a $600 million charge linked to stopping production of the Origin in Detroit.
During a call with analysts, Barra noted that using the Bolt would address regulators’ concerns regarding the Origin’s unconventional design, particularly its absence of a steering wheel. This shift aims to reduce per unit costs and optimize GM’s resources.
“Our vision to transform mobility using autonomous technology is unchanged, and every mile traveled and every simulation brings us closer because Cruise is an AI-first company,” Barra stated.
Additionally, GM is looking to restructure its joint venture in China with SAIC Motor as it grapples with losses, recording a $104 million loss in the second quarter. In June, the SAIC-GM partnership reduced production by 70%, delivering 26,000 vehicles, which is 50% lower than the previous year, according to reports.