General Motors has announced an increase in its financial targets for 2024 following a strong performance in the second quarter, which surpassed Wall Street expectations.
The Detroit-based automaker has raised its anticipated adjusted earnings for the year to between $13 billion and $15 billion, up from a previous estimate of $12.5 billion to $14.5 billion. Additionally, it has also increased its forecasts for operating cash flow and earnings per share. The projection for net income attributable to shareholders was slightly lowered by less than 1%, now estimated to be between $10 billion and $11.4 billion.
In terms of revenue, GM reported $47.9 billion for the second quarter, reflecting an increase of more than 7% compared to the same quarter last year and exceeding the expected $45 billion based on FactSet estimates. Earnings per share stood at $3.06, surpassing the $2.71 per share anticipated by analysts, and marking a 60% increase compared to the previous year. Net income rose by 14%, reaching $2.9 billion compared to $2.5 billion in the prior year.
As a result of this positive outlook, GM’s stock price surged nearly 5% in pre-market trading on Tuesday. The stock has gained over 37% this year. Following the market close on Monday, GM declared a cash dividend for the third quarter, further boosting investor confidence.
In a letter to shareholders, CEO Mary Barra highlighted the success of GM’s gas-powered trucks and SUVs and announced the company’s plans to launch eight new or redesigned models across compact, mid-size, and full-size segments in North America. Barra emphasized GM’s commitment to ramping up production of the electric Chevrolet Equinox, stating that while they are enthusiastic about their electric vehicles (EVs) and their initial success, the company remains dedicated to disciplined volume growth.
Earlier this month, Barra acknowledged that GM would not meet its goal of producing 1 million electric vehicles in North America by the end of 2025 due to a slowing market. However, the company has stated its intention to remain flexible and “build to demand,” despite an increase in EV sales last quarter.
Additionally, Barra announced that Cruise, GM’s self-driving subsidiary, would be discontinuing its Origin vehicle after previous operational setbacks. Cruise plans to utilize the next-generation Chevrolet Bolt for testing in Texas and Arizona instead. GM incurred a $600 million charge linked to the halted production of the Origin in Detroit.
During a call with analysts, Barra reassured them that using the Bolt would address regulatory concerns regarding the Origin’s distinctive design, such as its lack of a steering wheel. This pivot is expected to reduce costs per unit and enable GM to better allocate resources.
“Our vision to transform mobility using autonomous technology remains steadfast, and every mile traveled, and every simulation brings us closer because Cruise is an AI-first company,” Barra stated.
In addition, GM is working to restructure its joint venture in China with SAIC Motor, as it continues to experience losses, reporting a $104 million loss in the second quarter. In June, SAIC-GM significantly reduced production by 70%, selling only 26,000 vehicles, which is 50% less than the same period last year, according to reports.