General Motors has announced an increase in its financial targets for 2024 following impressive results that exceeded Wall Street predictions for its second quarter. The Detroit-based automaker has raised its expected adjusted earnings for the year to a range of $13 billion to $15 billion, up from the previous forecast of $12.5 billion to $14.5 billion. It has also increased its targets for operating cash flow and earnings per share, although it slightly reduced expectations for net income attributable to shareholders to between $10 billion and $11.4 billion.
GM reported second-quarter revenue of $47.9 billion, surpassing expectations with a more than 7% increase compared to the previous year and exceeding the forecast of $45 billion. Earnings per share stood at $3.06, outperforming the expected $2.71 and marking a 60% increase from 2023. The net income rose by 14% to $2.9 billion, up from $2.5 billion.
Following these announcements, GM’s stock surged nearly 5% during pre-market trading on Tuesday, contributing to an overall increase of more than 37% in stock value this year. The company declared a third-quarter cash dividend after market close on Monday, which further boosted the stock price.
In her letter to shareholders, CEO Mary Barra highlighted the strong performance of GM’s gas-powered trucks and SUVs. She mentioned upcoming launches of eight new or redesigned compact, mid-size, and full-size models in North America. Barra emphasized the commitment to disciplined growth in the electric vehicle sector, particularly regarding the production scale of the Chevrolet Equinox.
Despite the enthusiasm around electric vehicles, Barra noted that GM will not meet its goal of producing 1 million electric vehicles in North America by the end of 2025 due to a slowdown in the market. The company plans to be flexible and will adjust production based on demand, although EV sales saw an increase in the last quarter.
Additionally, Barra revealed that GM’s self-driving unit, Cruise, would abandon its Origin vehicle project following issues that led to a temporary suspension of operations last October. Instead, Cruise will focus on utilizing the next-generation Chevrolet Bolt for testing in Texas and Arizona. GM recorded a $600 million charge associated with halting production of the Origin in Detroit.
Barra reassured analysts that the shift to using the Bolt will mitigate regulatory concerns related to the Origin’s unique design, such as the absence of a steering wheel. This change is expected to lower costs per unit and enhance resource optimization.
Lastly, GM is working on restructuring its joint venture in China with SAIC Motor as it faces financial losses, reporting a $104 million loss for the second quarter. In June, production at SAIC-GM was reduced by 70%, resulting in the delivery of only 26,000 vehicles, a decrease of 50% compared to the previous year.