General Motors has increased several financial targets for 2024 following a strong performance in the second quarter that exceeded Wall Street’s expectations.
The Detroit automaker has raised its projected 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 revised upwards its targets for operating cash flow and earnings per share. However, the expectation for net income attributable to shareholders was slightly reduced by less than 1%, now between $10 billion and $11.4 billion.
For the second quarter, GM reported revenues of $47.9 billion, representing an increase of more than 7% compared to the same period last year and surpassing the Wall Street forecast of $45 billion as per FactSet estimates. The company recorded earnings per share of $3.06, exceeding analysts’ expectations of $2.71 and showing a 60% increase from 2023. Net income for the quarter rose by 14% to $2.9 billion, up from $2.5 billion.
As a result, GM stock surged nearly 5% in pre-market trading on Tuesday and has increased over 37% this year. Following the close of trading on Monday, GM announced a cash dividend for the third quarter, further boosting investor confidence.
In a letter to shareholders, CEO Mary Barra highlighted the success of the company’s gas-powered trucks and SUVs. She mentioned that GM is launching eight new or redesigned vehicles across compact, mid-size, and full-size categories in North America. Barra also pointed out the ramp-up of production for the electric Chevrolet Equinox, expressing excitement about the early success of GM’s electric vehicles while stressing a commitment to disciplined volume growth.
Despite these advancements, Barra acknowledged earlier this month that GM would not meet its target of producing 1 million electric vehicles in North America by the end of 2025 due to market slowdowns. The company intends to adopt a flexible approach and “build to demand,” although it reported an increase in electric vehicle sales last quarter.
Additionally, Barra revealed that GM’s self-driving unit, Cruise, would discontinue its Origin vehicle after scaling back operations following an incident last October. Instead, Cruise will focus on using the next-generation Chevrolet Bolt for testing its vehicles in Texas and Arizona. GM also incurred a $600 million charge related to halting production of the Origin in Detroit.
During an analyst call, Barra emphasized that utilizing the Bolt would address regulators’ concerns regarding the Origin’s unconventional design, such as its lack of a steering wheel. This decision is expected to reduce per unit costs and enhance resource optimization.
Barra reaffirmed GM’s commitment to transforming mobility through autonomous technology, stating, “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.”
Moreover, GM is in the process of restructuring its joint venture in China with SAIC Motor, which has been incurring losses; the company reported a $104 million loss for the second quarter. Earlier in June, SAIC-GM reduced production by 70% and delivered 26,000 vehicles, down 50% from the previous year, according to Automotive News.