General Motors has updated its financial forecast for 2024 following a strong second-quarter performance that exceeded Wall Street’s predictions.
The Detroit-based automaker has raised its adjusted earnings expectation for the year to a range of $13 billion to $15 billion, an increase from the previous estimate of $12.5 billion to $14.5 billion. Additionally, GM has boosted its targets for operating cash flow and earnings per share, while slightly reducing its net income forecast for shareholders to between $10 billion and $11.4 billion, a decrease of less than 1%.
In the second quarter, GM reported revenue of $47.9 billion, marking a more than 7% increase compared to the same period last year and surpassing Wall Street’s expected figure of $45 billion. Earnings per share reached $3.06, exceeding analysts’ estimates of $2.71 and representing a 60% increase from 2023. The company’s net income rose 14% to $2.9 billion, up from $2.5 billion.
As a result of this positive financial report, GM’s stock rose nearly 5% in pre-market trading on Tuesday and has gained over 37% in value so far this year. After markets closed on Monday, GM announced a third-quarter cash dividend, further boosting investor confidence.
In a letter to shareholders, CEO Mary Barra highlighted the success of GM’s gasoline-powered trucks and SUVs and outlined plans to launch eight new or redesigned vehicles across compact, mid-size, and full-size categories in North America. Barra emphasized that the company is ramping up production of the electric Chevrolet Equinox, stating, “As excited as we are about our EVs and our early success, we are committed to disciplined volume growth.”
Earlier this month, Barra acknowledged that GM would not meet its target of producing 1 million electric vehicles in North America by the end of 2025 due to a market slowdown. The company has committed to a flexible production strategy that aligns with demand, although electric vehicle sales did see an increase in the last quarter.
Additionally, Barra announced changes to GM’s self-driving unit, Cruise, which had to scale back operations after an incident last October. The company will no longer pursue the Origin vehicle and instead focus on utilizing the next-generation Chevrolet Bolt for testing in Texas and Arizona. GM incurred a $600 million charge related to the suspension of Origin production in Detroit.
During a call with analysts, Barra explained that transitioning to the Bolt will address regulatory concerns regarding the Origin’s unconventional design, such as the absence of a steering wheel. This move is also expected to reduce costs per unit and enhance resource optimization.
“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.
In its efforts to restructure its joint venture with SAIC Motor in China, GM continues to face challenges, recording a $104 million loss in the second quarter. In June, SAIC-GM significantly cut production by 70%, delivering only 26,000 vehicles, which is 50% lower than the previous year, according to industry reports.