General Motors is increasing its financial forecasts for 2024 following a strong performance that surpassed Wall Street expectations in the second quarter. The Detroit-based automaker has raised its projected adjusted earnings for the year to between $13 billion and $15 billion, up from the previous guidance of $12.5 billion to $14.5 billion. Additionally, GM has adjusted its targets for operating cash flow and earnings per share, while slightly lowering expectations for net income attributable to shareholders to between $10 billion and $11.4 billion.
In the second quarter, GM reported revenue of $47.9 billion, marking an increase of over 7% from the previous year and exceeding the Wall Street expectation of $45 billion according to FactSet estimates. The company’s earnings per share were $3.06, significantly higher than the anticipated $2.71 per share, reflecting a 60% increase from 2023. Net income rose 14% to $2.9 billion, up from $2.5 billion.
Following this announcement, GM’s stock rose nearly 5% in pre-market trading, boasting a year-to-date increase of more than 37%. Recently, GM also declared a cash dividend for the third quarter, contributing to the positive market response.
In a communication to shareholders, CEO Mary Barra highlighted the success of the company’s gas-powered trucks and SUVs, while also revealing plans to launch eight new or redesigned models in North America. She emphasized the scaling of production for the electric Chevrolet Equinox, assuring shareholders of a commitment to disciplined growth in electric vehicle production.
However, Barra indicated that GM would not meet its ambitious target of producing 1 million electric vehicles in North America by the end of 2025, attributing the setback to a slowdown in the market. The company intends to remain flexible and “build to demand,” though EV sales did see an uptick in the last quarter.
Moreover, Barra announced a significant shift for Cruise, GM’s self-driving division, which will no longer pursue the production of its Origin vehicle following a previous operational rollback. Instead, Cruise will concentrate on using the next-generation Chevrolet Bolt for testing in Texas and Arizona. GM also reported a $600 million charge associated with halting Origin production in Detroit.
In discussions with analysts, Barra explained that utilizing the Bolt would address regulatory concerns previously raised about the Origin’s unconventional design, including the absence of a steering wheel. This change is expected to reduce costs per unit and improve GM’s resource optimization.
GM is also working on restructuring its joint venture in China with SAIC Motor, as it continues to face financial losses; the company incurred a loss of $104 million in the second quarter. In June, SAIC-GM significantly reduced production by 70%, delivering only 26,000 vehicles, which is 50% less than in the same period last year.