General Motors has increased several financial projections for 2024 after significantly exceeding Wall Street’s expectations for its second quarter results.
The Detroit-based automaker has raised its forecast for adjusted earnings to a range of $13 billion to $15 billion, an increase from the previous estimate of $12.5 billion to $14.5 billion. In addition, GM has revised its targets for operating cash flow and earnings per share, while slightly lowering the outlook for net income attributable to shareholders by less than 1%, now expected to be between $10 billion and $11.4 billion.
In the second quarter, GM reported revenue of $47.9 billion, marking a more than 7% increase from the previous year and surpassing the $45 billion anticipated by analysts, according to FactSet estimates. Earnings per share reached $3.06, exceeding the expected $2.71 and reflecting a 60% increase compared to 2023. Net income rose by 14% to $2.9 billion, up from $2.5 billion.
Following the announcement, GM shares rose nearly 5% in pre-market trading, with the stock having gained over 37% this year. After 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 the company’s gas-powered trucks and SUVs, providing insight into the launch of eight new or redesigned models across various segments in North America. She also mentioned that GM is ramping up production of the electric Chevrolet Equinox, stating that the company is “committed to disciplined volume growth” despite their enthusiasm for electric vehicles (EVs).
Previously, Barra indicated that GM would not meet its target of producing 1 million electric vehicles in North America by the end of 2025, attributing this to a slowdown in the market. The company has emphasized its flexible approach to production, aiming to “build to demand,” although sales of EVs did increase in the last quarter.
Additionally, Barra announced that Cruis, GM’s self-driving division, will abandon its Origin vehicle following operational setbacks last October. Instead, Cruise will concentrate on utilizing the next-generation Chevrolet Bolt for vehicle tests in Texas and Arizona. This switch has prompted GM to take a $600 million write-down due to the suspension of Origin production in Detroit.
Barra explained that this decision to use the Bolt would address concerns from regulators regarding the Origin’s unconventional design, such as its absence of a steering wheel. Furthermore, this adjustment is expected to decrease production costs per unit and assist GM in optimizing its resources.
“Cruise is an AI-first company,” Barra asserted in a statement, reaffirming GM’s dedication to transforming mobility through autonomous technology.
Concurrent to these developments, GM is working on restructuring its joint venture in China with SAIC Motor due to ongoing losses, reporting a $104 million loss for the second quarter. Last June, SAIC-GM reduced production by 70%, delivering just 26,000 vehicles, which represents a 50% decline from the previous year, as reported by Automotive News.