General Motors has increased several financial projections for 2024 following a strong second quarter that exceeded Wall Street expectations.
The Detroit-based automaker has raised its forecasted adjusted earnings for the year to a range of $13 billion to $15 billion, up from the previous range of $12.5 billion to $14.5 billion. Additionally, it has updated its targets for operating cash flow and earnings per share. However, the outlook for net income attributable to shareholders has been adjusted downwards by less than 1%, now projected between $10 billion and $11.4 billion.
The company reported revenue of $47.9 billion for the second quarter, which reflects a more than 7% increase from the same period last year and surpasses the $45 billion estimate from analysts, according to FactSet figures. Earnings per share reached $3.06, exceeding the anticipated $2.71 per share and marking a 60% increase from 2023. Net income rose by 14% to $2.9 billion, compared to $2.5 billion in the previous year.
Following these announcements, GM’s stock experienced a nearly 5% rise in pre-market trading and has increased more than 37% throughout the year. Additionally, GM declared a cash dividend for the third quarter after trading closed on Monday, contributing to the stock’s positive momentum.
In a letter addressed to shareholders, CEO Mary Barra highlighted the strong performance of the company’s gas-powered trucks and SUVs, mentioning that GM is launching eight new or redesigned models across various categories in North America. She also emphasized the scaling up of production for the electric Chevrolet Equinox, while reiterating the company’s commitment to disciplined growth in electric vehicle production.
However, Barra acknowledged that GM will not meet its target of producing 1 million electric vehicles in North America by the end of 2025 due to a market slowdown, indicating that the company will adapt by “building to demand,” even though electric vehicle sales did see an increase in the last quarter.
Furthermore, Barra announced that Cruise, GM’s self-driving subsidiary, will discontinue its Origin vehicle project. Instead, the unit will focus on the next-generation Chevrolet Bolt for testing purposes in Texas and Arizona. GM incurred a $600 million charge due to the halt in production of the Origin.
During a conference call, Barra noted that utilizing the Bolt will ease regulatory concerns associated with the unique design of the Origin, such as its absence of a steering wheel. This shift is expected to reduce per-unit costs and streamline resource allocation.
Barra stated, “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.”
Additionally, GM is working on restructuring its joint venture with SAIC Motor in China as it continues to face financial losses, reporting a $104 million loss for the second quarter. In June, SAIC-GM significantly cut production by 70%, delivering 26,000 vehicles, which is a 50% decrease compared to the previous year, according to reports.