General Motors is increasing several financial projections for 2024 after exceeding Wall Street’s expectations for its second quarter performance.
The automaker has raised its forecast for adjusted earnings this year to a range of $13 billion to $15 billion, up from a previous range of $12.5 billion to $14.5 billion. It also increased its targets for operating cash flow and earnings per share, while slightly lowering the expectations for net income attributable to shareholders to between $10 billion and $11.4 billion.
In the second quarter, GM reported revenues of $47.9 billion, reflecting a more than 7% increase compared to the same period last year, and surpassing Wall Street’s expectation of $45 billion according to FactSet estimates. Earnings per share stood at $3.06, exceeding the anticipated $2.71 per share and marking a 60% increase from 2023. Net income rose 14% to $2.9 billion, compared to $2.5 billion in the previous year.
Following this positive financial news, GM’s stock rose nearly 5% in pre-market trading on Tuesday, and it has seen a growth of more than 37% throughout the year. After market close on Monday, GM also announced a cash dividend for the third quarter, further boosting investor confidence.
In a letter directed to shareholders, CEO Mary Barra highlighted the success of the company’s gas-powered trucks and SUVs while noting that GM is launching eight new or redesigned models across various sizes in North America. She emphasized the scaling of production for the electric Chevrolet Equinox, stating that the company remains dedicated to “disciplined volume growth” despite the early success of its electric vehicles.
However, Barra previously mentioned that GM will not reach 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 is adjusting its strategy to “build to demand,” although it did experience growth in electric vehicle sales last quarter.
Additionally, Barra announced that Cruise, GM’s self-driving unit, will discontinue the Origin vehicle as it focuses on utilizing the next-generation Chevrolet Bolt for testing in Texas and Arizona. This decision comes after Cruise had to scale back operations due to an incident last October. GM incurred a $600 million expense associated with halting Origin production in Detroit.
Barra explained that using the Bolt instead of the Origin would alleviate regulatory concerns related to the unique design of the Origin, notably its absence of a steering wheel. This adjustment is also expected to reduce costs per unit and optimize resources for GM.
“Our vision to transform mobility using autonomous technology remains steadfast, and with each mile and simulation, we move closer to our objectives, as Cruise operates as an AI-first company,” Barra stated.
Furthermore, GM is working on restructuring its joint venture with SAIC Motor in China, as it continues to face losses. The company reported a $104 million loss in the second quarter, following significant production cuts by SAIC-GM, which reduced output by 70% and delivered 26,000 vehicles, representing a 50% decline compared to last year.