GM Leaders Raise Forecast But Push Out EV Project Target Date
Boosted by better-than-expected price trends and the best quarter for U.S. sales late 2020, General Motors Corp. executives on July 23 raised their outlook for most of the company’s 2024 financials. But they also said they’ve held back on some electric-vehicle investments and are restructuring the auto giant’s China division.
Detroit-based GM booked revenues of $48.0 billion—up 7% year over year—on the sale to dealers and distributors of a little more than 1.04 million vehicles in the three months ended June 30. The company’s net income for the quarter climbed 14% to more than $2.9 billion and cash flow from its auto operations rose 8% to about $7.7 billion.
“We are making the most of every opportunity,” Chair and CEO Mary Barra said in a statement. “It was truly a great first half. And we have the products, discipline and strategies to drive future success.”
The Q2 numbers led Barra and CFO Paul Jacobson to lift their full-year guidance for cash flows by $900 million to a range of $19.2 billion and $22.2 billion. They also expect adjusted earnings before interest and taxes to be $500 million higher than their previous forecast.
GM delivered about 1.43 million vehicles globally during the second quarter, up 6% from Q1 but off nearly 10% year over year. In North America, however, deliveries rose 3% to 827,000, led by growth in pickup truck offerings. EV deliveries climbed 40% year over year—nearly quadruple the market’s pace—to about 22,000. Jacobson said solid pricing trends helped profitability and have “remained relatively consistent thus far into July.”
Not everything about Q2 was sunshine and roses for GM, though. Barra said her team has decided to push out the reopening of GM’s Orion Assembly plant in Michigan as a battery electric truck facility by six months. It’s the latest in a series of decisions by various automakers—legacy OEMs as well as EV-only specialists—to tap the brakes on EV investments as the growth rate of that part of the auto market has slowed.
GM’s original plan for Orion’s conversion to making EV versions of the GMC Sierra Denali and the Chevrolet Silverado called for production to start in late 2024. But the company last fall pushed that date to late 2025. Now, Barra said, the goal is to reopen in mid-2026.
“We’re confident that we can meet customer demand for standout EV trucks in the interim by leveraging the production capability and flexibility we have in Factory Zero” close to GM’s headquarters, Barra said on a conference call with analysts and investors. “We will also continue to take advantage of the flexibility we have to mix production between ICE and EV at key plants.”
Two other headaches for GM are:
- Its China joint venture, which lost more than $200 million in the first half of the year and which Barra said will need more work to remain sustainable in a cutthroat market that still has “significant excess capacity.”
- The company’s Cruise autonomous-vehicle group, which is finding its feet again after operations were suspended late last year following an accident and safety reviews. On July 23, Barra and Jacobson said they have decided to stop producing the Cruise Origin vehicle and will instead look to build Cruise around the next generation of the Chevrolet Bolt EV. The move—which led GM to take a $600 million charge to its earnings—will simplify (and lower the costs of) the development of Cruise, Barra said, because it removes regulatory obstacles. The Origin doesn’t have steering wheels and other safety components that have impeded a broader rollout.
“As we looked at this, we thought it was better to get rid of that risk,” Barra said.
Shares of GM (Ticker: GM) were down 6% at $46.56 heading into the close of trading July 23. Over the past six months, however, they are still up more than 30%, a move that has pushed the company’s market capitalization to $53 billion.
