By Nora Eckert
DETROIT (Reuters) -General Motors reported second-quarter profit and revenue on Tuesday that beat Wall Street’s expectations, and raised its annual profit forecast for a second time this year, buoyed by strong pricing and demand for gas-powered trucks.
The Michigan automaker is leaning heavily on its gasoline-engine offerings to fuel its profits through a slower-than-anticipated transition to electric vehicles. GM executives say it has now laid the foundation necessary to meet ambitious ramp-up targets on EVs.
“We’re encouraged by the early results we’re seeing in EVs now that we can build at scale,” CFO Paul Jacobson said in a call with reporters.
The company’s shares rose more than 4% in premarket trading.
GM increased its adjusted pre-tax profit projection for the year to $13 billion to $15 billion, from its previous range of $12.5 billion to $14.5 billion.
The company reported adjusted earnings per share of $3.06 that beat Wall Street’s average estimate of $2.75, according to LSEG data. The carmaker reported $48 billion in revenue for the three-month period, surpassing analysts’ consensus of $45.5 billion in the June quarter.
Executives at GM also provided an update on its Cruise self-driving unit, saying it will focus its development efforts on a next-generation Chevrolet Bolt rather than its planned futuristic Origin vehicle that would not have a steering wheel or other human controls.
GM was one of the automakers affected by a cyberattack that hit auto dealerships across the U.S. last month. The attack, which temporarily dampened sales at U.S. dealerships, did not weaken GM’s quarterly results. Executives reported a 14% increase in net income over the year-ago period to $2.9 billion.
GM’s stock has outperformed its rivals and the S&P 500 in 2024. The company’s share price has increased 38% this year, while cross-town rival Ford Motor has notched an 18% increase, and Jeep-maker Stellantis lost 11%.
EV INVESTMENTS AND RETREAT
GM received another cash boost from the U.S. government this summer to support its EV ambitions, although it has walked back many of its targets during the last year.
The Biden administration said this month that it would award GM $500 million to convert one of its Michigan gas-engine vehicle-assembly plants to produce EVs.
GM last week declined to reiterate a target of achieving 1 million units of EV production capacity in North America by the end of 2025. The carmaker also recently lowered its projected EV output for the year, now projecting the higher end of its 2024 production to be 250,000 units, down from a prior forecast of 300,000 units.
Still, GM executives said the company is scaling up production of the Chevrolet Equinox EV and plans to launch several new battery-powered models over the coming months.
Although the Detroit automaker has kept its sights set on transitioning its lineup to EVs, CEO Mary Barra has said it plans to introduce plug-in hybrids in 2027. Ford is currently benefiting from significant increases in hybrid sales.
Ford is set to release its second-quarter results Wednesday.
The outcome of the U.S. presidential election in November will also likely affect GM’s plans for battery-powered vehicles. Former President Donald Trump has criticized President Joe Biden’s approach on EVs, which have included significant government subsidies.
GM is also facing increasing investor scrutiny on its operations in China, which in the past decade have shifted from being a profit engine to a drain on the company’s finances.
GM recorded a $104-million loss in China for the quarter.
Jacobson addressed the company’s losses in China, and said it would be working with its joint-venture partner there to restructure its business.
“It’s clear that the steps that we have taken, while significant, have not been enough,” Jacobson said.
Last month, a leading automotive analyst called on the Detroit Three to withdraw from China to save cash to spend on costly EV production.
(Reporting by Nora Eckert; Editing by Rod Nickel)
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