General Motors boosted its earnings outlook early Tuesday for the second time this year after beating estimates for the second quarter. The auto giant signaled it's poised to sharpen its challenge to Tesla in the year ahead, but GM stock fell near a buy point.
On the GM earnings call, questions swirled around its current pace of rolling out new electric vehicles, while management sought to highlight a big expansion into the mainstream EV market.
Ford reports Q2 earnings Thursday after the market close.
GM Earnings
Estimates: Analysts, on average, expected GM earnings to rebound 64% to $1.87 per share, according to FactSet. Revenue was seen jumping 18%, year over year, to $42.133 billion.
In the year-ago quarter, GM and other automakers faced lingering chip shortages and other supply challenges that hurt production and sales. Those challenges have subsided, though not gone away.
Results: GM earnings jumped nearly 68% to $1.91 a share, an earnings release showed. Revenue surged 25%, year over year, to $44.75 billion. The company cited strong customer demand for its traditional gas-powered SUVs and trucks, while touting momentum on electric vehicles.
The results include a $792 million charge for new commercial agreements with LG Electronics and LG Energy Solution, tied to a Bolt EV recall, the earnings release said.
In Q2, the average transaction price in the U.S. for new GM vehicles reached $52,248. That was up $1,890 vs. a year ago and up $1,600 from the first quarter, the company said.
General Motors sold 691,978 vehicles in the U.S. during the quarter to take the sales crown. Some big increases for large, pricey SUVs helped to boost profits.
Outlook: General Motors raised its adjusted EBIT target to $12 billion-$14 billion, up from $11 billion-$12 billion. GM also expects adjusted automotive free cash flow of $7 billion-$9 billion vs. its old goal of $5.5 billion-$7.5 billion.
Prior to the Q2 beat, Wall Street saw full-year EPS of $7.09, down 6.5% vs. 2022, FactSet shows.
GM also plans deeper cost cutting, lowering its planned capital expenditures for 2023 to $11 billion-$12 billion from $11 billion-$13 billion.
GM Stock
In stock market trading Tuesday, GM stock lost 3.5% to 37.92. On Monday, shares climbed 1.95% to reclaim the 21-day line. Shares of General Motors had rallied into earnings, with the 50-day moving average poised to cross above the 200-day for the first time since April, a positive sign. GM stock has shaped a handle with a 41.04 buy point, according to the MarketSmith chart analysis.
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Cybertruck Rival, Cheaper EVs Coming
GM will "soon" start delivering the first-ever Silverado electric truck to commercial customers, with output ramping in Q4, according to the company's earnings presentation Tuesday. The Silverado EV, seen as a rival to the Tesla Cybertruck and Ford Lightning, is already in production.
In the current third quarter and Q4, GM plans to start producing a total of five-six new EV models, the presentation showed. Those will include two all-electric SUVs from the mass-market Chevrolet brand, with prices starting around $30,000. The No. 1 U.S. automaker had planned to phase out its older-generation, relatively affordable Bolt EV by end of year, but said Tuesday the model will live on.
All those forthcoming models will be built on a second-gen EV platform, styled Ultium. The Ultium platform is expected to drive growth, but it has also been the source of supply issues slowing the rollout of newer electric vehicles.
Currently, GM offers a couple EVs built on the second-gen architecture, including the Hummer truck and Cadillac Lyriq SUV, both high-end vehicles.
By 2025, GM is targeting $50 billion in EV revenue.
The automaker said Tuesday that it plans to double production to 100,000 EVs in North America in the second half of 2023.
The older Bolt made up the bulk of GM'S EV sales in the first half of 2023, due to struggles to produce a next-gen battery pack and issues with an automation equipment supplier.
EV Transition
Legacy automakers are making a costly and risky shift to electric vehicles, in Tesla's wake. Investors, meanwhile, remain worried about the impact of elevated interest rates on consumer purchases as well as the rising numbers of cars waiting on dealership lots to be sold.
GM's upcoming electric Silverado is set to take on the Tesla Cybertruck, also due later this year, as well as Ford and Rivian electric pickups that are already on the road.
The launch is high stakes for GM because the Chevy Silverado is its top-selling vehicle.
The automaker continues a bid to convince investors that its big EV bet will eventually pay off.
Last Wednesday, Tesla's Q2 results showed a 20% jump in Q2 profits. The EV leader also updated investors on its long-awaited Cybertruck.
Year to date, GM stock is up 12.7% vs. a 115.4% jump for Tesla stock.
