GM's Impressive Streak Overshadowed By EV Transition Challenges

On July 23rd, General Motors GM reported its second quarter financials, surpassing both top and bottom line estimates along with recording record revenues, which was largely owed to North America’s operations and more precisely, truck sales. Along with Ford Motor F and Stellantis N.V. STLA, GM is facing uncertainty that came as result of slower than expected EV adoption, along with macroeconomic challenges.

Second Quarter Highlights

For the quarter ended on June 30th, General Motors posted record revenue grew 7.2% YoY to $47.97 billion, suprassing LSEG’s estimate of $45.46 billion. Adjusted earnings per share of $3.06 also easily surpassed LSEG’s consensus estimate of $2.75 per share. Net income attributable to stockholders, which excludes some dividend payouts, grew 14.3% YoY to $2.93 billion. Adjusted EBIT rose  37.2% YoY to $4.44 billion. 

While GM outperformed in several areas, it did not succeed to return to profitability in China where it continues to struggle with an earnings decline.

EV deliveries grew 40% YoY to 21,930 units, but EVs still make a fraction of U.S. sales, more precisely 3.2%.

Lifted 2024 guidance to reflect a positive business trajectory.

Costs are expected to increase during the second half of the year, as they will include an additional $400 million in planned marketing spend compared to the first half of the year to promote new launches. But after easily beating Wall Street estimates, GM raised several key financial targets for the full year, revising its full-year earnings guidance upwards for the second time this year.  GM expects net income attributable to stockholders between $10.0 billion and $11.4 billion, with adjusted EBIT between $13.0 billion and $15.0 billion. GM now expects earnings per share between $8.93 and $9.93 on a diluted basis and between $9.50 and $10.50 on an adjusted diluted basis.

CFO Paul Jacobson reconfirmed that EV profitability on a prodiction or contribution margin basis is expected by the fourth quarter, when 200,000 units are reached. Until that happens, EVs will remain an earnings headwind.

The second half of 2024 seems daunting, but exciting.

Last week, Ford missed earnings expectations with its second quarter results. In addition, Ford guided adjusted earnings for the second half of the year to be between $2 billion and $3 billion, which is significantly down from first half’s $5.5 billion. However, Ford did reconfirm its 2024 guidance.

Athough the EV revolution seems to have come to a halt, innovation hasn’t.

GM, Ford and Stellantis pickups are getting a solar-powered tonneau cover this summer. Worksport Ltd. WKSP just announced its first-to-market solar-powered tonneau cover SOLIS entered the final live-testing phase, ahead of its alpha release. The alpha release of the power duo that consists of the SOLIS as well as the portable battery system COR has been scheduled for later this summer. 

This week, Worksport also announced it will be launching a new live sales feature. With Firework’s innovative web infrastructure that is trusted by more than 1,000 global brands, Worksport will be launching its first live sales session on August 6th at 12 PM ET.  With Firework averaging an astonishing 15% rise in average order value and 54% in sales conversions with other customer brands, Worksport has high expectations with its new cutting edge live sales platform with which it will undoubtedly enhance the experience of its growing audience that exceeds 15,000 weekly website visitors.

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