GM Slashes EV Production Forecast but Optimism Remains Strong
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Earlier this week, General Motors Co (GM:US) cut down on its estimated EV (electric vehicle) production for 2024. The automaker announced a forecast of 250,000 units, a reduction from the earlier projection of 300,000. The company recently stated that it will adjust production to align with demand, increasing more slowly than was anticipated.
At the same time, GM unveiled a new $6 billion share buyback plan, which comes on top of the $10 billion stock buyback plan announced last year.
GM’s CFO, Paul Jacobsen said of the announcements, “We are very focused on the profitability of our ICE business, we're growing and improving the profitability of our EV business and deploying our capital efficiently. This allows us to continue returning cash to shareholders.”
Previously in 2023, GM was one of the ‘Big 3’ Detroit Automakers who landed in hot water primarily due to the UAW strikes. Adding to these problems were problems with its Cruise self-driving vehicle unit. On Nov 16, General Motors was the first of the three companies - others being Ford (F:US) and Stellantis (STLA:US) - whose agreement was ratified by the UAW.
On April 23, 2024, GM disclosed its Q1 2024 report, listing quarterly revenues of $43.01 billion, up by 7.6% year-on-year. The company's shares, with a market capitalization close to $54 billion, increased by approximately 1% in afternoon trading. Since GM announced the $10 billion stock buyback in late November, the shares have climbed about 50%.
As of yet, GM has only been on the selling list of Congress’ stock trades. On May 20, Rep. Ro Khanna reported a sale of up to $15,000 from under his spouse and child’s ownerships. The Californian representative has been reporting sales on sales since Aug 2023. Before them, Rep. Bill Keating bought between $15,001 and $50,000 on July 19, 2023.
Much of GM’s profits even now come from its traditional gas-powered vehicles. The Detroit automaker is currently rolling out its latest EVs, including the new entry-level Chevrolet Equinox EV. Despite the delay, it can be estimated that GM stock is still headed for good earnings in the EV industry.
