EV profits, guidance, shareholder returns | Wilnesh News

On March 16, 2021, the General Motors logo appeared on the facade of the General Motors headquarters in Detroit.

Rebecca Cook | Reuters

DETROIT — Wall Street reacts General Motors Corporation’s Tuesday’s investor day was a shrug.

Executives are using the Detroit automaker’s activities to focus on broad, near-term updates to the company’s operations as it attempts to differentiate itself from rivals amid more challenging market and economic conditions. But this has little impact on the trend of the company’s stock.

GM believes it is uniquely positioned to exceed industry and Wall Street expectations with its all-electric vehicles and traditional combustion engine vehicles. The company expects profits to improve on both types of vehicles as it targets adjusted earnings next year to be similar to 2024.

“It all starts here: scale, capital efficiency and cost control. These are what will differentiate us from other companies in the industry and, frankly, from our past performance,” said GM CEO Mary Barra. Mary Barra during a roughly three-hour event at her manufacturing operations.

GM President Mark Reuss even took a swipe at its traditional crosstown rival Ford Motor Company and Strantis. He didn’t name them, but said GM doesn’t need a “skunk works” team to develop affordable electric vehicles like Ford’s, and cutting profitability like it did with Stellantis won’t work.

Still, investors have largely failed to reward GM for its leadership in domestic electric vehicle production and its superiority over many automakers in the profitability of conventional gasoline- and diesel-powered vehicles.

Several Wall Street analysts left their views and ratings on the automaker unchanged following the incident, citing continued optimism but a lack of details on the overall strategy.

GM, Ford, and Stellantis Stocks in 2024

“Missed opportunity – no strategy, just tactics,” Bernstein analyst Daniel Roeska wrote in an investor note Wednesday. GM’s investor day showcased many of the company’s current achievements. , but does not provide much insight into strategy.

People including Barclays’ Dan Levy and BofA Securities’ John Murphy said that while the event lacked some details, it solidified GM’s positioning compared with rivals.

“GM’s investor day yesterday didn’t offer much in the way of a sharp shift in strategy. However, we believe it was a strong reminder of GM’s balanced and pragmatic approach that combines a strong focus on electric vehicles with a focus on execution and execution. Combined with high levels of attention.

General Motors shares closed little changed at $46.01 on Tuesday. The stock is still up nearly 30% this year, but has come under pressure recently as Wall Street analysts have repeatedly downgraded the stock and revised its price targets.

Here are a few topics investors should take away from the event:

2025

GM expects adjusted earnings in 2025 Chief Financial Officer Paul Jacobson said the results were “similar” to the company’s performance this year.

It targets 2024 adjusted EBIT of $13 billion to $15 billion, or $9.50 to $10.50 a share, up from a range of $12.5 billion to $14.5 billion, or $9 to $10 a share, earlier this year. guidance value.

As of the first half of 2024, GM’s adjusted EBIT was $8.3 billion and adjusted automotive free cash flow was $6.4 billion.

GM’s capital spending in 2025 is also expected to remain consistent with this year, Jacobson said. GM’s 2024 financial guidance includes expected capital expenditures of between $10.5 billion and $11.5 billion.

Peak loss of electric vehicles?

Jacobson said GM’s earnings next year are also expected to show narrowing losses in its electric vehicle business, which is expected to fall by $2 billion to $4 billion.

GM’s electric vehicle tailwind next year will be divided into savings from increased sales and emissions, as well as electric vehicle production credits, and reduced costs such as raw materials and battery production.

“We believe our EV losses have peaked this year and our focus is to significantly improve profitability next year,” Barra said.

GM said battery costs have been reduced by $60 per kilowatt-hour this year, starting in 2023.

Barra said the automaker plans to produce and wholesale about 200,000 electric vehicles for North America in 2024 and achieve production or profit margins by the end of this year. The guidance is down from a previous target of 200,000 to 250,000 electric vehicles, which was as high as 300,000.

the last one

General Motors has touted Ultium as the ultimate solution for electric vehicles. Eventually died.

General Motors, which has spent years promoting the brand, will drop the “Ultium” name for its electric vehicle batteries and supporting technology as it reconsiders its electric vehicle and battery businesses.

The company said the batteries and technology will remain, but the name will disappear, except for production operations such as the “Ultium Cells” joint venture factory with LG Energy Solution.

Instead, GM plans to use a variety of battery chemistries and cell designs, said former battery maker Kurt Kelty. Tesla He joined General Motors earlier this year as senior executive vice president of batteries.

“GM is moving in many directions,” he said. “This will only help General Motors solidify our position to produce more electric vehicle models than any other automaker.”

ICE cost, profit

General Motors also expects sales and profits of traditional internal combustion engine vehicles to continue to grow in the coming years.

“We anticipate that the ICE industry will have a long tail and will be an important part of our future,” Jacobson said.

2025 GMC Yukon AT4 Ultimate Edition

General Motors Corporation

Profit growth is expected to benefit from some cost cutting, including the consolidation of parts and options.

On average, Reuss said, GM has reduced the total number of parts per vehicle by about 10 percent.

shareholder return

Jacobson said GM will continue to “aggressively” repurchase shares after this quarter’s buyback program ends. The previously announced move is expected to cancel about 250 million shares of the automaker’s stock.

Barra said that from 2022 to the end of 2024, General Motors will return approximately US$20 billion to shareholders through stock repurchases and dividends.

Jacobson said the automaker aims to reduce the number of shares outstanding to less than 1 billion shares by early 2025. The company had more than 1.1 billion shares outstanding as of Wednesday morning, according to FactSet.

Cruise ships and China

Wall Street isn’t happy with GM’s latest news about its troubled Cruise self-driving car unit Business in China.

GM’s business in China has experienced a decade-long profit decline, and executives said they are discussing restructuring plans with Chinese partners.

“In China, you’re going to start to see signs of improvement this year, with significant reductions in dealer inventories and slight improvement in sales and share,” Barra said.

Regarding Cruise, GM said it does not expect to spend more next year than this year. The company did not provide an update on its long-term plans for its troubled robotaxi business.

With GM’s investor day two days ahead of Tesla’s much-anticipated robotaxi day, Wall Street analysts are expecting some kind of update on the joint venture, specifically information about the company’s future financing or capital expenditures.