By Kalea Hall
In an impressive display of market strength, General Motors has revealed its financial results for the final quarter of 2024 along with optimistic projections for 2025, surpassing Wall Street’s expectations. The American car giant continues to benefit from robust consumer appetite for its high-end gasoline trucks and SUVs.
This year, GM’s vehicles fetched an average price tag of $50,000, and even with an anticipated 1% to 1.5% dip in North American pricing power and a slight drop in gas-powered vehicle sales next year, the company remains well-positioned. Notably, GM foresees its losses narrowing on the electric vehicle front, thanks to strategic changes in its Chinese operations and the decision to cease Cruise’s autonomous ride-hailing development, all contributing to significant cost savings.
Looking forward, GM estimates its net income for this year to be between $11.2 billion and $12.5 billion, which exceeds analysts’ predictions of $10.8 billion, according to LSEG’s calculations.
However, there are looming concerns that these projections don’t account for potential tariffs or reductions in electric vehicle incentives, nor tax adjustments threatened by ex-President Trump. GM faces substantial exposure to these potential policy shifts due to its hefty investments in EVs and its manufacturing footprint in Mexico and Canada.
Although GM hasn’t detailed its electric vehicle financial performance, it indicated a noteworthy achievement in 2024 with higher revenues than fixed costs—such as labor and materials—reflecting a positive turn in variable profitability. While not accounting for expenses like setting up production lines, this metric suggests promising financial strides.
CFO Paul Jacobson mentioned that GM fell short of its goal to produce and wholesale 200,000 electric vehicles in North America, reaching 189,000 units instead. Despite this, the company successfully cut its EV inventory from a 100-day supply at the end of the third quarter to a 70-day supply.
Previously, GM projected a narrowing of EV operating losses by $2 billion to $4 billion from unspecified figures, though Jacobson noted the actual loss reduction might be closer to the $2 billion mark, targeting a wholesale figure of 300,000 units for the year.
“We believe we can stimulate further EV demand,” Jacobson expressed. “We’re keen to see how electric vehicle adoption evolves into 2025.”
Impressively, GM concluded the fourth quarter with $47.7 billion in revenue, soaring past the $43.9 billion anticipated by analysts. The automaker also posted an adjusted earnings per share of $1.92, beating forecasts of $1.89 per share.
Restructuring initiatives are playing a significant role at GM. Although they reported a pre-tax profit of $2.5 billion for the quarter, the company also absorbed a $3 billion net loss due mainly to $4 billion in restructuring charges in China. However, the China segment managed to regain profitability before accounting for these charges, according to Jacobson.
Presiding over the restructuring in China along with its partner SAIC Motors, GM is implementing measures aimed at elevating operational efficiency to above 80% utilization rates, all while avoiding additional capital commitments from GM.
The carmaker’s collaboration with SAIC entails producing popular brands like Buick, Chevrolet, and Cadillac in China.
Overall, GM’s annual adjusted earnings per share hit $10.60, overshooting market predictions of $10.39, and the year’s total revenue of $187 billion outstripped estimates of $183 billion.
Despite incurring a $500 million fourth-quarter charge related to its Cruise autonomous unit, GM remains committed to self-driving technologies for personal vehicles, halting funding for Cruise’s robotaxi program after substantial investments of $10 billion since 2016. This move is anticipated to save $500 million in the coming year.
Reflecting on their 2024 sales, GM reported selling 2.7 million vehicles, marking a 4% rise compared to 2023. Meanwhile, electric vehicle sales stood strong at 114,432 units, a 50% jump from last year, fueled by the success of electrified models like the Chevrolet Equinox, Blazer, and the Cadillac Lyriq, which notably outpaced some traditional luxury SUV sales.
(Reporting by Kalea Hall; Editing by Peter Henderson and Jamie Freed)
