General Motors (GM) exceeded Wall Street’s earnings expectations in its third quarter, reporting a net income of $3.056 billion on revenue of $48.757 billion, up 10.5% year-over-year. While net income decreased slightly by 0.3%, GM’s continued success in North America and its growing electric vehicle (EV) market has allowed the automaker to raise its 2024 earnings guidance for the third consecutive quarter.
For 2024, GM now expects adjusted earnings to range from $14 billion to $15 billion, an increase from the previous forecast of $13 billion to $15 billion. Adjusted automotive free cash flow is projected to rise to $12.5 billion to $13.5 billion, significantly up from the prior range of $9.5 billion to $11.5 billion. The company also forecasts a net income between $10.4 billion and $11.1 billion for the year.
From July to September, GM reported adjusted earnings before interest and taxes (EBIT) of $4.1 billion, a 15.5% increase year-over-year, and adjusted earnings per share of $2.96, beating Wall Street’s estimate of $2.43. GM’s revenue for the quarter also surpassed expectations, with Wall Street predicting $44.58 billion.
Despite a challenging auto market, GM has maintained its profitability through strong pricing, lower incentives, and a competitive internal combustion engine (ICE) lineup of vehicles and EVs. GM’s incentive spending as a percentage of the average transaction price (ATP) was 6.7% in September, below the industry average of 7.3%, while its ATP has held steady at approximately $51,500, down just 2% year-over-year.
North America remains GM’s financial backbone, with pretax earnings reaching $3.98 billion in Q3, a 12.9% increase. In contrast, GM’s international operations significantly declined, with pretax earnings falling to $42 million from $357 million last year. In China, GM experienced a loss of $137 million in Q3, down from a $192 million profit in the same period last year, as local competition intensifies.
GM’s autonomous vehicle division, Cruise, also posted a loss of $383 million, which marks a decrease from the $732 million lost in Q3 2023, following cost-cutting measures. Cruise has resumed testing on public roads in Houston, Phoenix, and Dallas after pausing operations due to regulatory scrutiny.
Electric vehicle growth remains a bright spot for GM, with record EV deliveries of 32,095 units in Q3, a 60% year-over-year increase. GM is now the No. 2 EV seller in the U.S., overtaking Ford. The automaker plans to produce and sell about 200,000 EVs by the end of 2024 and expects to see profitability in its EV segment by the fourth quarter of this year.
As GM transitions to electric vehicles, the company remains focused on cost-cutting measures and maximizing profitability from its ICE lineup. The automaker aims to achieve $2 billion in cost savings by the end of 2024, while continuing to grow its share in the competitive EV market.
Looking ahead, GM expects to narrow losses in EV earnings before interest and taxes by $2 billion to $4 billion in 2025 as it ramps production.
