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Like any seasoned roadtripper preparing for the occasional detour, General Motors is leaving room to maneuver on its route to electric vehicle (EV) profitability.
“In our EV business, we expect our US portfolio to be variable profit positive in the second half of the year based on our current expectations for EV demand and production growth,” CEO Mary Barra said during a recent earnings call. “Strong interest in our vehicles, lower commodity prices, and other factors will support this."
Barra also expressed confidence that the EV demand would continue improving.
"Many third party forecasts have US EV deliveries rising from about 7% of the industry in 2023 to at least 10% in 2024," she said. “Which would mean another year of record EV sales.”
Hit the brakes. Aren’t signs pointing to weakness in the EV market right now? After all, automakers and industry observers recently signaled that demand is slowing compared to gangbusters growth in recent years, the Washington Post reported. CFO Brew also detailed Hertz’s decision to reduce its electric fleet by a third.
“We know the EV market is not going to grow linearly and we are prepared to flex between ICE [internal combustion engine] and EV production,” GM CFO Paul Jacobson told analysts. Barra also admitted “the pace of EV growth has slowed, which has created some uncertainty.”
The company plans to produce between 200,000 and 300,000 EVs in North America this year, but may end up making more or fewer depending on consumer appetite, Barra said.
Even with demand uncertainty, “EV is our focus” in the new year, Barra told analysts. She also affirmed the company’s commitment “to eliminating tailpipe emissions from our light-duty vehicles by 2035.”
GM is buckling up for a solid 2024. Barra said the company expects to sell about 16 million units this year. Investors were likely pleased to hear the company is returning roughly two-thirds of its $22 billion 2022–’23 cash flow to shareholders, through both dividends and share repurchases. GM shares spiked 8.7% after that announcement from Barra, Reuters reported.
The automaker reported a 2023 net income of $10.1 billion—about $1 billion ahead of its 2023 guidance—and expects 2024 net income to reach as much as $11.2 billion, according to a press release. Its Q4 net income increased 5.2% YoY to $2.1 billion, and revenue was $43 billion, down 0.3% year over year.