General Motors stock skyrockets—profits surge as EVs electrify the market

General Motors (GM) has witnessed a significant boost in its stock price following its robust third-quarter 2024 earnings report. The automaker’s stock surged by 6.9% to reach $37.83 per share, driven by better-than-expected profit figures and promising advancements in its electric vehicle (EV) business. The latest earnings exceeded market forecasts, with the company posting an EPS of $2.62 and revenues of $47.97 billion, up by 7.2% from the previous quarter. These figures reflect GM’s growing strength in a competitive market, supported by its aggressive push into the EV segment and solid demand for its internal combustion engine (ICE) models.

EV Sales Fuel Growth Amid Market Challenges

A key factor in GM’s impressive performance is its EV strategy. In Q3 2024, GM sold over 32,000 electric vehicles, marking a 60% year-over-year increase. Notable models, such as the Chevrolet Equinox EV and Cadillac Lyriq, have been instrumental in driving these numbers. CEO Mary Barra noted that GM’s focus on expanding its EV lineup and improving production efficiency is paying off. She emphasized that GM’s cost-cutting measures and battery production optimization have accelerated the company’s timeline for achieving profitability in the EV market.

Barra highlighted that GM now anticipates reaching positive variable profit for its EVs by the end of 2024, ahead of the initial 2025 target. This early achievement underscores the effectiveness of GM’s strategy in a rapidly changing automotive landscape. The company has not only optimized its EV production but also maintained a strong foothold in the ICE segment, which continues to contribute significantly to its bottom line.

Resilience in Domestic Market and Challenges Abroad

Despite global economic headwinds and heightened competition in international markets, especially in China, GM managed to increase its U.S. sales by 3% in Q3 2024. This domestic growth has been a pillar of stability, allowing the company to offset some of the difficulties it faces in foreign markets. Mary Barra noted that the U.S. market remains vital to GM’s growth strategy, as it provides a solid base for the company’s ongoing transition towards electric mobility.

The company’s ICE vehicles remain in demand, contributing substantially to overall profits. Barra stressed that while the EV transition is central, GM’s ICE models play a critical role in supporting this shift, generating the cash flow needed to invest in electric and autonomous technologies.

Expert Opinion: A Balanced Approach for GM

Industry analysts have praised GM’s balanced strategy, which effectively manages the dual focus on ICE vehicles and EVs. Analysts have pointed out that this approach has positioned GM uniquely among its peers, allowing it to maximize profits from existing models while investing in future technologies. They believe that GM’s accelerated timeline for EV profitability showcases its operational efficiency and strategic foresight. The company’s decision to maintain a diverse portfolio, rather than transitioning entirely to electric vehicles at once, is seen as a prudent way to manage risk and sustain profitability during the industry’s transitional phase.

Raising Full-Year Guidance as Optimism Grows

Off the back of these positive results, GM has raised its full-year profit guidance to between $8.50 and $9.50 per share. The company’s optimistic outlook is supported by its expanding EV portfolio and improving economic conditions in its key markets. GM plans to launch several new models aimed at reinforcing its position as a leader in the North American EV market.

Investors have reacted favorably to the updated guidance and strong quarterly performance, with GM’s stock gaining momentum in response. Market sentiment suggests confidence in GM’s ability to navigate industry challenges while maintaining a robust growth trajectory.