GM cuts EV production outlook but stresses that demand remains strong

By Tomi Kilgore

May was 'really, really strong' and the best month in 31/2 years, GM CFO says

Shares of General Motors Co. were trading at more than a two-year high but pared earlier gains after the automaker cut its full-year outlook for electric-vehicle production.

Chief Financial Officer Paul Jacobson spoke about GM's (GM) recent performance at the Deutsche Bank Global Auto Industry Conference on Tuesday, and while he was upbeat about the "really strong gains" the company's EV business has made, demand hasn't quite lived up to expectations.

Given where retail demand for EVs was going into this year, Jacobson said that he believed most industry analysts were expecting the EV market would be up to about 10% of total cars, according to a FactSet transcript of his remarks. He added, however: "We still see it trending kind of around that 8% level. As a result, we've talked before about 200,000 to 300,000 EVs this year. We're actually going to trim that to 200,000 to 250,000. So at the lower end of that, I think it reflects the momentum that we have in the business."

The stock had run up as much as 2.9% following the earlier announcement of a new $6 billion stock-repurchase program but pulled back after Jacobson started speaking, to be up just 0.2% at its intraday low.

It has bounced since to be up 1.4% in afternoon trading, to put it on track for the highest close since Feb. 18, 2022.

Jacobson said it's still expected that GM can achieve "variable profit positive" for its EV portfolio, but that will probably be more in the fourth quarter, rather than its previous view of in the second half of the year.

Meanwhile, shares of EV giant Tesla Inc. (TSLA) took a hit Tuesday, falling 2.6% toward a one-month low.

Also read: Tesla shareholders should pass Elon Musk's pay package, or else, analyst warns

Elsewhere, Rivian Automotive Inc.'s stock (RIVN) lost 0.9%, GM rival Ford Motor Co. shares (F) shed 1.8% and the Global X Autonomous & Electric Vehicles exchange-traded fund DRIV was down 1.1%.

Separately, Jacobson said May was a "really, really strong month" for GM, adding that he thinks it was the best month for the company since December 2020.

"On the EV side, while a lot is being written about how the growth rate has kind of diminished, we still see really strong performance in the GM portfolio," Jacobson said.

He said sales of the Cadillac Lyriq electric sport-utility vehicle were up over 3,500 vehicles in May, and with "good traction" with the Chevy Blazer EV, the company sold more than 9,500 EVs in North America.

"So despite the fact that we're seeing a little bit of slowing that growth for our portfolio, it's still pretty strong," Jacobson said.

-Tomi Kilgore

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06-11-24 1406ET

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