Proactive Investors - General Motors Company (NYSE:GM) is taking a more measured approach to its electric vehicle strategy than its peers, the auto maker’s 3Q results indicated.
GM withdrew its production guidance for 100,000 EVs in the second half of 2023 and said it no longer anticipates reaching 400,000 total production units by mid-2024.
GM CEO Marry Barra told investors that the company will slow its electric vehicle strategy to match production to demand to avoid deep discounts, prioritizing profits ahead of its sales targets.
That wasn’t a surprise to analysts at Bank of America (NYSE:BAC).
“While the company indicated this is intended in part to give it more flexibility, we believe it also reflects the broader softening of EV demand,” analysts wrote.
The company reaffirmed its guidance for a low to mid-single-digit EV EBIT margin in 2025 but acknowledged that it might be more challenging to achieve due to higher labor costs, moderating EV prices, and slowing demand.
Overall, the company’s 3Q results highlighted “solid” execution, BofA wrote.
General Motors reported strong third-quarter results, with an adjusted EPS of $2.28, surpassing both BofA's estimate of $1.35 and the consensus forecast of $1.84.
However, the ongoing strike by the United Auto Workers union had a significant impact. GM withdrew its 2023 outlook due to the uncertainty surrounding the strike's duration and intensity.
The strike has already cost GM $200 million in the third quarter and $600 million in the fourth quarter, with an estimate of approximately $400 million per week going forward, particularly impacting the company's fourth-quarter results.
Analysts are maintaining their Buy rating on GM, with a price target of $75.