Following a strong 2023 and positive retail sales growth in 2024, GM (GM) investors are counting on the Big Three automaker to keep the earnings momentum going with Q1 results on tap for Tuesday morning.
For the quarter, GM is expected to report top-line revenue of $42.09 billion (per Bloomberg consensus), a jump of 5% versus a year ago but below last quarter’s $43 billion in sales. In terms of profits, the Street is looking for GM to earn $2.12 in adjusted earnings per share, translating to an adjusted net income of $2.42 billion, with operating profit coming in at $3.12 billion.
Though revenue is expected to rise 5%, GM’s adjusted net income could slide by nearly 22%, as higher labor costs from its new labor deal with the United Auto Workers (UAW), weak international sales (especially in China), and costs from its EV business may take a bite out of profits.
Though its EV sales were improving in 2024, GM had to take a $1.7 billion hit for losses relating to existing EV inventory in Q4.
Investors will be keen to see if there are any updates to GM’s 2024 outlook. Earlier this year, GM forecast $12 billion to $14 billion adjusted EBIT for 2024, with the automaker also seeing $8.50 to $9.50 in adjusted EPS for the year.
“We believe GM could raise guidance as soon as this quarter, given stronger pricing for longer than assumed,” Deutsche Bank’s Emmanuel Rosner wrote to clients early last week.
As for deliveries in the quarter, GM reported Q1 sales in the US that topped estimates but were down compared to a year ago due to lower fleet sales. GM delivered 594,233 vehicles, down 1.5% compared to a year ago; however, retail sales were up 6%. GM also said it delivered more vehicles than any other automaker in the US in Q1.
Digging deeper into GM’s EV sales, the company reported big gains with the Cadillac LYRIQ, Hummer EV, and the Silverado EV. The Silverado EV was only available to fleet customers but will begin deliveries to retail customers in “the coming months,” GM said.
Chevrolet’s Blazer EV notched just 500 sales in the quarter, though it only resumed sales in March following stopped sales due to a software issue. Looking ahead, the highly anticipated Equinox EV begins sales later in Q2; GM said the Equinox EV will start around $35,000.
GM and other legacy automakers’ ability to leverage traditional gas powertrain vehicle sales has allowed those companies to weather the current EV demand slump affecting bigger EV names with only minimal overall sales losses.
Missing from GM’s rollout has been hybrids, which have been gaining in popularity recently. GM said in its Q4 earnings call that it will roll out plug-in hybrid tech to some of its vehicles in North America.
Earlier this year GM CFO Paul Jacobson also reiterated the company’s goal for EV profitability in a roundtable call with reporters. “We won’t get to low-to-single-digit profitability [EBIT EV margin] until 2025,” he said.
GM, which abandoned its goal of building 400,000 EVs through mid-2024, did not say whether it still expects to have 1 million units of EV capacity by 2025.
Finally, investors will be seeking new updates on GM’s autonomous driving unit, Cruise. The unit shut down all operations last year following an accident with a pedestrian and other incidents involving its vehicles. After a management shake-up, Cruise is rumored to be restarting operations in Phoenix featuring vehicles with human co-pilots.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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