GM Ending Chevy Bolt Run; Automaker Defies Wall Street With Earnings Gain

General Motors (GM) told investors Tuesday it plans to stop production of the Chevrolet Bolt by the end of 2023. CEO Mary Barra made the announcement during the earnings call to discuss GM topping first-quarter earnings and revenue estimates while raising its profit guidance for 2023. Meanwhile, GM stock fell.

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GM shrugged off analysts’ projections for rising inflation and as interest rates to eat away at profits in Q1. As previously disclosed, GM delivered more than 20,000 electric vehicles in the first quarter. Ahead of Tuesday’s earnings call, Barra said in a letter to shareholders this number was mostly due to a third consecutive quarter of record Chevrolet Bolt EV and Bolt EUV deliveries.

Barra added that Cadillac Lyriq sales also are picking up from a very low base. GM is now second in the U.S. EV market after increasing its market share by 8 percentage points in Q1.

General Motors has been hustling to expand its electric-vehicle operations. Barra announced at the end of January the company was on track to “to produce 400,000 EVs in North America from 2022 through the first half” of 2023. The U.S. automaker expects to meet its goal of selling 1 million electric vehicles in North America by 2025.

The GM CEO told investors Tuesday a Detroit plant that has produced the Chevy bolt for around six years will be refitted for production of an electric truck.

General Motors stock dropped 4.3% to 32.83 Tuesday during market trade, leaving shares below their 50-day and 200-day lines.

GM Earnings

Estimates: Wall Street analysts predicted GM earnings would fall 17% to $1.72 per share in Q1. They targeted revenue increasing 7% to $38.55 billion, according to FactSet.

Results: GM reported EPS growing 6% to $2.21 in the first-quarter. Revenue jumped 11% to $39.98 billion.

Outlook: GM executives see full-year earnings per share of $6.35-$7.35, up from the previous view of $6-$7. GM expects net income attributable to stockholders of $8.4 billion-$9.9 billion, down from the earlier outlook of $8.7 billion-$10.1 billion. It put EBIT-adjusted earnings at $11 billion-$13 billion, up from the previous $10.5 billion-$12.5 billion view.

GM also raised expectations for adjusted automotive free cash flow to a range of $5.5 billion-$7.5 billion, slightly up from the Q4 2022 forecast of $5 billion-$7 billion.

Analysts forecast 2023 full-year EPS dropping 21% to $6.01 with sales increasing around 2% to $159.31 billion.

At the end of January, GM blew past analyst fourth-quarter earnings and revenue targets. GM Q4 earnings ballooned 57% to $2.12 a share while revenue gained 28% to $43.1 billion.

In 2022, rising demand in the second half of the year helped General Motors to grow U.S. vehicle sales 2.3%.

The chip shortage and other supply disruptions hit industrywide vehicle production and inventories for most of 2022, easing in the final quarter. But demand concerns emerged in Q4 and have grown since.

Staying Out Of the Price Cut War

The Detroit, Michigan-based auto giant ended 2022 reclaiming the No. 1 spot for U.S. auto sales, taking it from Toyota. A second-half recovery offset a sharp slump, worsened by supply disruptions, during the first six months of the year.

GM has also signaled it has no intention to enter the auto price-cutting war, touched off by Tesla (TSLA) this year. General Motors does plan to cut costs by $2 billion in 2023.

“We think we’re pricing where we need to be,” Barra told investors during the Q4 earnings call.

However, analysts see GM profits slipping this year with sales expected to stay mostly flat.

Earnings And EV Sales Shift

General Motors and other traditional automakers are making a historical shift away from combustion-engine cars to electric vehicles.

Their EV sales significantly trail those of Tesla for now, with GM and Ford (F) competing for market share.

In 2023, GM has three all-new EV models due from its mass-market Chevrolet brand. Those new models include all-electric versions of the bestselling Silverado truck, and the Blazer and Equinox SUVs.

The new models could kindle GM’s EV growth strategy. But in 2022, production and sales of next-gen GM EVs, using an all-new Ultium-branded EV architecture, were sluggish, and have remained so in the first quarter

The older Bolt EV variants fared well.

In the long term, electric vehicles are seen as a growth driver for traditional automakers, especially with government rules effectively mandating them.

By 2030, GM, Ford and Stellantis (STLA) expect as much as half of their U.S. sales to be all-electric vehicles, also known as battery-electric vehicles, or BEVs.

GM has also recently announced a $650 million investment in Lithium Americas (LAC) mining operation. The capital will reportedly go to develop LAC’s Thacker Pass lithium mining operation in Nevada. The site aims to produce enough lithium to supply up to 1 million new electric vehicles a year.

General Motors ranks fourth in IBD’s Auto Manufacturers industry group. GM stock has a 73 Composite Rating out of 99. The stock has a 38 Relative Strength Rating. GM stock’s EPS Rating is 84 out of 99.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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