Wall Street wants updates on EVs and short-term guidance from GM’s investor day
Mary Barra, Chair and CEO of the General Motors Company (GM), speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 2, 2022.
Patrick T. Fallon | AFP | Getty Images
DETROIT – It’s been a year since General Motors announced plans to double its revenue by the end of this decade through profitable growth in all-electric vehicles and emerging new businesses.
At that time, the Detroit automaker detailed its long-term “roadmap” to achieving annual revenue of $280 billion and operating profit margins of 12% to 14% by 2030. But the company was light on near-term details and guidance, which Wall Street has grown increasingly cautious of during a period of rising interest rates, surging inflation and recessionary fears.
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GM will look to address such concerns during an investor event, which kicks off at 1 p.m. ET Thursday in New York. The event will focus on GM’s plans through 2025, including “rapid scaling” of its new EVs and supporting technologies, while leveraging its traditional gas- and diesel-powered “vehicles to maintain strong margins,” CEO Mary Barra told investors last month.
Analyst are expected to press executives on updates to its previously announced plans, short-term guidance and potential macro-offsets in the years ahead, especially in 2023.
“While we do not expect formal 2023 guidance (aside from perhaps high-level comments), we think GM does have an opportunity to highlight potential macro-offsets next year,” Citi analyst Itay Michaeli wrote in an investor note last week.
They’ll also be closely monitoring how GM plans to boost profits of EVs to wean the automaker off its reliance on large fossil-fuel powered pickup trucks and SUVs in the long-term, as the company has said it plans to exclusively offer EVs by 2035.
Barra, as first reported by Bloomberg News, is expected to tell investors Thursday that the company expects its electric-vehicle program to be profitable in 2025.
Wells Fargo Colin M. Langan is “skeptical” that GM’s electric vehicles can be sustainably profitable by 2025, even with incentives in the Biden administration’s Inflation Reduction Act. He said pricing and raw material assumptions will be key.
“At the last Investor Day, GM promised ICE-like EV margins by 2030. Since then, battery raw material costs have dramatically spiked; therefore, it would be surprising if GM can still see EV profitability by 2025,” Langan wrote Tuesday.
GM previously said it secured binding commitments for all the battery raw material it needs to deliver its 2025 electric vehicle capacity target of 1 million vehicles. The company also has plans for capacity of 1 million EVs in China by then as well.
Investors will also be looking for any change regarding short-term financial guidance; goals for EV sales, including outselling Tesla in EVs by mid-decade; and updates on its growth businesses such as OnStar, BrightDrop commercial EV vans and others.
Since GM’s investor day last year on Oct. 5, shares of the company have fallen by roughly 31% to around $37.60 per share ahead of the Thursday event. The company’s market cap is roughly $55 billion
If GM can deliver, if not exceed, expectations of investors during the event, analysts say it should be a positive catalyst for the stock despite broader economic concerns.
“If investors can walk away feeling better about 2023 macro resilience (something GM has already established a good track record for in 2020-22) and with more granularity across several imminent growth levers, we think the stock can work from here,” Michaeli said.
–CNBC’s Michael Bloom contributed to this report.