GM Stock Jumps As General Motors Forecasts Strong 2019 Earnings, Signals EV Shift

General Motors (GM) 2018 earnings topped expectations and the carmaker foresees strong GM earnings in 2019 as well, affirming strength in its largest markets despite headwinds. GM also said its upscale Cadillac brand will be the “tip of the spear” for future electric vehicles. GM stock jumped on the news.

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Early Friday, GM said 2018 EPS will exceed previous guidance of  $5.80-$6.20. It also expects to surpass an earlier view of adjusted automotive free cash flow of $4 billion.

GM laid out out an even brighter picture for 2019. It issued full-year guidance of EPS $6.50 and $7.00. It forecast adjusted automotive free cash flow of between $4.5 billion and $6 billion.

“Our transformation remains a very dynamic process,” GM CEO Mary Barra said on an investor and analyst call. GM will continue to strengthen its core business while investing in technologies transforming the future of mobility, she added.

GM Stock Soars

GM stock jumped 7% to 37.18 on the stock market today. Shares vaulted above the 50-day and 200-day moving averages.

GM Investor And Analyst Day Highlights

The top U.S. automaker highlighted these measures as underlying its bullish outlook:

Investing in higher-return products. The new Cadillac XT4 and Chevrolet Blazer SUV, and all-new Cadillac XT6 luxury SUV, will boost momentum in 2019, GM said. In addition, GM will benefit from a full year of sales of the all-new Chevrolet Silverado and GMC Sierra light-duty full-size pickups. In the hot SUV and pickup truck segments, GM has a “huge competitive advantage” on the combined strength of its GMC and Chevrolet brands, GM President Mark Reuss said. It’s also growing retail market share in the truck segment, with average transaction prices surpassing key rivals, GM said. GM dominates truck sales in the U.S. along with Ford Motor (F). GM continues to move away from slow-selling sedans as it bets its future on pickup trucks and SUVs.

All-new lineup of vehicles in international markets. GM plans to launch more than 20 all-new or refreshed vehicles, including crossovers, in China in 2019. That represents “the strongest mix of products we have ever brought to China,” Matt Tsien, GM China president, told investors. The Chinese market is GM’s largest, ahead of the U.S. General Motors said Friday it views China “constructively” despite recent headwinds, including slowing industry-wide sales. It sees 2019 China auto sales, across the industry, as roughly in line with 27 million units last year. It sees “improvement in the macro environment” in South America, another key market where it faces challenges.

Commercial robotaxi service: GM says it’s still on track to launch a robotaxi service later this year. GM said it raised a total of $5 billion of external capital for its Cruise self-driving car unit last year, including a $2.25 billion investment in May by Japan’s Softbank Vision Fund. Cruise just signed a partnership with DoorDash for food delivery. It’s one way the automaker hopes to tap what Reuss called “new and potentially lucrative revenue streams” for the mobility business. The company also reported progress on development of a “purpose-built” autonomous vehicle.

Cadillac will be GM’s lead electric vehicles brand: Cadillac will become GM’s lead EV brand and will have an all-new battery vehicle architecture, GM said. That signals that GM, which previously launched the small Chevrolet Bolt, is moving toward luxury electric vehicles like European automakers, chasing Tesla (TSLA).

The new battery EV architecture will be “modular” and “flexible,” GM says. That will allow it to be easily integrated into a broad range of body styles, from cars and vans to crossovers and SUVs. The critical components, battery cells and the battery system, are also being designed for use across vehicle segments.

In China, the top EV market in the world, GM says half of its planned new models in upcoming years will be “new energy vehicle” models, GM said. The country also has a growing luxury segment and Cadillac will become the “tip of the corporate spear in EVs,” Reuss said.

GM cost savings add up: By 2020, GM expects about $6 billion in savings. Its belt-tightening in the past year included a plan late in 2018 to cut thousands of job cuts and shut down several plants.

Ford Cutting Jobs

A day earlier, Ford Motor (F) said it will slash thousands of jobs in Europe as it seeks to improve profitability. Ford stock rose 2% on Friday.


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