GM Drives to a Big Q1 Profit

Climate change or no, US consumers don’t have much truck for EVs. 

After pivoting from electric vehicles in the face of soft demand, General Motors posted its biggest earnings beat in a year on Tuesday, with first-quarter profit jumping nearly 25% to almost $3 billion. Revenue also blew past analysts’ estimates, rising more than 7% to $43 billion. The company’s stock rose 4.4% in Tuesday trading.

Truckin’

GM’s strong quarter essentially crystallizes the current auto-industry zeitgeist. The transformation to EVs hasn’t gone according to plan, with early adopters snapping up models left and right, and the rest of us deciding to wait for prices to come down. That’s meant a hard pivot for automakers that were preparing for an EV wave that never came — including GM, which has pulled back from developing more standard EV models as well as slowing the roll on its Cruise driverless-car business, all of which were losing money. Fortunately, there’s still a willing US consumer for trucks:

• GM said it grew market share across several pickup and SUV models, despite pricing incentives that were “well below” the industry average. GM’s large-size Chevrolet Silverado and GMC Sierra both gained US market share at the expense of models from Ford and Stellantis, as did GM’s new small SUVs, including the Chevrolet Trax and the Buick Envista.
• The steadiness of the “inflation, shminflation” US consumer also was a boon. “Our consumer has been remarkably resilient in this period of higher interest rates,” CFO Paul Jacobson said during a media call. “We think, in this environment, we can continue to perform.”

A Little Trouble in Big China: In China, GM has the opposite problem. Cheap EVs are bringing about a legitimate transition in the Asian nation — more than half of the EVs on roads around the world are in China. That’s led to dwindling market share for US companies over the past 10 years, including GM, which reported a Q1 loss of $106 million in China. CEO Mary Barra said GM “remains committed” to the region, but whether the Chinese consumer is committed to GM will become clearer with each successive earnings report.