General Motors Co’s profit surged 60% from a year ago, easily beating Wall Street’s expectations on strong demand for gas-powered trucks in the US.

The automaker earned US$3.06 a share on an adjusted basis in the second quarter (2Q), up from US$1.91 a year ago, according to a statement on Tuesday. That compared with the US$2.71 average of analyst estimates compiled by Bloomberg. The company also raised its earnings guidance by US$500 million to as much as US$15 billion for this year.

The automaker’s stronger-than-expected performance comes mostly from its US business, where demand for pickup trucks and SUVs - along with a slowdown in sales growth of electric vehicles (EVs) that lose money at current volumes - has enabled GM to maximise profits and cash flow. The Detroit-based manufacturer is delaying some of its investments in EV plants and stock buybacks have reduced the share count by 17%.

Record revenue in the quarter and first half of the year “has paved the way for us to increase our guidance for full-year earnings, free cash flow and earnings per share,” chief executive officer Mary Barra said in a letter to shareholders.

GM’s shares jumped 5.1% as of 6.33am before regular trading in New York.

Simply put, GM is operating as a gasoline-fuelled cash generator rather the high-tech growth machine Barra had once envisioned. Taken together, the business-as-usual nature of the US vehicle market is boosting profitability that easily offsets its struggling business in China, which continues to lose money.

While truck profits are the main driver of earnings growth and cash flow, GM has also delayed expansion plans for EV production and reduced capital expenditures from as much as US$13 billion in past years to range of US$10.5 billion to US$11.5 billion for this year. Adjusted profit will be as much as US$10.50 a share in 2024, up 50 cents from the prior range.

In North America, adjusted earnings before interest and taxes grew about 39% to US$4.4 billion last quarter. 

The company’s US$48 billion in revenue in the quarter rose 7% from a year ago and beat the consensus estimate of US$45.6 billion. A key driver was a nearly 5% rise in sales of GM’s full-size Chevrolet Silverado and GMC Sierra pickup trucks. Net income rose 14% to US$2.9 billion after making a US$583 million one-time adjustment related to restructuring at its Cruise self-driving car unit.

GM didn’t address reports that the company has delayed its third battery cell plant that’s planned with LG Energy Solution. Barra said recently that the company won’t hit its goal of having production in place for one million EVs at the end of 2025.

The company feels it can slow its push into EVs because a lot of its investment in battery production has been made. By the end of next year, the company will have a bigger lineup of EVs than any automaker in the market. GM is already selling electric versions of the Chevrolet Silverado pickup and the Blazer midsize crossover SUV and smaller Equinox. 

Later this year, GM will add an electric version of its flagship Cadillac Escalade and a GMC Sierra pickup plug in. A new Bolt compact EV comes out next year, along with a three-row Cadillac crossover called the Vistiq.

The Bolt will take on new importance for GM. When the small EV comes out next year, it will be the self-driving car employed by Cruise LLC, the automaker’s autonomous vehicle unit. Barra said in her letter that GM will shelve the purpose-built Origin autonomous vehicle, a bread box-shaped shuttle that was designed for four to six passengers. She said it will be mothballed for cost and regulatory reasons.

While cash flow remains strong from the North American business and the EV plans a moving ahead, GM is struggling in China. The company lost US$104 million in the quarter after making US$78 million a year ago. 

GM chief financial officer Paul Jacobson said the company is talking to its Chinese partners to restructure the business. 

“We’re continuing to see challenges,” he said on a call with reporters. “We’ve seen significant market share erosion and it’s price competitive.”

  - Bloomberg