As the 2019 North American International Auto Show kicks off in Detroit, GM is turning heads on Wall Street. Late last week, the company announced increased guidance and further plans for their most recent foray into the electric vehicle market.
General Motors’ stock jumped around seven percent in pre-market trading on Friday after the company increased their 2018 guidance. In turn, both Ford and Fiat Chrysler Automotive got some small sympathy bumps in their share price on the news. Ford rose 1.61 percent and FCA saw a 2.19 percent bump. More price action is sure to come in the next week, as the Auto Show brings headlines and tailwinds to the industry as a whole.
GM announced both raised its guidance for 2019 as a whole and announced that their 2018 EPS would come in higher than they had anticipated. A large factor in the better-than-anticipated 2018 guidance was the cost cutting measures, which received comments from both President Trump and union officials. This past November, the company announced that is would be cutting 15,000 jobs and putting five North American factories on notice for closure.
Moreover, over the past two years, General Motors has been reorganizing European and Asian operations in an effort to streamline their business and trim the fat.
“We are no longer investing in things that don’t make money,” said General Motors President Mark Reuss. “The future is coming fast. We are doing everything we need to do as fast as we can.”
CEO Mary Barra delivered a similar sentiment.
“Because of the actions we have been taking for several years, General Motors enters 2019 leaner, more agile and positioned to win,” said CEO Mary Barra in a presentation to investors on Friday.
In addition to the positive news on financial performance, GM shed light on some big news for their current horse in the electric vehicle race, Cadillac.
“Cadillac will be GM’s lead electric vehicle brand and will introduce the first model from the company’s all new battery electric vehicle architecture,” the company said in a press release, “GM’s foundation for an advanced family of profitable EVs.”
This isn’t GM’s first foray into electric vehicles. In fact, the company recently surpassed the 200,000 vehicles sold milestone with their Bolt EV. However, establishing their EV lineup as a luxury sedan brand will allow the company to compete well with European competitors such as BMW and Mercedes Benz, both of which have also recently announced plans for their EV future.
Investors should be aware that while GM got a recent bump and has shown an ability to continually improve operations, with the auto show beginning, more news is likely to come. With Electric Vehicle adoption growing and all-electric cars becoming more accessible to the average consumer, all three companies in the Big 3 Detroit automakers will need to lay out comprehensive strategies to jump on the new market. The likelihood of Tesla becoming the sole leader in the Electric vehicle market is becoming slimmer by the day, and investors should anticipate more news this week from the various auto manufacturers.