General Motors Co. (GM -2.33% decline; red down-pointing triangle) increased its full-year profit forecast for the year, citing buyers' desire to spend more on high-end vehicles even as the Detroit automaker tightens its belt.
The Detroit automaker also said on Tuesday that it would discontinue production of the Chevrolet Bolt, effectively killing off its first mainstream electric vehicle as it transitions to newer battery technology.
After issues with battery fires and lackluster sales for the vehicle that helped kick off the automaker's drive into the technology, GM announced plans to halt the manufacture of the Chevy Bolt at the end of the year.
The small SUV, which debuted in 2016, employs outdated battery technology, and while experts expected it to be phased out when new EV models emerge, GM had not announced the model's demise until today.
The move comes after GM announced a first-quarter pretax profit that exceeded analysts' expectations.
The country's largest automaker by sales raised its profit forecast for 2023 since January-March earnings exceeded forecasts and cost savings from a recent employee-buyout program are flowing to the bottom line.
According to GM finance head Paul Jacobson, car demand is robust and buyers continue to spend top dollar—an average of $50,263 per vehicle in the United States during the third quarter, down 1% from the previous year.
Revenue and vehicle sales also increased as GM and other automakers increased factory output as the effects of a lengthy computer-chip scarcity eased.
The better-than-expected results come despite rising inflation and economic uncertainty, which some experts predict could erode the pricing power that has boosted industry earnings in recent years and restrict showroom visitors. However, officials from GM and other automakers point to pent-up demand following three years of supply-chain issues.
Mr. Jacobson also stated that GM does not feel obligated to match price reductions in the rapidly expanding electric-vehicle sector, including many recent reductions by Tesla Inc.
"We feel good about where we're priced right now," Mr. Jacobson said at a press conference.
GM reported $2.4 billion in net income for the first quarter, a 19% decrease attributable mostly to a buyout program that resulted in about $900 million in associated expenditures. In March, around 5,000 salaried employees at GM took voluntary buyouts. Weaker earnings in China, as well as increased borrowing rates, impacted the company's bottom line.
Pretax profit increased by nearly 14% in North America, its largest and most profitable region, while revenue set a new first-quarter high. Overall sales increased 11% to almost $40 billion, including a first-quarter record of $32.9 billion in North America, as demand for large pickup trucks and SUVs like the GMC Sierra and Cadillac Escalade—GM's largest moneymakers—remained strong.
Pretax earnings, excluding the buyout and other one-time events, was $3.8 billion, a 6% decrease from the previous year. This resulted in profits per share of $2.21, above the average analyst expectation of $1.70.
The company upped its pretax adjusted profit forecast for 2023 from $10.5 billion to $12.5 billion to a range of $11 billion to $13 billion.
GM stock jumped nearly 2% in early trade Tuesday.
Also on Tuesday, GM and Korean battery giant Samsung SDI announced plans to invest more than $3 billion in a new battery cell facility in the United States, which would begin operations in 2026.
The Bolt, which debuted around the same time as Tesla's similarly sized Model 3, was one of the first mass-produced EVs on the market in the United States. However, the Bolt's sales were overshadowed by Tesla's rapid climb, and it became a thorn in GM's side in 2021 when the firm recalled all of the roughly 142,000 EVs it had sold to replace their lithium-ion battery packs following concerns of fires.
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