Musk, Barra Put Optimistic Spin on Tesla, GM Q2 Results

General Motors and Tesla post second-quarter results that reflect the difficulties each carmaker faces as they prepare for an uncertain future.

GM, which saw its profits increase 15% in the quarter, insists it is figuratively hitting on all cylinders even as it pumps the brakes on plans for rolling out battery-electric vehicles. Tesla, now one of GM’s major rivals, faces questions about its plans amid CEO Elon Musk’s insistence the challenges facing the company are minimal.

During a conference call with investors, Musk says Tesla will introduce an “affordable” model expected to boost the BEV maker’s flagging sales. Asked about the roadster he is promising to deliver, it should appear sometime next year, according to Musk, who declines to discuss future product plans in detail.

“We’re going to make great products in the future just as we have in the past,” Musk insists.

But Tesla’s revenue from the automotive sector dropped 7% in the second quarter, while revenue from all sources was up 2% and its net income dropped 45% to $1.48 billion. Revenue from the company’s energy business, which revolves around selling lithium-ion storage batteries and battery-powered generators, doubled in the quarter.

During the conference call, Musk says discounting in the BEV sector has been difficult for Tesla but thinks it will only be a near-term issue.

“We’ll see where it stands after the election,” says Musk.

It does not make sense to invest in Mexico since Republican presidential nominee Donald Trump has promised to levy heavy import tariffs on vehicles built in Mexico, Musk says. Instead, Tesla would build somewhere in the U.S.

Musk also dismisses Trump’s threat to scale back the Inflation Reduction Act, which includes provisions to aid the transition to BEVs. “I guess there would be an impact, and I guess it would be devastating for our competitors. But long term, it would help Tesla,” he says.

Musk stresses he believes in the potential of the autonomous-vehicle business. Tesla’s robotaxi rollout is delayed until Oct. 10, but Musk insists the company is steadily improving its AV systems. Approval by regulators is inevitable, he adds.

“Once we show (AVs are) safer than humans, they are morally obligated to approve it,” says Musk.  “If you don’t believe in AVs, you should sell your Tesla stock.”

Musk says AVs have the potential to boost Tesla’s market capitalization to more than $5 trillion. Rivals such as GM simply cannot compete with Tesla’s superior technology, he tells investors.

GM, meanwhile, says it is writing off its $600 million investment in the Cruise Origin AV, which lost $450 million during the second quarter. “Regulatory uncertainty” is one of the reasons cited by GM for canceling the Origin, the robotaxi the automaker first unveiled on the eve of the pandemic in 2020.

GM Chair and CEO Mary Barra says the automaker is switching from the Origin to the next-generation Chevrolet Bolt BEV, which will now serve as the platform for Cruise’s future expansion.  “We extinguished the regulatory risk (and will) get better scale on Bolt production,” she says.

During a separate conference call, Barra emphasizes GM believes electric vehicles remain the wave of the future. And despite Trump’s promises to roll back what he describes as the Biden Admin.’s “EV mandate,” Barra says GM “will be guided by the customers regardless of the regulatory environment.”

GM is creating thousands of BEV-related jobs at new battery factories in Michigan, Ohio and Tennessee, she notes, and will launch new BEVs such as the Chevrolet Equinox EV (pictured, below) in the second half of 2024. The EV launches in the second half of the year will be supported by $450 million in advertising, according to GM executives.

The automaker, though, is delaying the startup of production at its Orion Assembly Plant in suburban Detroit, Barra says. The plant was tentatively scheduled to begin producing battery-electric pickup trucks at the start of 2026. The start of production at the retooled plant will now begin in the middle of 2026.

Meanwhile, GM is continuing to rely on a revamped portfolio of trucks and SUVs powered by internal-combustion-engines for profits, according to Barra.

GM reports second-quarter revenue increased 7% to $48.0 billion, while net income attributable to stockholders totaled $2.9 billion and adjusted EBIT was $4.4 billion.

“Our past investments have created a consistently high-performing portfolio of ICE trucks and SUVs from a volume, share and margin standpoint,” Barra says. “Next, our EV portfolio is scaling well and gaining market share. In fact, our U.S. EV deliveries grew 40 percent year-over-year in the second quarter, while the industry grew at 11 percent.” EV sales could produce small profits in the fourth quarter, she adds.Paul Jacobson, GM chief financial officer says, thanks to smaller-than-expected price cuts, the automaker now expects to earn a profit of $9.50 to $10.50 per share, versus previous guidance of $9.00-$10.00 per share. This compares to the Wall Street consensus estimate of $9.64 per share.