General Motors (GM) reported its third-quarter earnings on Tuesday, and while there was some good news, the overall report painted a bleak picture for the automaker.
Detroit Flop City
GM’s net income and revenue beat analyst expectations, but profits were still down 7% from last year. The ongoing United Auto Workers (UAW) strike has also been a major challenge for the company, costing it about $800 million in pretax earnings so far. The strike, which began on September 15, has led to a loss of about $200 million per week in vehicle production. To make matters worse, the union decided to expand the strike by targeting one of GM’s biggest profit centers, an SUV plant in Arlington, Texas.
The UAW strike is just one of the hurdles GM is currently facing. The company has been banking on electric vehicles (EVs) to drive its future growth, but it appears that its ambitions may have been too optimistic. In its earnings call, GM announced that it is abandoning its previously announced goal of producing 400,000 EVs over the next two years. The company cited slowing EV sales growth and high-interest rates as reasons for this decision. Furthermore, GM saw a 42% decrease in income from China due to increased competition from local EV rivals.
No more self driving: Adding to GM’s troubles, the state of California’s Department of Motor Vehicles announced that it is revoking the operating permits of Cruise, GM’s self-driving taxi business. This comes after a series of incidents involving Cruise vehicles. It seems even robot drivers are not immune to the challenges of the road.
While GM did generate $3.1 billion in profit during the quarter, the overall outlook is not rosy. The UAW strike and the uncertainty surrounding the future of EVs pose significant challenges for the company. GM will have to navigate these obstacles carefully in order to secure a brighter future.