GM's optimistic forecast for 2019 surprised a lot of investors Friday, triggering an 8% surge in GM stock, but CEO Mary Barra has been laying the groundwork for more than 3 years.
The big picture: Barra is building a case for how GM will remain healthy amid factors she can't control — trade friction, economic slowdown, and rising commodity prices — not to mention the historic transformation of the automobile.
The background: Under Barra, GM pulled out of unprofitable markets like Europe and redirected investments toward new technologies, like electric cars and automated vehicles.
- She stood up to President Trump, who blasted GM for its decision to close 5 factories — 4 of them in the U.S. — and cut almost 15,000 jobs. Barra reiterated her position today in a meeting with investors in New York.
What's new: GM said it finished 2018 stronger than expected, and signaled 2019 will be even better, the opposite of what the rest of the industry is signaling.
- 2019 adjusted earnings will be $6.50 to $7 a share, higher than analyst estimates.
- Profits from new pickups and SUVs will offset flattening sales in the U.S. and China.
- Cost cuts in engineering and manufacturing will help fund its push into electric vehicles.
What's next: Besides its continued focus on trucks, 3 new product lines will help lead GM into the future.
- Cadillac will be GM's new electric vehicle brand, leading an onslaught of 20 new EVs by 2023, many of them in China.
- A new family of Chevrolet vehicles, part of a $5 billion bet on global emerging markets, launches in China this year, then South America and Mexico.
- Cruise Automation, GM's self-driving car unit, expects to deploy a commercial robo-taxi service in San Francisco in 2019, then scale rapidly.
