On Tuesday Eastern Time, General Motors announced that its board of directors has approved a new stock repurchase authorization to repurchase up to $6 billion of the company's issued common stock. In the US stock market, General Motors' stock price rose nearly 3% at one point.
In November last year, General Motors announced a $10 billion stock buyback plan, with $1.1 billion remaining authorized and expected to be completed by the end of this month. Since announcing a massive $10 billion repurchase plan, the company's stock price has risen by nearly 70%, with a current market value of approximately $55 billion.
This decision was based on General Motors' growth momentum in the first quarter, when strong sales of trucks and SUVs in the United States helped the company overcome challenges in other markets and raised its annual profit expectations.
General Motors Executive Vice President and Chief Financial Officer Paul Jacobson said, "General Motors' investments in its brand and product portfolio over the past few years, as well as the company's operational discipline, are leading to sustained strong revenue growth, profit margins, and free cash flow."
Jacobson said, "We attach great importance to the profitability of our gasoline vehicle business, while the profitability of our electric vehicle business has improved and continues to grow. In addition, we are effectively allocating capital, which allows us to continuously return cash to shareholders."
According to the company, the largest part of its investment in the electric vehicle sector, the Ultium Cells battery factory, has mostly completed its construction, allowing it to continue producing electric vehicles while repurchasing stocks and rewarding investors.
General Motors stated that the new stock repurchase authorization allows the company to repurchase stocks at any time after completing the existing authorization, but the specific timeline has not been determined.
As General Motors announced its repurchase plan, the US electric vehicle industry is facing many uncertainties and customer demand for new cars is stagnant. Previously, General Motors placed a heavy bet on all electric vehicles.
Jacobson pointed out that the company currently expects to produce 200000 to 250000 electric vehicles this year, lower than the previously announced 200000 to 300000 vehicles. The company reiterated that it will produce on demand, and its production is increasing, but slower than many people expected.
General Motors predicts that electric vehicle sales in the United States will account for around 8% of the entire industry, which is lower than many other companies' expectations. They expect sales to reach around 10% of the industry's total sales in 2024.
Meanwhile, the Detroit automaker is launching its latest electric vehicles, including the entry-level Chevrolet Equinox electric car, which starts at around $35000.