Wall Street's focus during GM's investor day is on Cruise, cash, and EV profits.

• On Tuesday, GM will address investor concerns at its vehicle and battery plants in Spring Hill, Tennessee during a capital markets day.
• The automaker is facing slowing consumer demand and changing market conditions.
• The company's embattled Cruise autonomous vehicle unit and its China restructuring are of great interest to Wall Street analysts, particularly regarding electric vehicles and hybrids.

Since the last investor day, two years ago, a lot has changed, but the automaker's ability to outperform Wall Street's expectations has remained consistent. They have achieved this feat every quarter since then.

During a capital markets day on Tuesday, Mary Barra, the CEO of GM, will try to convince investors that she and her executive team can still succeed in meeting their goals, despite slowing consumer demand and shifting market conditions.

The company's plans for electric vehicles and hybrids, its embattled Cruise autonomous vehicle unit, its China restructuring, and GM's near-term plans for free cash flow, lowering costs, and rewarding investors are of great interest to Wall Street analysts.

The investors are anticipating that GM will be more focused on its short-term goals and messaging compared to its past investor days, particularly three years ago when Barra and others announced ambitious long-term financial targets to increase the automaker's revenue to approximately $280 billion by 2030.

"According to Barclays analyst Dan Levy, who spoke last week in an investor note, the industry environment has changed significantly since three years ago. As a result, while the theme for General Motors three years ago was "Growth Motors," the analyst believes the theme today is "praGMatic Motors.""

The company will emphasize its "flexibility" in producing EVs and traditional ICE vehicles at the event, which is being held at GM's vehicle assembly and Ultium EV battery plants in Tennessee. Spring Hill Assembly produces both types of vehicles.

Since the slower than expected adoption of electric vehicles, executives, including Barra, have emphasized a dual strategy involving lowering or withdrawing nearly all of the company's EV targets.

"During the second-quarter investor call in July, Barra stated that the company is taking advantage of every opportunity in ICE and EV while utilizing its core strengths. The company is being adaptable and proactive, but also maintaining strict discipline."

Low expectations

Although it's been since November 2022 that General Motors held an investor day, Wall Street analysts have low expectations.

UBS analyst Joseph Spak stated in a Sept. 23 investor note that although we remain positive on the stock, we do not see a particularly appealing tactical risk/reward ratio for the event.

Shreyas Pati, a Wolfe analyst, suggests that "low expectations" could allow GM's message to be "more constructive than anticipated."

Despite billions of dollars in buybacks, GM's stock has been under pressure as of late, with shares down about 8% from the beginning of last month and off 9% from a high of more than $50 reached in July, despite a roughly 28% increase in value for the year.

Last month, the stock experienced a 5.4% decline in one day, which was its second-largest daily drop this year, resulting from Wall Street analysts' price adjustment downgrades.

Morgan Stanley and Bernstein recently lowered their price targets for GM, stating that the market conditions are challenging and the upside potential is limited.

Daniel Roeska, a Bernstein analyst, wrote in a Sept. 23 investor note that he wants to wait and see which updates GM shares with the market before downgrading the stock to Market-Perform.

Analysts predict that GM's stock will remain overweight with a price target of $54.64 a share, according to FactSet's compilation of 29 estimates.

Ongoing issues

Automakers such as GM face concerns from investors about potential declining profits in the future.

The company's restructuring in China has caused concern among employees, as the announcement was made with minimal information about what to expect, and only stated that it was necessary after GM's business in the country had been declining for years.

In 2018, the operations recorded $2 billion in equity income, but in the second quarter of 2023, they suffered a loss of $104 million, marking their second consecutive quarterly loss after hitting a 20-year low in 2023.

A pricing war has been sparked in China due to the influx of domestic automakers, particularly BYD, in the EV market.

In GM's home market, investors are looking for updates on its plans for both electric vehicles (EVs) and hybrids. Unlike its crosstown rival, which has shifted its focus to hybrids, GM has not offered a hybrid option other than the Corvette for many years.

John Murphy, a BofA Securities analyst, stated in a Sept. 20 note that the event will likely offer insight into GM's strategy to reconcile the sluggish adoption of EVs with its future business plan, which is still expected to prioritize electrification but with a greater focus on hybrid technology.

Wall Street is closely monitoring Cruise's plans for funding its struggling autonomous vehicle division.

Despite halting all on-road operations last year and removing leaders after an October accident involving a pedestrian, Cruise has been gradually trying to restart operations, but it is still far from its pre-incident state.