GM Beats Wall Street Estimates, EVs Play a Strong Part in Success

On January 28, 2025, CNBC reported that General Motors exceeded Wall Street’s expectations for both revenue and earnings in the fourth quarter, while projecting strong performance for 2025.

Despite challenges such as slowing industry sales, restructuring efforts in China, and heightened geopolitical and regulatory uncertainty in the U.S. with President Donald Trump entering his second term, the Detroit-based automaker remains optimistic about its outlook for the year ahead.

Although GM reported results that met or surpassed investor expectations, its shares dropped by approximately 9% in early trading. Analysts during the company’s earnings call raised concerns about how GM is preparing for potential changes under the Trump administration, particularly regarding the impacts of possible tariffs on vehicle production and shifting policies that could affect electric vehicle pricing and sales. This uncertainty signals strong ongoing concerns for the broader auto industry.

Wall Street analysts have pointed to a lack of investor enthusiasm toward the U.S. automotive sector, citing a slowdown in electric and autonomous vehicles, as well as volatility in regulatory policies.

For 2025, GM’s guidance includes net income for shareholders ranging from $11.2 billion to $12.5 billion, or $11 to $12 per share, adjusted earnings before interest and taxes (EBIT) between $13.7 billion and $15.7 billion (or $11 to $12 in adjusted EPS), and automotive free cash flow between $11 billion and $13 billion.

“In our view, the guidance for 2025 leaves no room for errors, and also does not include impact from regulatory changes in the U.S., especially on tariffs and BEV support,” analysts at Bernstein said.

General Motors (GM)’s financial performance for 2025 is projected to meet or exceed many of Wall Street’s expectations, with analysts predicting adjusted earnings of around $14 billion. This guidance follows a strong 2024 for the automaker, which reported record figures, including adjusted EBIT of $14.9 billion and net income attributable to stockholders of $6 billion.

For 2025, GM’s guidance does not account for potential regulatory changes, such as tariffs on vehicle imports or any tax reforms. The company’s forecast includes net income for shareholders ranging from $11.2 billion to $12.5 billion, adjusted EBIT of $13.7 billion to $15.7 billion, and adjusted automotive free cash flow between $11 billion and $13 billion.

In the fourth quarter, GM reported earnings of $1.92 per share, slightly exceeding analysts’ estimates of $1.89. The company posted revenue of $47.7 billion, surpassing the anticipated $43.93 billion, marking an 11% increase from the same period last year.

Despite these strong results, GM incurred a net loss of $2.96 billion, or $1.64 per share, in the fourth quarter, compared to a profit of $2.1 billion, or $1.59 per share, during the same period in 2023. This loss was largely due to $5 billion in special charges, including $4 billion in noncash restructuring charges tied to its operations in China and $500 million in costs related to its decision to halt funding for the Cruise robotaxi business. Excluding these charges and other items, GM would have earned $1.92 per share in the fourth quarter.

CFO Paul Jacobson emphasized that the company’s performance was strong in 2024, with notable growth in both its electric vehicle (EV) and traditional internal combustion engine segments. CEO Mary Barra highlighted that GM’s restructuring plan to refocus its autonomous driving efforts on personal vehicles, along with the shutdown of robotaxi development, is expected to generate annual savings of around $1 billion.

For the full year of 2024, GM’s net income attributable to stockholders dropped 40.7% from the previous year, totaling $6 billion. The automaker’s revenue for the year reached $187.44 billion, a 9.1% increase from 2023.

Regional Results Varied

GM’s North American operations continued to be the primary driver of the company’s earnings, maintaining their strong performance for another year. GM’s North American adjusted earnings for 2024 grew by 18.1% compared to 2023, reaching $14.53 billion, which corresponds to a solid 9.2% adjusted profit margin.

However, the automaker’s international operations faced challenges. Adjusted earnings from regions like South Korea, Brazil, and the Middle East fell sharply by 75%, totaling just $303 million in 2024. A significant contributor to this decline was GM’s equity income from its joint venture in China, which posted a loss of $4.41 billion. This loss was primarily attributed to the company’s ongoing restructuring efforts in the region.

Despite these setbacks, GM remains optimistic about its future in China. CEO Mary Barra pointed to the positive equity income reported in the fourth quarter before restructuring costs, emphasizing that the company is taking proactive steps, in collaboration with its partner, to improve its performance there moving forward. Barra reassured investors that GM does not plan to inject additional capital from the U.S. into its Chinese operations as part of the restructuring process.

GM’s focus remains on refocusing its efforts and improving profitability in international markets, while North America continues to be a crucial pillar of its financial strength.

GM’s Electric Vehicles Reached a Targeted Profitability on a Production Basis

Electric vehicle sales for GM jumped 50% for the year and 125% for the fourth quarter, roughly doubling market share over the course of the year. GM was the #2 seller of EVs in the U.S. across the second half of 2024.

GM plans to continue rolling out new products to support both its sales and earnings growth, with a particular focus on electric vehicles (EVs). The company reported that its EV production reached a targeted level of profitability during the fourth quarter, marking a key milestone in its push for sustainable, profitable electric mobility.

Looking ahead, GM forecasts a $2 billion to $4 billion improvement in its EV business in 2025, based on a projected increase in wholesale volumes of approximately 300,000 units. This would represent a roughly 59% increase compared to 189,000 EVs sold in 2024, though it falls slightly short of GM’s initial target of 200,000 units. The automaker attributed this slight miss to efforts to reduce its days’ supply of vehicles by the end of the year, focusing on optimizing inventory levels.

GM is confident that continued improvements in scale, fixed cost absorption, and ongoing efforts to reduce battery cell and vehicle costs will drive further profitability in its EV segment in 2025.

Beyond EVs, GM CFO Paul Jacobson also highlighted the company’s focus on returning value to shareholders and paying down automotive debt. In December, GM successfully retired $750 million in debt and completed stock repurchases, reducing its outstanding share count to below 1 billion by the end of the year. The company is also preparing to address $1.75 billion in automotive debt that matures in 2025.

For the broader U.S. auto industry, GM anticipates relatively flat new vehicle sales for 2025, projecting total sales of more than 16 million vehicles, which would be in line with the prior year. As for vehicle pricing, which has come down from record highs, GM expects prices to decline by 1% to 1.5% as the market stabilizes.

All Automakers Face Uncertainty During Trump’s Second Term

In her shareholder letter, GM CEO Mary Barra acknowledged the current “uncertainty over trade, tax, and environmental regulations” and how these factors could potentially affect the company’s operations moving forward.

Barra emphasized that GM has been proactive in its discussions with both Congress and the administration, advocating for the importance of U.S. manufacturing and American leadership in advanced technologies. She noted, “It’s clear that we share a lot of common ground, and we appreciate the dialogue,” referencing her past conversation with President Donald Trump before his inauguration.

Barra expressed confidence that regardless of the regulatory landscape, GM is well-positioned with a diverse and growing portfolio of both internal combustion engine (ICE) vehicles and electric vehicles (EVs). She assured investors that GM would remain agile and execute its strategy efficiently in response to any changes in the market.

GM had previously shared with CNBC that Barra’s conversation with Trump was “friendly and productive.”

A potential concern for GM and other automakers is Trump’s discussion of a possible 25% tariff on goods imported from Canada and Mexico. Such tariffs could impact vehicles that are imported into the U.S., as many major automakers, including GM, maintain manufacturing facilities in the U.S. but still rely heavily on imports from countries like Mexico to meet domestic consumer demand. The uncertainty around these potential tariffs underscores the serious ongoing challenges not only in the global automotive supply chain, but for all business in the US and around the world.

AP reported that President Donald Trump is preparing to implement tariffs on goods from Canada and Mexico. However, the stakes are higher this time, with many economists expressing concerns about the certain damage these tariffs would inflict on the U.S. economy.

“The potential for such sizable economic impacts ought to act as enough of a deterrent that Trump will not end up implementing these higher tariffs,” said Matthew Martin, senior U.S. economist at the consultancy Oxford Economics.

Nationwide’s economics division released a report on Monday estimating that Trump’s proposed tariffs could increase inflation by as much as 0.5 percentage points and reduce economic growth by up to 0.7 percentage points. The analysis further noted that these figures did not account for potential retaliatory tariffs from Canada or Mexico, which could intensify the negative effects on inflation and GDP growth.

One of Trump’s key strategies for addressing inflation has been to lower gasoline prices. However, economists warn that imposing tariffs on Canada—a major source of oil and gas imports to the U.S.—could drive up fuel prices at the pump, undermining his efforts to control inflation. This creates a complex dilemma, as the tariffs would certainly harm consumers by raising costs on essential goods, including gasoline, while simultaneously harming broader economic growth.

“For example, 60% of oil and gas imports come from Canada,” said Oxford Economics’ Martin. “A 25% tariff would lead to higher gasoline, diesel, and petroleum product prices for households and firms, especially in the Midwest and Rocky Mountain regions, where refineries are connected to Canada by pipeline.”

EV, Hybrid Sales Reached a Record 20% of U.S. Vehicle Sales in 2024

In 2024, Motor Intelligence, an auto data firm, reported that over 3.2 million “electrified” vehicles were sold in the U.S. This category includes 1.9 million hybrid vehicles, including plug-in hybrids, and 1.3 million all-electric models. The data shows that sales of electric and hybrid vehicles reached a historic milestone, accounting for 20% of total U.S. vehicle sales in 2024, as reported by CNBC.

While electrified vehicles made impressive gains, traditional gas and diesel-powered internal combustion engine (ICE) vehicles still dominated the market, making up 79.8% of sales. However, this marks a significant shift, as the share of ICE vehicles dropped below 80% for the historic first time in modern automotive history, highlighting the growing shift toward electrification in the automotive industry, and proving mass EV adoption is coming soon.