Tariff exposure, EV business on investor agenda
Detroit General Motors (GM) will report third-quarter earnings before the opening bell on Tuesday morning as the largest of the trio of automakers grapples with President Trump’s auto tariffs and volatile EV business.
GM is expected to report first-quarter revenue of $45.16 billion, down 7% from a year earlier, according to Bloomberg consensus. Analysts predict GM’s first-quarter adjusted earnings per share will be $2.27 and adjusted net income will be $2.25 billion.
GM’s revenue decline isn’t the result of a lack of sales. GM said third-quarter sales reached 710,347, up 8% from a year ago. The automaker said it ranked No. 1 in overall sales in the U.S., achieving its best market share since 2017.
Gasoline-powered vehicles, including pickup trucks like the Chevrolet Silverado and full-size SUVs like the GMC Yukon, drove gains. Both categories are poised to lead the industry by the end of the year, GM said.
Unsurprisingly, GM’s EV sales reached a record high of 66,501 units in the third quarter before the $7,500 federal EV tax credit expired.
However, the EV business is expected to contract somewhat after the tax credit expires.
The automaker said last week it would take a $1.6 billion charge from the reevaluation of its EV plans, of which $1.2 billion of the impact would be non-cash special charges as a result of adjustments to EV capacity. GM said the other $400 million remaining in cash was primarily related to contract cancellation fees and commercial agreements related to EV-related investments.
The other big looming issue for GM is tariff cost exposure.
Read more: Latest news and updates on Trump’s tariffs
Last spring, the automaker lowered its full-year forecast to include a possible $4 billion to $5 billion impact from auto tariffs; But after reporting second-quarter earnings in the summer, GM confirmed its guidance and said the projected tariff impact would remain unchanged.
GM currently projects full-year EBIT of $10 billion to $12.5 billion, net income attributable to shareholders of $8.25 billion to $10 billion, and adjusted automotive free cash flow of $7.5 billion to $10 billion.
To combat the impact of tariffs and increase US production, GM has committed $4 billion to expand US manufacturing capabilities.
GM’s guidance miss and increased spending are hurting other U.S. manufacturers, including Ford (F), Tesla (TSLA), and even foreign automakers like Toyota (TM), which produces in USMCA countries such as the United States, Canada and Mexico.
The Anderson Economic Group reports that auto and parts tariffs from Canada and Mexico alone have cost automakers more than $6 billion this summer and will total more than $10 billion by the end of this month.
