GM Q4 earnings beat estimates as EV business turns the corner, company boosts 2025 profit guidance

Posted by Admin January 28, 2025 Bussiness

General Motors (GM) continued its strong run of quarterly performance last year, with full-year profit that came in at the high end of its range and upbeat forward guidance.

But challenges remain for the US automaker in 2025, with its electric vehicle business and manufacturing footprint possibly under threat from new White House regulations.

For the fourth quarter, GM posted revenue of $47.70 billion, compared with $44.46 billion per Bloomberg estimates. That’s 11% more than the $42.98 billion the company reported a year ago.

GM reported adjusted earnings per share (EPS) of $1.92 on Tuesday, versus the $1.83 expected. Adjusted earnings before interest and taxes (EBIT) was $2.50 billion, up 42.8% compared to a year ago. For full-year 2024, GM earned $14.9 billion in adjusted EBIT.

Following GM’s third quarter results, the automaker boosted its guidance for the third time, forecasting 2024 adjusted profit of $14 billion to $15 billion. Metrics like full-year automotive operating cash flow and adjusted automotive free cash flow came in at or above that guidance. But EPS diluted for the year did not, owing to charges the company took with its China business and Cruise self-driving unit, which came in at $4 billion and $500 million, respectively.

Nonetheless, GM now sees 2025 profit coming in at a range of $13.7 billion to $15.7 billion, with a lower low bound but a higher upper bound than in 2024. Diluted and adjusted EPS are seen at $11.00 to $12.00 for the year.

GM did not model the effects of potential tariffs or loss of federal EV tax credits from the Trump administration in its guidance. GM doesn’t assume these policy moves will happen, but will adjust based on the outcomes, GM CEO Mary Barra said in an interview with Yahoo Finance.

President Donald Trump speaks to reporters aboard Air Force One as he travels from Las Vegas to Miami on Saturday, Jan. 25, 2025. (AP Photo/Mark Schiefelbein) · ASSOCIATED PRESS

“Well, I think he [President Trump] very much understands exactly what the ramifications will be [of tariffs]. And I think they’ve been very clear that they want to make sure there’s the right and balanced relationships with many of the different countries that they’re talking about to accomplish the goals of his administration,” Barra said. “So I do think he has a very good understanding of the implications of tariffs or changing IRA [Inflation Reduction Act] or the stringency from a [emissions] standards perspective.”

While GM didn’t model these scenarios in its forward guidance, it does have a “playbook” and has been preparing for various outcomes based on where Trump’s policies may go, GM CFO Paul Jacobson said in a call with reporters.

Barra also said the potential loss of the federal EV tax credit may mean that GM takes “a larger share if there’s a smaller [EV] market” due to the desirability of GM’s EV portfolio, though she does see EV demand going down if the tax credit goes away.

GM credits improvements in its EV business and China operations as reasons for the better results in the past quarter.

“We doubled our EV market share over the course of the year as we scaled production, and our portfolio became variable profit positive in the fourth quarter,” Barra said in a letter to shareholders.

Barra added: “In China, we reported positive equity income for the fourth quarter before restructuring costs, and we’re taking steps with our partner to improve from there.”

Members of the media look at the Chevy Equinox EV at the North American International Auto Show in Detroit, Michigan on September 14, 2022.Members of the media look at the Chevy Equinox EV at the North American International Auto Show in Detroit, Michigan on September 14, 2022. (Photo by Geoff Robins / AFP) (Photo by GEOFF ROBINS/AFP via Getty Images) — Members of the media look at the Chevy Equinox EV at the North American International Auto Show in Detroit, Michigan on September 14, 2022. (GEOFF ROBINS/AFP via Getty Images) · GEOFF ROBINS via Getty Images

Earlier in January, GM reported that Q4 sales jumped 21% from a year ago and were up 4% in 2024 to 2.7 million vehicles. It said full-size pickup sales were up for the fifth straight year, hitting their highest level since 2007. Sales of full-size SUVs like the Tahoe, Suburban, and Yukon also propelled GM to a category win in the segment for the 50th straight year.

But there might be some slight challenges ahead for GM’s bread-and-butter US business.

“We’re assuming modest headwinds in wholesale volumes and mix as we appropriately balance production and dealer inventory levels. We’re also assuming a pricing decline in North America — one to one and a half percent year-over-year,” CFO Jacobson said in a media call.

In June, GM issued a new share buyback plan to repurchase up to $6 billion of its outstanding common shares. This was an addition to the $10 billion accelerated share repurchase (ASR) program it introduced at the end of last year, which coincided with a plan to increase its dividend by 33%, beginning last January.

Jacobson said on the call that while GM did not confirm any new share buybacks or ASR programs, management and the board would try to figure out a “prudent” way to expand those if possible.

As for its EVs, vehicles like the Cadillac Lyriq and Chevrolet Equinox EV have been selling well, but growth in the business hasn’t been as fast as the company originally projected.

Despite achieving its variable profit target in Q4, Jacobson said GM “wholesaled” — or sold through various distribution channels like retail, fleet, and government — a total of 189,000 EVS in 2024, falling short of its 200,000 projected.

However, GM forecasts 300,000 EV sales in 2025, Jacobson said. That’s at the lower end of its internal projections but enough volume to provide an earnings tailwind of $2 billion to $4 billion in 2025 just from its EV business. The automaker has previously said it’s expecting to trim EV costs by $2 billion to $4 billion this year.