GM outlines $4B U.S. capacity expansion and expects Super Cruise revenue to double in 2026 amid tariff mitigation efforts

Earnings Call Insights: General Motors Company (GM) Q2 2025

Management View

• Mary T. Barra, CEO, reported that “we have delivered strong underlying operating performance, and we are positioning the business for a profitable long-term future as we adapt to new trade and tax policies and a rapidly evolving tech landscape.” Barra highlighted consistent execution in production and go-to-market strategies, noting particular strength in both ICE and EV segments, with Chevrolet now the #2 EV brand and Cadillac the #5 overall.
• Barra emphasized a $4 billion investment in U.S. assembly plants to add 300,000 units of capacity for high-margin vehicles, stating this will help “greatly reduce our tariff exposure, satisfy unmet customer demand and capture upside opportunities as we launch new models.” She also mentioned new leadership appointments, including Sterling Anderson as Chief Product Officer and Barak Turovsky to head AI initiatives.
• Barra added, “Chevrolet Equinox alone gained nearly 6 points of retail market share year-over-year in the industry’s largest segment thanks to the popularity of both the ICE and EV models.”
• Barra reported that GM has “booked $4 billion of deferred revenue from Super Cruise, OnStar and other software services that we will recognize over time,” with projected Super Cruise revenue of more than $200 million in 2025 and expectations to more than double in 2026.
• Paul A. Jacobson, CFO, stated, “For the first half, total company revenue was a record $91 billion, driven by strong demand, stable vehicle pricing and continued growth at GM Financial.” Jacobson added that North America revenue reached nearly $77 billion, up slightly year-over-year, and highlighted U.S. market share gains and disciplined incentive strategies.

Outlook

• Management stated guidance remains at EBIT adjusted in the $10 billion to $12.5 billion range, EPS diluted adjusted in the $8.25 to $10 per share range, and adjusted automotive free cash flow in the $7.5 billion to $10 billion range. Jacobson explained, “Our guidance in most of our underlying assumptions remain unchanged.”
• Jacobson indicated that second half EBIT adjusted is expected to be about $1.75 billion lower than the first half due to an additional quarter of net tariff impact, reduced North America wholesale volumes from seasonality, and increased spending on next-generation full-size trucks and U.S. capacity expansion.
• The company continues to plan for a full-year U.S. SAAR around 16 million units.

Financial Results

• Jacobson reported, “Total company EPS diluted adjusted was $2.53 and EBIT adjusted was $3 billion, down $1.4 billion year-over-year. This decline was primarily driven by a net tariff impact of $1.1 billion in the quarter.”
• Adjusted automotive free cash flow was $2.8 billion, down $2.5 billion year-over-year, primarily due to tariff payments and working capital headwinds.
• North America delivered EBIT adjusted of $2.4 billion and EBIT-adjusted margins of 6.1%. Jacobson noted, “Excluding the impact of tariffs, our margin would have been approximately 9%.”
• GM International posted EBIT adjusted of $200 million, up $150 million year-over-year, supported by improved China equity income.
• GM Financial delivered EBT-adjusted of $700 million and paid a $350 million dividend to GM during the quarter.

Q&A

• Michael Patrick Ward, Citigroup Inc.: Asked about the $600 million EV inventory adjustment and tariff mitigation. Paul A. Jacobson responded that the EV write-down reflects “expectations on pricing as well as production and demand” and expects improvement as inventory stabilizes. On tariffs, Barra said, “We feel we’ll be able to offset 30%. A lot of that will come in later this year as well as we’ll continue to make improvements across the board.”
• Dan Meir Levy, Barclays: Inquired about pricing and EV profitability. Jacobson explained, “We still see that working quite well,” referencing pricing stability. On EVs, Barra stated, “We are focused on each and every vehicle getting to profitability, and we’re not going to stop until they do.”
• Ryan Joseph Brinkman, JPMorgan: Asked about the impact of manufacturing investments on tariff mitigation. Jacobson explained that future U.S. production will help lower tariff exposure over time, but the “environment remains dynamic.”
• Emmanuel Rosner, Wolfe Research: Asked about share buybacks and capital allocation. Jacobson noted that open market repurchases resumed in July with $4.3 billion of authorization remaining. On capital spending, he said, “Our capital is now focused on where can we structurally and architecturally improve the cost and the performance.”

Sentiment Analysis

• Analysts expressed concerns about tariffs, EV profitability, pricing, and the ability to offset external headwinds, often probing for details on mitigation strategies and capital flexibility. The tone was neutral to slightly negative, especially around the sustainability of EV margins and effectiveness of tariff offsets.
• Management maintained a confident and disciplined tone in prepared remarks, emphasizing strategic flexibility and cost controls. During Q&A, the tone remained steady, with Jacobson stating, “We’re aiming for the midpoint and that’s the way we try to shoot straight across the guidance.”
• Compared to the previous quarter, both analysts and management maintained a similar dynamic, with analysts pressing on external risks and management highlighting resilience and operational discipline.

Quarter-over-Quarter Comparison

• Guidance ranges for EBIT adjusted, EPS, and free cash flow remained unchanged from Q1 2025. Management continued to focus on cost mitigation, disciplined pricing, and U.S. capacity expansion.
• Strategic focus expanded with explicit $4 billion U.S. manufacturing investment and more detailed plans for battery chemistry innovation and flexible production between ICE and EVs.
• Analysts’ questions shifted slightly more toward the sustainability of EV profitability and the long-term impact of tariffs versus Q1, where the focus was more on initial responses to new policy and supply chain resilience.
• Management confidence and messaging on margin protection, capital discipline, and strategic investments were consistent with the prior quarter.

Risks and Concerns

• Management cited ongoing risks from tariffs, higher warranty expenses, and EV inventory adjustments. Jacobson flagged, “warranty expenses have also been obscuring our strong performance, including a $300 million increase in the second quarter compared to last year.”
• The company faces continued headwinds from fleet pricing and slower EV industry growth. Management is addressing these with new battery chemistries, production flexibility, and operational cost controls.
• Analysts highlighted the potential for further downside if tariff relief does not materialize and questioned the timeline and certainty of mitigation actions.

Final Takeaway

General Motors management highlighted strong operational execution, U.S. market share gains, and a clear commitment to profitable growth through both ICE and EV portfolios. Strategic investments in U.S. manufacturing capacity and battery technology are expected to reduce tariff exposure and drive future profitability, while Super Cruise and software services are on track for significant revenue growth. Management maintained guidance ranges and stressed disciplined capital allocation, cost controls, and flexibility to navigate a dynamic regulatory environment.

Read the full Earnings Call Transcript