General Motors gave robust 2025 outlook early Tuesday after beating earnings estimates for a fourth quarter marked by strong vehicle volumes and pricing. GM stock plunged near a buy point.
Analysts turned cautious on guidance, which GM indicated does not include potential impact from President Donald Trump's evolving trade and tariff policies. Uncertainty about the future of tax credits for electric vehicles under Trump also lingers.
GM CEO Mary Barra told analysts on an earnings call that the carmaker is tracking "a lot of moving parts" in federal policy under the new Trump administration.
"What I would say is whether we're talking about (the Inflation Reduction Act of 2022) or tariffs, we've got multiple playbooks that we have been working on" to respond to or even anticipate some of those moves, Barra said.
Ahead of the report, GM stock passed IBD's Rising Profit Estimates screen. Rival Tesla is on the IBD Leaderboard watchlist.
GM Earnings And Outlook
General Motors reported Q4 earnings per share of $1.92, up 55% vs. a year earlier. Revenue rose 11% to $47.7 billion. That reflects easy comparisons in part. Both GM earnings and sales fell in Q4 2023 amid an autoworkers' strike.
Analysts had expected GM earnings of $1.85 per share on revenue of $44.982 billion, FactSet showed.
For 2025, the company guided earnings of $11-$12 per share, which would be up from $10.60 in 2024. It was also above analyst consensus estimates for $10.82 going into Tuesday's report. GM guided 2025 automotive free cash flow of $11 billion-$13 billion on Tuesday, which would be below the $14 billion generated in 2024.
The 2025 guidance "assumes a stable policy environment in North America," the GM earnings release said. The 2025 guide also assumes "an estimated benefit of $500 million from reduced year-over-year expenses at Cruise" (GM's largely shuttered self-driving car business) and "anticipated capital spending of $10 billion-$10 billion," including investments in battery cell manufacturing.
President Trump has revived fears of a trade and tariff war, including threats to imports from Mexico and Canada, where GM makes vehicles.
GM Stock Plunges Below Key Level
Shares of General Motors sank nearly 9% in Tuesday's stock market trading, undercutting the 50-day moving average in heavy volume.
The car stock shows a 61.24 buy point from a consolidation that began in November. But on Tuesday, shares fell near the bottom of that pattern.
The relative strength line is lagging. The RS line for GM stock has been lackluster over the longer term as well.
Tesla stock and Ford shares also fell on Tuesday. Tesla reports Q3 earnings on Wednesday and Ford follows on Feb. 5.
Among auto stocks, shares of GM and Tesla are acting relatively well, along with China's BYD and XPeng. XPeng stock nudged up in buy range on Tuesday after breaking out past 14.66 last week.
Auto Recovery, EV Shift In Spotlight
In 2024, both Ford and GM grew new vehicle sales capped by a strong fourth quarter, the companies reported in early January. Both notched their best annual sales tally since 2019 as the auto recovery continues.
Average transaction prices continued to rise in Q4 while incentive spending continued to fall, GM said. That was a positive sign for GM earnings on Tuesday.
For Q4, GM grew EV sales and share in the U.S. thanks to affordable new models, including the Equinox EV. Analysts said Tesla's U.S. EV sales and share fell over that period.
Tesla's response, in the form of its cheapest model yet, is expected in the first half of 2025.
Legacy automakers are shifting to electric cars despite challenges. GM says it remains committed to gas-powered SUVs and trucks while investing in electric vehicles, an emerging and future growth market.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
