General Motors (GM) ended 2024 on a high note, reporting fourth-quarter revenue of $47.7 billion and an operating profit of $2.5 billion, surpassing Wall Street expectations, however, GM’s stock fell by more than 10% as tariff fears overshadowed strong guidance.
For the full year, GM achieved an adjusted profit of $10.60 per share and sold nearly 190,000 electric vehicles (EVs), falling just shy of its 200,000-unit goal.
Looking ahead, the automaker predicts an even better 2025, with projected operating profits of $13.7 billion to $15.7 billion and an adjusted earnings-per-share (EPS) range of $11 to $12.
At the midpoint, this represents a nearly 10% increase in EPS from 2024, buoyed by cost management, improving EV profitability, and an aggressive $16 billion stock buyback program.
However, GM’s stock tumbled by more than 10% following the earnings announcement and was down by 9.43% at 1 pm.
Before Tuesday’s moves, GM’s stock had risen 44% in the past year.
Tariff fears overshadow strong guidance
While GM’s financial performance and outlook were impressive, its stock decline reflected mounting concerns over policy changes.
GM’s 2025 guidance does not account for possible tariffs, tax reforms, or regulatory shifts under President Donald Trump.
Trump has threatened 25% tariffs on imports from Canada and Mexico.
“GM produces 300,000 full-sized pickups in Mexico and 75% to 80% are exported to the US,” said Freedom Capital Markets analyst Mike Ward. Tariffs would make those vehicles more expensive, eat away at GM’s profit margin, or both.
“There are 3 large open questions regarding this outlook,” wrote Wolfe Research analyst Emmanuel Rosner in a Tuesday report.
These include the lack of clarity on tariff impacts, weaker-than-expected North American profit margins, and the absence of an updated capital return strategy, as GM exhausted its stock repurchase authorizations in 2024.
GM also said it faces headwinds in 2025 including higher labor costs and an expected pricing drop of 1% to 1.5% in North America.
Robust cash flow expected
Despite the challenges, GM remains committed to its EV roadmap.
The company plans to ship 300,000 electric vehicles in 2025, a 58% increase from 2024.
However, this projection hinges on the continuation of EV tax credits and other supportive policies, which may change under the Trump administration.
GM also expects robust cash flow, forecasting $21 billion to $24 billion in operating cash flow from its automotive business in 2025.
Of this, $10 billion to $11 billion will be reinvested in the business, while $500 million is allocated for dividends, leaving ample room for further share buybacks.
The automaker’s share repurchase program has been a significant driver of its stock performance, with GM shares rising nearly 50% in 2024, second only to Tesla among major global automakers.
GM also faces increasing competition in the EV market
While GM navigates tariff uncertainties, it also faces intensifying competition in the EV market.
Tesla, for example, remains the industry leader, selling 1.8 million EVs in 2024.
However, Tesla’s stock surged 66% last year, fueled more by investor excitement over its AI and self-driving initiatives than traditional vehicle sales.
Tesla’s upcoming robo-taxi service, set to launch in late 2025, has captured market attention and could further shift the competitive landscape.
Meanwhile, GM’s plans for self-driving technology and other innovations have yet to make a similar impact on its valuation.
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