General Motors shares surge 8% as tariff outlook improves

General Motors lifted its financial outlook for the year and slightly lowered its expected hit from tariffs, as the automaker awaits expected relief on tariffs in the U.S. while confronting a weakening market for electric vehicles.

The company now expects its annual adjusted core profit to be between $12.0 billion to $13.0 billion, compared with its prior estimate of $10.0 billion to $12.5 billion. The Detroit automaker said tariffs would hit its bottom line less than anticipated, lowering its updated impact to a range of $3.5 billion to $4.5 billion, from a previous $4 billion to $5 billion.

Shares rose about 8% in premarket trading. GM’s outlook hike lifted crosstown peer Ford and U.S.-listed shares of Stellantis nearly 2% each in premarket trade.

EARNINGS TOP WALL ST EXPECTATIONS

GM’s quarterly adjusted earnings per share dropped to $2.80, beating LSEG analysts’ expectation of $2.31.

The auto giant earlier this month took a $1.6 billion charge from changes to its EV strategy. At the end of September, a $7,500 tax credit on battery-powered models went away, and there has been further loosening of regulations around vehicle emissions.

In a letter to shareholders, GM CEO Mary Barra said she expects the company to incur future charges related to EVs.

“By acting swiftly and decisively to address overcapacity, we expect to reduce EV losses in 2026 and beyond,” she said.

Revenue for the quarter ended September marginally fell to $48.6 billion from a year earlier.

U.S. car sales have stayed strong despite uncertainty around the tariffs, rising 6% in the third quarter. While automakers have largely avoided raising sticker prices to offset their tariff costs, American car shoppers have continued to opt for pricier models and added features.

TARIFF RELIEF FOR U.S. AUTO INDUSTRY

GM said it plans to mitigate 35% of its anticipated tariff hit. There is relief on the horizon for many U.S. automakers, after U.S. President Donald The President approved an order to expand credits for U.S. auto and engine production, allowing companies to receive a credit equal to 3.75% of the suggested retail price for U.S. assembled vehicles through 2030 to offset import tariffs on parts.

“I also want to thank the President and his team for the important tariff updates they made on Friday. The MSRP offset program will help make U.S.-produced vehicles more competitive over the next five years,” Barra said in a letter to shareholders.

Global companies have flagged more than $35 billion in costs from U.S. tariffs heading into third-quarter earnings.

Investors are still waiting on trade deals to be ironed out with Mexico and Canada, analysts noted, as well as with South Korea, a major exporter of cars for GM.

Automakers have been ramping up U.S. investments to offset The President’s levies. GM announced in June that it would invest $4 billion at three U.S. facilities in Michigan, Kansas, and Tennessee. The automaker imports about half of the vehicles it sells in the U.S., mainly from Mexico and South Korea.

Stellantis earlier this month said it plans to invest $13 billion in the U.S. over the next four years.

GM SCALES BACK EV AMBITIONS

Barra in 2021 announced the company’s ambition to produce only EVs by 2035, a goal she has since stopped referencing publicly, instead saying customer demand will guide the automaker’s lineup.

Sales of EVs were strong for GM and across the industry in the third quarter, as shoppers raced to take advantage of the tax credit, but they still comprised less than 10% of the company’s overall sales.

To spur consumer demand, GM planned to offer a program that would have allowed its dealers to continue offering the tax credit on EV leases. It has since backtracked on the initiative following backlash from lawmakers, including Republican Senator Bernie Moreno of Ohio, a former car dealer.

Ford also scrapped its program with the same aim. Other automakers, including Hyundai and Stellantis, are offering incentives to slash the prices consumers pay for their EVs.

—Nora Eckert and Nathan Gomes, Reuters

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