DETROIT (Reuters) -General Motors on Tuesday posted fourth-quarter 2024 results and a 2025 earnings forecast ahead of Wall Street expectations, but shares fell sharply in trading Tuesday as investors weighed the threat of tariffs that could hit the automaker’s business.
U.S. President Donald Trump on Monday evening again threatened tariffs on a broad array of goods, including steel, aluminum and copper, all materials critical to building automobiles. Shares dropped 8.6% in early trading.
GM is one of the automakers most exposed to Trump’s plans on two important fronts: EVs, where it has made aggressive investments, and tariffs, because it has substantial manufacturing in Mexico and Canada, countries that Trump is targeting.
The automaker projected net income of $11.2 billion to $12.5 billion this year, ahead of analyst expectations for $10.8 billion as calculated by LSEG.
“There’s a big caveat to 2025 guidance, though, on trade policy not messing everything up, which it could as soon as Feb. 1 with 25% tariffs,” said David Whiston, Morningstar Research Services analyst, in an email.
GM’s CFO Paul Jacobson told reporters Monday prior to Trump’s statements that the company has an “extensive playbook” pulled together in the event tariffs are imposed. The company had already started to bring vehicles in its international inventory in Mexico and Canada to the United States, Jacobson said.
“Every delivery that we can make before a tariff is instituted, it’s that much better, rather than sitting on inventory,” he said.
He did say, however, that they would not be able to make some decisions until they understand what the tariff environment will look like. “There’s things that we can do to balance plants, etc, and then there are things that cost a lot more money going forward,” he said.
GM’s adjusted earnings per share of $10.60 for the year surpassed the market expectation of $10.39. GM’s revenue of $187 billion beat estimates of $183 billion.
GM sold vehicles at an average price of $50,000 in 2024, and executives see a 1% to 1.5% drop in North American pricing power and a modest decline in gas-powered vehicle volume in 2025.
The company expects losses will narrow with its battery-powered vehicles, reorganization of its China business, and the end of robotaxi development at Cruise, its autonomous vehicle unit.
The Detroit carmaker does not break down its EV losses, but said in 2024 that revenue was higher than fixed costs including labor and material costs, a metric that it calls positive variable profitability. The figure does not include costs such as building assembly lines, but indicates financial progress in the EV rollout.
