General Motors lifts forecast as tariff outlook improves, shares surge 14%

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By Nora Eckert and Nathan Gomes

(Reuters) -General Motors raised its profit outlook for the year citing relief on two fronts: less pressure from tariff costs and lighter losses on electric cars, as it unwinds massive bets it made on the technology. 

GM’s shares surged 14% on Tuesday morning as investors cheered the profit forecast and the automaker’s third-quarter results along with the company’s signals for an even stronger 2026, putting its shares on track for their biggest single day jump in nearly six years.

In a letter to shareholders, GM CEO Mary Barra said the company focused on EV investments to meet stringent federal requirements, which U.S. President Donald Trump has since largely unraveled. She expects the company to incur future charges related to EVs, although she said the vehicles remain its “North Star.”

“It is now clear that near-term EV adoption will be lower than planned,” Barra said, citing changing regulations. “By acting swiftly and decisively to address overcapacity, we expect to reduce EV losses in 2026 and beyond.” 

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. 

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.

GM’s results lifted crosstown rivals Ford Motor and U.S.-listed shares of Stellantis roughly 4% and 3% respectively in early trading. 

EARNINGS TOP WALL ST EXPECTATIONS

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. 

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

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

Still, GM’s results could be hampered by supply chain disruptions, additional EV charges and increased warranty costs. GM said it could be affected by disruptions related to chipmaker Nexperia, whose production is being stymied by a dispute between China and the Dutch government. 

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 Trump 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 Trump’s levies. GM announced in June that it would invest $4 billion at three U.S. facilities in Michigan, Kansas, and Tennessee. The automaker has previously imported 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.  

The company is also canceling production of its electric BrightDrop van, it shared Tuesday, with executives citing slow development in the commercial EV van market. The vehicle is produced in Canada.  It expects to record a charge relating to the axed program in the fourth quarter. 

(Reporting by Nathan Gomes and Nora Eckert; Editing by Shilpi Majumdar, Mike Colias and Nick Zieminski)