General Motors has recently adjusted its annual profit guidance, signaling a more optimistic outlook on the impact of tariffs than initially anticipated. The U.S. automaker announced on Tuesday that it now expects a potential hit from U.S. tariffs to reach up to $4.5 billion, a decrease from its previous estimate of $5 billion. This revision has allowed GM to forecast its annual adjusted operating profit in the range of $12 billion to $13 billion, up from earlier projections of $10 billion to $12.5 billion.
Despite these positive adjustments, GM remains significantly impacted by the ongoing trade tensions initiated by U.S. President Donald Trump. With a substantial manufacturing presence not just in the United States but also in South Korea, Mexico, and Canada, GM’s operations are closely tied to the implications of these tariffs. The company indicated that it will mitigate some of the tariff burden by passing additional costs onto consumers through price increases, with plans to raise vehicle prices in North America by up to 1 percent year-on-year.
This announcement follows GM’s warning last week regarding a $1.6 billion charge associated with scaling back its electric vehicle (EV) production. This decision was influenced by the cancellation of tax credits for EV purchases in the U.S., prompting GM to reassess its EV capacity and manufacturing strategy. Chief Executive Mary Barra emphasized the need for the company to act quickly in response to overcapacity issues, expressing confidence that these measures would help reduce losses in the EV sector by 2026 and beyond.
The expiration of the tax credits on September 30 led to a surge in consumer purchases of electric vehicles, resulting in a remarkable doubling of GM’s EV sales to a record quarterly total of 66,501 units. However, the automotive industry is bracing for a downturn in EV sales in the wake of these tax changes, along with potential rollbacks in vehicle emissions regulations, something that many automakers, including Ford, are anticipating.
In its third quarter report, GM revealed adjusted earnings before interest and tax of $3.4 billion, reflecting an 18 percent decline compared to the previous year. Meanwhile, revenues remained steady at approximately $49 billion. Notably, the adjusted operating profits exceeded analysts’ average expectations, which stood at around $2.7 billion, as reported by Visible Alpha.
