Automotive manufacturer General Motors (NYSE: GM) missed Wall Street’s revenue expectations in Q4 CY2025, with sales falling 5.1% year on year to $45.29 billion. Its non-GAAP profit of $2.51 per share was 11.1% above analysts’ consensus estimates.

Is now the time to buy GM? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

General Motors’ latest quarter was met with a strong positive reaction from the market, despite missing Wall Street’s revenue expectations. Management attributed performance to disciplined inventory management, strong pricing on internal combustion engine vehicles, and strategic shifts in response to changing consumer demand. CEO Mary Barra emphasized, “We proactively managed our net tariff exposure and were quick to respond to slowing EV demand by selling our share in the Altium Cells Lansing plant and pivoting Orion Assembly from EV to ICE production.” The company also highlighted margin expansion, driven by operational efficiencies and lower warranty expenses.

Looking forward, General Motors’ guidance is underpinned by a planned return to higher margins in North America, ongoing cost reductions in electric vehicles, and a continued focus on digital revenue streams. Management is confident that actions taken to rightsize EV capacity and investments in software-defined vehicles will help stabilize profitability. As CFO Paul Jacobson stated, “We expect North America ICE wholesale volumes to be flat to up modestly, with the full-year benefit of model year 2026 price increases and a benefit of $1 to $1.5 billion related to actions taken to rightsize our EV capacity.”

Key Insights from Management’s Remarks

Management credited the quarter’s results to a strong ICE portfolio, operational cost discipline, and rapid adaptation to evolving market and policy dynamics.

• ICE vehicles drive momentum: Strong demand for full-size pickups, SUVs, and crossovers like the Chevrolet Equinox and Traverse underpinned market share gains and pricing power, outpacing declining EV volumes.
• EV strategy reset: Slower-than-expected EV adoption led to the sale of GM’s stake in the Altium Cells Lansing plant and shifting Orion Assembly back to ICE production, coupled with $7.6 billion in EV-related charges to reduce fixed costs and align output with demand.
• Cost control and margin expansion: The company offset more than 40% of gross tariff costs through a mix of manufacturing footprint changes, go-to-market initiatives, and cost reductions, supporting margin improvement despite external pressures.
• Digital and software growth: OnStar and Super Cruise subscriptions saw substantial growth, with 12 million OnStar subscribers and nearly 80% year-over-year increase in Super Cruise users, contributing to deferred revenue and improved long-term margin prospects.
• International and China stabilization: International operations, particularly in South America, and a turnaround in China’s new energy vehicle segment provided additional earnings stability, even amid competitive pressures from Chinese automakers.

Drivers of Future Performance

General Motors’ outlook for the coming year is shaped by continued ICE strength, EV cost efficiency, and expanded digital services, balanced against regulatory and commodity headwinds.

• EV cost reduction and mix: Management expects lower EV-related losses as capacity is rightsized and new battery technologies are introduced, with ongoing efforts to reduce production and warranty costs supporting a return to North America margins of 8%–10%.
• Tariffs and supply chain resilience: Tariff mitigation remains a key focus, with management aiming to offset gross tariff costs through manufacturing onshoring, footprint adjustments, and operational efficiency. However, commodity price increases and memory chip costs are seen as persistent risks.
• Digital services expansion: Growth in high-margin OnStar and Super Cruise subscription revenue is projected to increase deferred revenue, bolstering profitability and creating a foundation for future software-defined vehicle offerings and autonomous features.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace of EV cost reductions and progress toward North America margin targets, (2) the expansion and monetization of digital services like Super Cruise and OnStar, and (3) successful execution of new vehicle launches and manufacturing onshoring. Trends in commodity prices, regulatory shifts, and international market performance will also be key factors shaping General Motors’ trajectory.

General Motors currently trades at $86.68, up from $79.38 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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