General Motors Co Earnings - Q4 2025 Analysis & Highlights
General Motors Co. (GM) delivered an exceptional 2025, achieving $12.7 billion in EBIT-adjusted and $10.6 billion in adjusted automotive free cash flow. The company reported a total return of 54% for investors and its highest full-year market share in a decade in the United States. GM's strategic adjustments to EV capacity and manufacturing footprint were highlighted, along with a focus on cost reduction and profitability. The company announced an increase in its quarterly dividend rate by 20% and plans for future share repurchases, reflecting confidence in strong future cash flows.
Key Financial Results
Total company revenue was $45 billion, down approximately 5% year-over-year.
EBIT-adjusted was $2.8 billion, increasing year-over-year despite the impact of tariffs.
EPS diluted adjusted was $2.51, also increasing year-over-year despite the impact of tariffs.
Adjusted automotive free cash flow was $2.8 billion, driven by higher EBIT-adjusted performance and favorable cash timing.
Full-year EBIT-adjusted was $12.7 billion.
Full-year adjusted automotive free cash flow was $10.6 billion.
Year-end cash balance was $21.7 billion.
Deferred revenue from software and services is expected to be approximately $7.5 billion by the end of 2026, up nearly 40% from 2025.
Business Segment Results
North America delivered EBIT-adjusted of $2.2 billion and margins of 6.1%.
GM International, excluding China equity income, delivered EBIT-adjusted of $200 million.
China equity income was $100 million, excluding the restructuring charge.
GM Financial's fourth quarter EBT-adjusted was $600 million, down slightly year-over-year.
GM Financial's full-year EBT-adjusted was $2.8 billion, within their guidance of $2.5 billion to $3 billion.
Capital Allocation
Dividends of $1.5 billion were paid to GM by GM Financial.
Quarterly dividend rate was increased by 20% to $0.18 per share.
Share repurchases in the fourth quarter totaled $2.5 billion, retiring 33 million shares.
Total buybacks for the year amounted to $6 billion.
Total shareholder returns through share repurchases since November 2023 reached $23 billion.
Outstanding share count was reduced by more than 465 million shares, or nearly 35%, by year-end 2025.
A new share repurchase authorization of $6 billion was approved.
Investments in capital projects over the last two years exceeded $20 billion.
Annual investments of $10 billion to $12 billion are expected for 2026 and 2027.
Debt retirement of $1.8 billion occurred in 2025.
Industry Trends and Dynamics
US market share reached its highest full-year level in a decade.
2025 marked the fourth consecutive year of market share growth.
GM led the industry in full-size pickups and full-size SUVs.
Best year ever in crossovers, driven by redesigned Chevrolet Equinox and Traverse.
Slowing EV demand led to strategic adjustments, including selling share in the Ultium Cells Lansing Plant and pivoting Orion Assembly from EV to ICE production.
EV losses are expected to be lower.
US regulatory and policy environment is increasingly aligned with customer demand, allowing for more onshore production of ICE vehicles.
EV drivers rarely return to ICE vehicles.
EV adoption is expected to grow over time, supported by increased charging infrastructure.
US SAAR is expected to be in the low 16 million unit range for 2026.
North America ICE wholesale volumes are expected to be flat to up modestly.
Competitive Landscape
GM Envolve led the US fleet segment for the second consecutive year.
OnStar Fleet subscriptions reached 2 million, which is 2 times any other competitor.
GM's stock price appreciated more than 170% since late November 2023, reinforcing conviction in repurchasing GM stock at current valuation levels, which are below peers.
China new energy vehicle sales reached nearly 1 million units in 2025, representing more than half of total sales in China.
Chinese OEMs are providing stiff competition in markets like Brazil due to heavy subsidies.
Macroeconomic Environment
Net tariff exposure was reduced well below initial expectations through self-help initiatives and policy actions.
Gross tariff costs for 2025 totaled $3.1 billion, below the predicted range of $3.5 billion to $4.5 billion.
Over 40% of gross tariff costs were offset in 2025 through go-to-market actions, footprint adjustments, and cost reduction initiatives.
Gross tariff costs are anticipated to be in the $3 billion to $4 billion range for 2026, slightly higher than 2025 due to an additional quarter of tariff exposure, partially offset by reduced Korea tariff and expanded MSRP offset program.
Headwinds of $1 billion to $1.5 billion are expected from recent trends in aluminum, copper, other key commodities, higher DRAM costs, and unfavorable foreign exchange movements.
Growth Opportunities and Strategies
OnStar services had a record 12 million subscribers in 2025, including more than 620,000 Super Cruise subscribers, achieving nearly 80% year-over-year growth.
Super Cruise business will expand into South Korea, the Middle East, and Europe in 2026.
Annual production in the US is expected to rise to an industry-leading 2 million units with new vehicle launches and expanded capacity.
Sixth-generation small-block V8 is being launched, leveraging virtual tools for better fuel efficiency, power, and faster development times.
AI, machine learning, and robotics are driving safety, quality, and speed in manufacturing plants.
LMR battery chemistry is expected to launch in 2028, reducing cell and pack costs by several thousand dollars.
Second-generation software-defined vehicle architecture for ICE and EVs is expected to launch in 2028, offering 10 times more OTA capacity and 1,000 times more bandwidth.
Eyes-off, hands-off driving technology will launch on the Cadillac Escalade IQ in 2028.
GM Financial received approval for its industrial bank application, which will enable it to accept deposits, providing a stable and diversified funding source and potentially lowering the cost of funds.
Financial Guidance and Outlook
EBIT-adjusted is expected to be $13 billion to $15 billion for 2026.
EPS diluted adjusted is expected to be $11 to $13 per share for 2026.
Adjusted automotive free cash flow is expected to be $9 billion to $11 billion for 2026.
North America EBIT-adjusted margins are expected to be back in the 8% to 10% range.
Gross tariff costs are anticipated to be $3 billion to $4 billion for 2026.
Q1 2026 gross tariff impact is expected to be $750 million to $1 billion.
Benefit of $1 billion to $1.5 billion is anticipated from actions to rightsize EV capacity.
North America pricing is expected to be flat to up 0.5% due to the full-year benefit of model year 2026 price increases.
Benefit of $500 million to $750 million is expected from savings related to no longer purchasing compliance credits.
Warranty costs are expected to deliver a $1 billion benefit versus 2025.
Increase of around $400 million in high-margin revenue is expected from the expansion of OnStar software and services, including Super Cruise.
Headwinds of $1 billion to $1.5 billion are expected from onshoring vehicle production, investments in supply chain resiliency, and software initiatives.
China and International operations outside of China are expected to be profitable and deliver results largely consistent with 2025.
GM Financial is expected to deliver EBT-adjusted in the $2.5 billion to $3 billion range.
Capital expenditures are expected to be $10 billion to $12 billion annually for 2026 and 2027, including approximately $5 billion to expand US manufacturing capacity.
Lower production tax credits in 2026 should represent a tailwind in 2027.
Hybrid vehicles will be added to the portfolio in key segments.
New truck launches later in the year are expected to drive commercial momentum.
EV volumes are expected to be down for the full year due to the cessation of the consumer tax credit.
Downtime for retooling for new trucks will impact volumes in 2026.
Pricing impact from new truck launches is largely expected to be a 2027 tailwind.
Software-defined platform (SDV) and Super Cruise will be available across both ICE and EV platforms.
Onshoring costs will be offset as production ramps up in the future.
Software investment in technologists and programmers will continue for SDV 2.0 and autonomy/Super Cruise enhancements.
Net tariffs are expected to be lower in 2026 than in 2025 due to annualization of go-to-market and fixed cost reductions.
EV profitability improvement and regulatory cost savings are expected to contribute to upside.
Warranty expense is moving in the right direction.
Compliance requirements are complicated, involving state, federal, local, and international regulations.
CAFE credits are no longer needed, resulting in year-over-year savings.
GHG credit purchases are still pending resolution with the administration.
International markets, particularly South America, are showing improvement despite competition from Chinese OEMs.
Super Cruise revenue growth is driven by the amortization of prepaid services on new vehicle sales and strong renewal rates (low 40% range).
OnStar Basics package provides engagement opportunities for enhanced services and future growth with software-defined vehicles.
China business is expected to be stable year-on-year due to the right product portfolio, discipline in managing inventory and incentives, and strong brands like Cadillac and Buick.
