GM Takes Steps to Reassure Investors About Profitability at Shareholder Event

General Motors’ Chief Executive, Mary Barra, addressed investors during an event in Tennessee, reassuring them that the profit margins for internal combustion engine (ICE) vehicles have not reached their peak, and that demand for electric vehicles (EVs) is on the rise.

Barra pointed out that earnings before interest and taxes for the coming year are expected to be “similar” to the range projected for 2024, bolstered by anticipated cost savings of $2 billion to $4 billion in the battery electric vehicle division.

While the company did not offer specific guidance for 2025, analysts suggested that GM’s core earnings for the year could range between $13 billion and $15 billion. In contrast, Wall Street consensus estimates have placed this figure at approximately $12.4 billion.

During her remarks, Barra highlighted efforts to stabilize the business amid a slower-than-expected shift toward electric vehicles. She mentioned that EVs are expected to achieve positive variable profitability—revenues minus various input costs—by the fourth quarter, despite the unit falling short of previous ambitious targets.

Goldman Sachs analysts noted that GM is realizing significant margin improvements on several new model launches compared to previous iterations, thanks to investments in product innovation and cost control.

However, company executives emphasized the importance of increasing GM’s EV footprint to remain competitive in the medium term, especially as stricter emissions standards loom, which could affect sales of ICE vehicles.

GM President Mark Reuss shared that the company is working to lower EV production costs by minimizing the number of parts required for each vehicle. He also mentioned that demand for GM’s gasoline-powered vehicles remains strong, notwithstanding impending emissions regulations expected to tighten in the coming years. GM aims to introduce plug-in hybrid versions of its vehicles by 2027.

Wells Fargo analysts indicated that the launch of new gas-powered sport-utility vehicles, stable fixed costs, and recovering sales in China will help support GM’s future returns. However, they cautioned that these potential profits might be countered by pricing pressures and rising labor costs.

Additionally, Jefferies analysts pointed out “gaps in disclosure” from GM, criticizing the lack of information on the funding for its Cruise autonomous driving segment and the financial implications of adjusting its presence in the Chinese automotive market.