GM stock slumps on tariff fears even as revenues exceed expectations

Despite exceeding Wall Street’s forecasts, investors are still dumping the company in large part due to concerns about tariffs, which will make it difficult for the automaker to reach its 2025 goals.

On Tuesday, the stock dropped by more than 10%, putting it on course for its worst day since the COVID-19 pandemic started in March 2020. Investors and analysts believe that Donald Trump’s threats of tariffs and reduced support for electric vehicles have impacted GM’s outlook.

Trump on Monday evening again threatened tariffs on a broad array of goods, including steel, aluminium and copper, all materials critical to building automobiles. He has also threatened heavy levies on allies&nbsp, Mexico&nbsp, and&nbsp, Canada, which are key to the US automotive supply chain.

The automaker projected net income of $11.2bn to $12.5bn for 2025. That’s ahead of expectations for $10.8bn, and numerous analysts termed that outlook optimistic.

There is a lot of uncertainty between the EV tax incentives and the rules and regulations surrounding tariffs. With that uncertainty, that really isn’t baked into GM’s guidance at this point”, said Jeff Windau, financial analyst at Edward Jones.

On a conference call on Tuesday, GM CEO Mary Barra stated to investors that she thinks Trump “wants to use policy and regulations to strengthen domestic manufacturers without harming GM.” Trump has stated that he wants to force businesses to relocate to the US, but such moves can take years.

In the meantime, GM has&nbsp, an “extensive playbook” pulled together in the event&nbsp, tariffs are imposed, GM’s CFO Paul Jacobson told reporters on Monday prior to Trump’s statements. According to Jacobson, the company had already begun exporting vehicles from Mexico and Canada to the US.

“Every delivery that we can make before a tariff is instituted, it’s that much better, rather than sitting on inventory”, he said.

He did state, however, that some decisions won’t be made until they are aware of the effects of the tariff environment. “There’s things that we can do to balance plants, etc, and then there are things that cost a lot more money going forward”, he said.

EV losses

GM’s fourth-quarter revenue of $47.7bn surpassed analyst expectations of $43.9bn. Adjusted earnings per share of $1.92 also exceeded analyst forecasts of $1.89 per share.

It earlier had said it sold 2.7 million vehicles for the year, up 4 percent from 2023.

In 2024, GM sold vehicles for an average of $50, 000, and executives anticipate a 1% to 1.5 percent decline in North American gasoline-powered vehicle sales and a modest decline in volume in 2025.

The company expects losses will narrow with its battery-powered&nbsp, vehicles, &nbsp, reorganisation of its China business, and the end of&nbsp, robotaxi development at Cruise, its autonomous vehicle unit.

The Detroit carmaker does not break down its EV losses, but said in 2024 that revenue was higher than fixed costs including labour and material costs, a metric that it calls positive variable profitability. The figure does not include costs such as building assembly lines, but indicates financial progress in the EV rollout.

GM did not meet its goal of producing and wholesaling 200, 000 EVs in North America in the year, instead ending up at 189, 000 units wholesale, Jacobson said. &nbsp, EV inventory fell from&nbsp, 100 days at the end of the third quarter to 70 days.

Although Jacobson said the loss decline was likely to be closer to $2 billion, GM had previously predicted that EV operating losses would decrease by between $2 billion and $4 billion this year from undisclosed levels.