GM Stock Surges After Company Raised Its 2025 Guidance

General Motors (NYSE: GM) stock rose almost 15% yesterday and had its second-best day since it emerged from bankruptcy in 2009 as the legacy automaker beat Q3 earnings and raised its 2025 guidance.

GM posted $48.6 billion in total revenue, which was nearly flat compared to the same period in the prior year, yet comfortably exceeded market expectations of $45.26 billion. The company’s adjusted pre-tax profits came in at $3.38 billion, which was well ahead of the $2.72 billion that analysts were expecting.

GM Took a $1.6 Billion Charge in Its EV Business

However, the headline figure for GAAP net income attributable to stockholders was $1.3 billion, representing a significant drop of over 56% year-over-year. This decline was largely attributed to a $1.6 billion special charge recorded during the quarter, primarily related to the strategic realignment of the company’s electric vehicle (EV) production capacity. This charge included approximately $1.2 billion in non-cash impairments and about $400 million in cash supplier cancellation costs, signaling the company’s move to “right-size” its EV assets amid a more tempered pace of electric vehicle adoption than initially projected.

Notably, GM had forewarned about the charge in a filing earlier this month. GM’s decision stems from a re-evaluation of its prior aggressive investment and production commitments for EVs. The company specifically cited changes in US government policy as a key factor expected to slow the pace of EV adoption. These policy shifts include the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations. The tax incentives, which had previously spurred sales, expired at the end of September 2025, leading to a projected dip in consumer demand.

Meanwhile, CEO Mary Barra termed EVs as the company’s North Star in the shareholder letter while adding, “However, with the evolving regulatory framework and the end of federal consumer incentives, it is now clear that near-term EV adoption will be lower than planned.” She added, “That is why we are reassessing our EV capacity and manufacturing footprint. The work, which is ongoing, resulted in a special charge in the third quarter, and we expect future charges. By acting swiftly and decisively to address overcapacity, we expect to reduce EV losses in 2026 and beyond.

How did General Motors’ Different Segments Perform in Q3?

The adjusted EBIT (earnings before interest and taxes) of GM’s North America segment decreased by 37.1% to $2.5 billion. This drop was primarily attributed to an estimated $1.1 billion in tariff costs and higher warranty-related expenses, partially offset by fixed cost efficiencies and tariff mitigation efforts. However, the North America deliveries were 837,000 units, up 6.2% year-over-year. U.S. sales were particularly strong at 710,000 deliveries, an 8% increase.

GM’s China business swung to a profit in Q3, reporting $80 million in equity income compared to a $137 million loss in the same period last year. This marked a return to profitability for its restructured China business. The company’s deliveries were also strong in the quarter, and it delivered nearly 470,000 units, showing an increase of over 10% year-over-year.

GM Raised Its 2025 Guidance

Meanwhile, GM raised its full-year 2025 guidance, citing improved clarity on the impact of tariffs and a more contained outlook for EV-related losses as the main drivers. It now forecasts its full-year adjusted EBIT to be between $12 billion and $13 billion, an increase from the previous range of $10 billion-$12.5 billion. Similarly, the full-year adjusted EPS is now expected to be between $9.75 and $10.50 versus the previous guidance of $8.25 to $10. GM also raised its automotive free cash flow guidance to between $10 billion-$11 billion, up from the previous guidance of $7.5 billion-$10 billion.

This revised outlook suggests management is confident in its ability to mitigate ongoing pressures and capitalize on the enduring strength of its traditional vehicle segments.

GM Expects 2026 Profits To be Higher Than 2025

Notably, GM expects its 2026 earnings to be higher than this year. “Looking ahead to 2026, we have multiple levers to carry our current momentum forward, including progress on [electric vehicle] losses, warranty costs, tariff offsets, regulatory requirements and fixed costs,” said CFO Paul Jacobson during the earnings call. He added, “As a result, we expect next year to be even better than 2025.”

In the shareholder letter, Barra said, “Looking ahead, our top priority is to restore North America to our historical 8–10% EBIT-adjusted margins. We are focused on driving EV profitability, maintaining production and pricing discipline, managing fixed costs, and further reducing tariff exposure.”

Notably, GM is more exposed to tariffs compared to Ford, as it imports not only parts and vehicles from Mexico and Canada but also finished cars from South Korea and China into the US. However, the company has been trying to mitigate the impact of the tariffs by increasing domestic content. As part of that initiative, it announced a capex of $4 billion earlier this year, which would help it in onshoring production at plants in Kansas, Tennessee, and Michigan.

How Analysts Reacted to General Motors’ Q3 Earnings

General Motors’ Q3 earnings were received positively by the markets, and several analysts raised their target prices. Wedbush, for instance, raised its price target on General Motors stock to $75 from a previous target of $65, while maintaining an “Outperform” rating.

“This commentary is encouraging and consistent with our incoming view that automakers could convey positive messaging beyond 2025,” said TD Cowen analyst Itay Michaeli in his note.

Citi analyst Michael Ward said GM’s Q3 earnings signal a larger change for the company. “In the past, it was said that it was difficult to turn the big ship GM too quickly. Given the changing landscape, GM has found a way to turn it much faster than in the past,” said Ward in his note.