General Motors Raises Guidance as Truck Demand Offsets EV and Tariff Pressures

Key Points

• GM raised its full-year guidance after a strong first half, supported by resilient demand for trucks and SUVs, disciplined inventory and incentives, and solid GM Financial performance. The company still expects second-half pressure from commodity inflation, onshoring costs and vehicle launches.
• GM is scaling back EV capacity as adoption grows more slowly than expected, with restructuring expected to reduce losses in 2026 and potentially stabilize operations in 2027. The company sees more meaningful EV profitability progress in 2028 through battery and vehicle-architecture improvements.
• New truck launches, domestic production expansion and a $4.5 billion purchasing facility are intended to support growth and reduce tariff and supply-chain risks. GM also expects warranty costs to improve by approximately $1 billion to $1.5 billion year over year.

General Motors NYSE: GM Chief Financial Officer Paul Jacobson said the automaker’s first half performed “remarkably well,” supporting an increase in full-year guidance, while cautioning that the second half faces pressures from commodity inflation, onshoring costs and vehicle launch activity.

Speaking at a JPMorgan event, Jacobson said consumer demand has remained resilient for GM, including demand for trucks and SUVs as well as performance at GM Financial. He said the company’s results have benefited from inventory and incentive discipline despite widely reported affordability concerns in the auto market.

China JV Extension and EV Capacity Actions

Jacobson highlighted GM’s agreement to extend its China joint venture with SAIC. He said restructuring actions have made the business more self-funding and capable of delivering more consistent profitability, even if it does not return to the roughly $2 billion in annual earnings GM previously generated in China.

“The effect of the restructuring has made it so that we can self-fund and can be consistent profitability,” Jacobson said. He added that China’s economic challenges have reinforced the value of restructuring the operation when GM did, particularly compared with other foreign automakers operating in the country.

The company also reached an agreement with Samsung SDI regarding its Indiana battery plant. Jacobson said the related charge had already been incorporated into GM’s second-half accruals and charges, meaning the agreement did not create a new financial impact. He described the move as part of GM’s effort to reduce EV capacity while maintaining supplier relationships and preserving the ability to expand as EV demand grows.

Jacobson said EV adoption has continued at a slower pace than the industry anticipated several years ago, citing changes in government support. GM was previously configured for annual EV capacity of about 1 million units, while current production is substantially lower, he said.

• GM expects 2026 EV losses to improve as lower production reduces variable losses and restructuring actions are completed.
• Jacobson described 2027 as a potentially more stable year for EV operations, with volumes possibly increasing from current adoption levels of roughly 5% to 6%.
• He said 2028 could bring more significant progress toward profitability as GM introduces LMR battery changes and other vehicle architecture improvements.

Truck Launches, Onshoring and Tariffs

GM is transitioning to a new truck platform that Jacobson said will ramp through 2027 before reaching full capacity. The outgoing trucks, in their final year of production, have continued to perform strongly, he said, without the substantial decline in realized pricing that can typically occur as manufacturers increase incentives on outgoing models.

GM expects new trucks to begin arriving in showrooms in December. The company is also undertaking a new engine-platform rollout and converting its Orion facility from EV to internal-combustion-engine production, including Escalade production. Those changes will create near-term inefficiencies as GM hires and trains workers before output reaches scale, Jacobson said.

He said Orion’s efficiency drag should continue into 2027 but improve as production ramps, particularly toward the second half of that year. GM expects increased domestic output to reduce some tariff exposure as it moves toward 2 million units of production through 2027 and into 2028, although Jacobson said it was too early to provide formal tariff guidance because of uncertainty around future trade rates and agreements.

On commodities, Jacobson said GM could see more stable conditions next year if current conditions normalize, but added that geopolitical developments and tariff policies involving Mexico and Canada could materially change the outlook.

Warranty, Supply Chain and Capital Allocation

Jacobson said GM expects a year-over-year warranty improvement of approximately $1 billion to $1.5 billion, but stressed that the company still has substantial work to do. He said warranty costs have risen because of dealership inflation and significant supplier-related issues, including the L87 matter referenced during the discussion.

GM has redirected some inventory and parts to customer-care operations, a decision Jacobson said has at times affected production but helps return customer vehicles to service more quickly. Improving quality and reducing warranty liabilities remain priorities, he said.

The company also announced a $4.5 billion purchasing facility led by JPMorgan and Santander. Jacobson said the facility will help GM build strategic inventory worldwide to protect production and cash flow against supply shortages, geopolitical disruptions and natural disasters. He said the facility will add some interest expense but was structured to support supply-chain continuity.

Regarding EV restructuring cash costs, Jacobson said GM spent about $4.5 billion in the first half and expects most of the remaining spending to occur this year, with some potentially extending into 2027. He said GM has sought to move quickly with suppliers, even if that meant paying more in some cases, to allow the supply base to focus on future product development.

Software, Defense and International Operations

Jacobson said GM’s China software platform has been rated more highly than many Chinese competitors’ platforms, though it cannot simply be transferred to the U.S. market. Still, he said the experience has increased GM’s confidence in its technology capabilities and in the potential for digital revenue growth.

He said about 30% to 40% of Super Cruise customers renew their subscriptions after the initial three-year period. GM plans to make Super Cruise standard on higher-trim Silverado and Sierra trucks, aiming to increase installed volume and build future digital revenue opportunities. Jacobson also pointed to a planned technology shift for Super Cruise with the next-generation Escalade IQ in 2028.

In international markets, Jacobson said Chinese competition is a significant challenge, though GM has continued to benefit from customer and brand loyalty in regions including South America and the Middle East. Disruptions in the Middle East have pressured GM International, but GM has redirected some vehicles to North America at slightly higher margins, he said.

Jacobson also said GM’s defense business has expanded its revenue base and reached break-even, aided by the Infantry Squad Vehicle program. He said the company sees defense as a future margin contributor through opportunities that apply GM engineering and manufacturing capabilities with relatively low capital requirements.

About General Motors (NYSE:GM)

General Motors Company NYSE: GM is a global automotive manufacturer headquartered in Detroit, Michigan, that designs, builds and sells cars, trucks, crossovers and electric vehicles, and provides related parts and services. Founded in 1908, GM has long been one of the world's largest automakers and has evolved into a multi-brand company whose primary marques include Chevrolet, GMC, Cadillac and Buick. Beyond vehicle manufacturing, GM's operations encompass vehicle financing, connected services and advanced mobility initiatives.

GM develops and markets a broad portfolio of products and technologies, including internal-combustion and battery-electric vehicles, vehicle components and on-board connectivity services.

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