GM Stock Whipsaws Despite Q4 Earnings Beat and Upbeat 2025 Guidance

General Motors (NYSE: GM) stock is down slightly in US premarket price action today even as the Detroit giant posted better-than-expected earnings for Q4 and provided upbeat guidance for 2025. Here are the key takeaways from the report.

GM reported revenues of $47.7 billion in Q4. The company’s sales rose 11% in the quarter and came in well ahead of the $43.93 billion that analysts were expecting. The company’s adjusted EPS was $1.92 in the quarter which was also better than the $1.89 that analysts were modeling. In the shareholder letter, GM CEO Mary Barra termed 2024 as an “outstanding” year for the company.

GM Reports Better Than Expected Earnings

Looking at the full-year numbers, GM reported a net profit of $6 billion which was short of its guidance. However, the company incurred special charges of over $5 billion in the final quarter of the year, the bulk of which was due to the impairment of its assets in China. GM also exited the robotaxi business last year and incurred charges to the tune of $0.5 billion towards the same. Its adjusted pre-tax earnings and cash flows were however towards the upper end of its guidance.

GM Exited Cruise Robotaxi Business in December

In December, GM announced that it would exit the Cruise robotaxi business and would instead focus on autonomous driving for personal vehicles. GM’s robotaxi business was burning a lot of cash while the competition in the industry is set to intensify with Tesla launching its Cybercab.

In its release, GM said that it won’t fund the robotaxi business any further “given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market.”

Notably, GM was an early entrant in the robotaxi industry and acquired Cruise in 2016. The company also onboarded third parties like Microsoft and Honda as investors in the self-driving unit. However, GM’s robotaxi operations did not make headway and the company halted the production of its Origin autonomous car in July.

As for the China market, GM restructured its operations last year amid recurring losses. China has been a particularly tough market for foreign automakers and they have been losing market share to domestic Chinese companies. Meanwhile, in its release, GM said that the company’s China business generated positive equity income in the fourth quarter after accounting for the restructuring costs and that it is “taking steps with our partner to improve from there.”

General Motors’ EV Business Posts Variable Profit

GM’s EV market share in the US doubled last year and the business generated a variable profit as the company had forecast. Both Ford and GM are currently posting losses in the EV business and are working to cut down on these losses.

Meanwhile, these losses have been masked by strong profits in the legacy internal combustion engine (ICE) business. While both Ford and GM are posting healthy cash flows, the former is spending the money on dividends rather than buybacks. Ford is committed to returning between 40%-50% of its free cash flows to shareholders, and along with the usual quarterly dividend it announced a special dividend of 18 cents per share during its Q4 earnings call last year.

GM posted adjusted automotive free cash flows of over $14 billion last year which was 20.4% higher YoY. The company has been using its excess cash to repurchase shares and managed to bring down its outstanding share count to below 1 billion in Q4, ahead of the timeline.

GM Provided Upbeat Guidance

GM expects to post adjusted pre-tax earnings between $13.7 billion-$15.7 billion in 2025 as compared to $14.9 billion last year. Notably, GM raised its 2024 guidance in the previous three earnings calls even as several other global automakers cut their forecasts amid a tough macro environment – particularly in China.

Meanwhile, in her letter, Barra alluded to possible changes related to tariffs and taxes under the Trump administration. Trump has threatened tariffs on imports from Mexico which could complicate the picture for General Motors as the company has manufacturing plants there that export to the US.

“There is uncertainty over trade, tax, and environmental regulations and we have been proactive with Congress and the administration,” said Barra. She however added, “In our conversations, we have stressed the importance of a strong manufacturing sector and American leadership in advanced technologies.

EV Losses to Narrow

GM expects its wholesale EV shipments to rise to 300,000 in 2025 as compared to 189,000 last year. The company reiterated its previous forecast of EV losses narrowing by between $2 billion-$4 billion this year.

The guidance looks encouraging as Tesla’s US deliveries fell YoY last year for the first time. GM is however optimistic about growing its EV deliveries. “We do think that we can grow our EV demand,” said GM CFO Paul Jacobson.

He added, “We’re going to continue to see how EV adoption progresses in 2025, but the 300,000 is the assumption that we base on being at the low end of the $2 billion to $4 billion of profit improvement.”

Despite the expected improvement in EV profitability, GM’s 2025 guidance is not much different from the 2024 numbers which can be attributed to the softness in the ICE business.

“We’re assuming modest headwinds in wholesale volumes and mix as we appropriately balance production and dealer inventory levels. We’re also assuming a pricing decline in North America — one to one and a half percent year-over-year,” said Jacobson.

Meanwhile, GM shares have whipsawed in premarkets today. While the stock was up handsomely after the results were released, they subsequently turned lower.