GM Adjusts 2025 Forecast, Highlighting Potential $5 Billion Tariff Impact
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DETROIT – General Motors on Thursday lowered its 2025 earnings guidance to account for a possible $4 billion to $5 billion impact resulting from the auto tariffs implemented by the administration. The Detroit automaker stated that its revised guidance now includes adjusted earnings before interest and taxes ranging from $10 billion to $12.5 billion. This is a decrease from the previous guidance, which did not consider the tariffs, predicting earnings of $13.7 billion to $15.7 billion.
GM's 2025 guidance also reflects net income attributable to stockholders between $8.2 billion and $10.1 billion, down from an earlier forecast of $11.2 billion to $12.5 billion, and adjusted automotive free cash flow expected to be between $7.5 billion and $10 billion, also reduced from the earlier range of $11 billion to $13 billion. The company maintained its capital spending target, which remains at $10 billion to $11 billion.
"Importantly, GM's business is growing and fundamentally strong as we adapt to the new trade policy environment, further strengthen our supply base, and drive EV profitability," GM CEO Mary Barra stated in a shareholder letter on Thursday.
The updated guidance considers "the positive impact" of recent changes to some tariffs that include reimbursement for certain U.S. parts and a reduction in the cumulative effect of tariffs on the industry.
GM reported first quarter results that exceeded market expectations but postponed its investor call and updated guidance details amid anticipated changes to the auto tariffs. Barra informed CNBC's Phil LeBeau that the company is actively working to mitigate the increased costs associated with these tariffs as much as possible.
"Absolutely, we can make changes. We've been focused on improving our supply chain since 2019 to enhance its resilience," Barra noted, highlighting a 27% increase in U.S.-sourced parts. "We see considerable opportunities as we collaborate with our supply base to boost U.S. content. Expect more announcements from us now that we have clarity to reinvest in the U.S."
When asked about the possibility of shifting production from Mexican plants to U.S. facilities, Barra stated that the company plans to utilize its existing assets. This includes 11 large assembly plants in the U.S. that employ tens of thousands of workers. "We're going to leverage our current footprint because we can add capacity to many of those plants. This will enable us to act efficiently and more quickly than starting from scratch," Barra said.
