Latest news with #MaryBarra
Gizmodo
20 minutes ago
- Automotive
- Gizmodo
GM Re‑Embraces Gas Cars as EV Dream Hits a Major Pothole
The electric vehicle revolution just got a harsh reality check. General Motors is tapping the brakes on its all-electric push, signaling that the gasoline-powered cars we've known for a century have a much 'longer runway' than previously predicted. This marks a strategic pivot that speaks volumes about the cooling EV market. The shift in tone and strategy was laid bare during the company's second-quarter conference call with analysts Tuesday, where executives announced plans to increase production of popular and profitable internal combustion engine (ICE) models. The move is a direct response to a messy, slowing EV market and the looming expiration of the popular $7,500 federal tax credit for new electric vehicles on September 30th. Sales of EVs dropped by over 6% in the second quarter compared to the second quarter of 2024. In a clear sign of the new direction, GM CEO Mary Barra announced that the company will be 'adding Chevrolet Equinox ICE production at Fairfax assembly in Kansas and moving Blazer ICE production to Spring Hill in Tennessee,' according to the transcript of the second-quarter's earnings conference call. This decision to bolster the output of two of its bestselling gasoline SUVs is a pragmatic retreat from the all-in-on-EVs rhetoric that has dominated the auto industry for the past several years. 'We are well positioned to succeed in an ICE market that has now a longer runway,' Barra told analysts, a striking admission from the leader of a company that has invested billions in its all-electric Ultium platform. 'We will continue to drive improved profitability for ICE, and focus on EV profitability improvement.' This strategic pivot is rooted in a simple truth: while EV sales have grown, they haven't grown fast enough to offset the massive capital investment, especially as mainstream consumers show hesitation. As recent sales data has shown, the EV market has become a messy battleground with clear winners and losers, and the initial explosive growth has tempered into a more challenging slog. The end of the federal tax credit, a key incentive that helped bridge the price gap for many buyers, is poised to make that slog even tougher. GM's answer is to lean on its traditional strength. Chief Financial Officer Paul Jacobson framed the company's ability to build both gas and electric vehicles as a core competitive advantage over EV-only startups. 'That built in flexibility for us to switch between EV and ICE and make sure that we meet customers where they are is an inherent advantage that we have,' Jacobson explained. 'We can absorb some of the cost of that manufacturing facility with more ICE production if EV demand goes down. So that flexibility is gonna be important for us as we as we go through the next several years, and I think it's gonna be helpful on that journey.' For the American car buyer, the immediate impact is clear. The affordable, familiar gasoline-powered SUVs they continue to buy in droves will be more readily available. The dream of a truly mass-market, affordable EV, however, appears to be pushed further down the road as automakers confront the challenge of making them profitable without government subsidies. Tesla Isn't a Car Company Anymore This doesn't mean GM is abandoning its electric ambitions. Barra was firm that a profitable EV lineup remains the company's 'North Star.' But the path to that star is now being paved with profits from gasoline-powered trucks and SUVs. The focus has shifted from a headlong rush into electrification to a more methodical, financially-grounded transition. 'What we're investing going forward is largely focused on improving our EV profitability,' Barra stated, referencing developments in lower-cost batteries. When pressed by an analyst on whether there was a clear path to making affordable EVs profitable, her answer was resolute but telling. 'We are focused on each and every vehicle getting to profitability and we're not going to stop until they do,' she said. GM's recalibration is a story of pragmatism over promises. It's an acknowledgment that market realities and government policy have forced a change of course. By leveraging the enduring popularity of its gas-powered vehicles, GM is buying itself time and generating the cash needed to make its electric future not just a vision, but a viable business.
Times
10 hours ago
- Automotive
- Times
General Motors' profits fall by a third after $1.1bn hit from tariffs
America's largest carmaker has reported a $1.1 billion hit to its quarterly profits from President Trump's trade war. General Motors' second-quarter core profit fell 32 per cent to $3 billion as it continued to deal with the fallout from Trump's tariff policies. Earnings in its US business, the company's main profit centre, suffered from import duties on cars made in Canada, Mexico and South Korea. The Detroit-based carmaker expects the tariff impact on profits to worsen in the third quarter and repeated a previous estimate that trade headwinds will cost it up to $5 billion. However, it is aiming to mitigate at least 30 per cent of that impact through manufacturing adjustments, targeted cost initiatives and pricing. Mary Barra, chief executive of General Motors, said they were attempting to 'greatly reduce our tariff exposure', citing $4 billion of new investment in the automaker's US assembly plants. The carmaker expects to build more than 2 million vehicles in the US each year after it scales production. Paul Jacobson, chief financial officer, said: 'Over time, we remain confident that our total tariff expense will come down as bilateral trade deals emerge and our sourcing and production adjustments are implemented.' Shares of General Motors fell $3.69, or 6.9 per cent, to $49.52 in morning trading in New York. The automaker's revenue in the three months to the end of June fell nearly 2 per cent to about $47 billion from a year ago. General Motors said it dealt with higher warranty costs during the quarter, which was partly due to an increase in warranty claims from software issues on some of its early electric vehicle launches. • Nvidia's Jensen Huang unveils superchip and General Motors tie-up EV sales totalled 46,300 in the second quarter, up from 31,900 in the first quarter. However, overall in the United States, EV sales growth has begun to slow. The $7,500 EV tax credit under the Inflation Reduction Act is set to expire in September for many models. 'Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star,' Barra wrote in a letter to shareholders. 'As we adjust to changing demand, we will prioritise our customers, brands, and a flexible manufacturing footprint, and leverage our domestic battery investments and other profit-improvement plans.'
Yahoo
14 hours ago
- Automotive
- Yahoo
General Motors' Q2 profits drop $1.1B after taking tariff hit
General Motors' net income plummeted 35% in the second quarter compared with the same quarter in 2024 as increased costs and industry uncertainty stemming from President Donald Trump's ongoing automotive tariffs cost the company $1.1 billion. The Detroit automaker reported earnings for the quarter ending June 30 on July 22, the first quarter the automaker said tariffs meaningfully impacted its bottom line after warning it could lose billions due to higher import tax for vehicles and the materials required to make them. In a letter to shareholders, GM CEO Mary Barra emphasized the $4 billion investment in U.S. manufacturing GM announced in the quarter, a change that adds 300,000 units of capacity for profitable light-duty pickups, full-size SUVs and crossovers currently made in other countries. 'This will help us satisfy unmet customer demand, greatly reduce our tariff exposure, and capture upside opportunities as we launch new models,' she said. 'The capacity begins coming online in just 18 months, after which we project building more than 2 million vehicles in the U.S. each year as we scale.' Here are the numbers GM reported: Net income of $1.89 billion, compared with the prior year's second quarter of $2.93 billion. Total revenues of $47.1 billion, down 1.8% compared with $47.97 billion in second-quarter 2024. Full-year financial guidance of $8.2 billion to $10.1 billion, which remains unchanged. Sales rose 7% in the second quarter compared with Q2 2024 and 12% in 2025's first half. Earnings before income and taxes (EBIT) of $3.04 billion, down from $4.43 billion in the same quarter the prior year. GM CFO Paul Jacobson told shareholders Tuesday morning, July 22, that the road ahead could be even rockier with tariffs in place until new trade deals emerge and the sourcing and production adjustments that GM outlined earlier this year come into play. The $1.1 billion tariff hit was slightly lower than expected due to the timing of 'certain indirect tariff costs,' Jacobson said. 'As a result, we will likely see third-quarter net tariff costs higher than in the second quarter ... as we continue to produce and import vehicles from Canada, Mexico and Korea to avoid interruptions for our customers and dealers.' GM has continued to import the more affordable vehicles such as the Chevrolet Trax, Barra said on the call with shareholders, despite the fact the company estimates $2 billion of the tariff hit it expects for 2025 to come from South Korean imports. In January, GM estimated annual net income for 2025 at a range of $11.2 billion to $12.5 billion and adjusted earnings before interest and taxes of $13.7 billion to $15.7 billion — ranges that excluded impact from increased tariffs or other policy changes under the Trump administration but assumed a stable policy environment in North America and an estimated benefit of $500 million from reduced year-over-year expenses of its autonomous Cruise business. GM revised those figures on May 1 to account for a projected $5 billion tariff-related hit on profits. Still, GM does not expect to raise prices based on the current projections of tariff impacts. GM leaders opted to keep pricing stable in the past few months as its competitors raced to offer discounts to attract buyers wary of tariff costs. As a result, GM kept those profits and grew its U.S. market share in the U.S. to 17.3% in the first half of the year, up from 14.5% in 2021, and 'more than double the gain of our closest competitor,' Jacobson said. Jeff Windau, senior analyst for Edward Jones, said in an earnings report July 22 that GM's better-than-expected vehicle sales overcame pressures on operating profitability to deliver earnings that rose above Wall Street's predictions. 'We believe GM benefited from a short-term increase in demand, as consumers accelerated car-buying decisions to avoid higher tariff costs and take advantage of electric vehicle tax credits before they are eliminated,' Windau said. CEO Barra also noted in her letter that the company has had success with its electric vehicle product portfolio, even though weaker customer demand pushed back the timeline for fully discharging internal combustion engines. 'Five years ago, the EV market essentially had one player. Today, there are 30, and Chevrolet became the No. 2 EV brand in the second quarter, while Cadillac became the No. 5 EV brand overall and the luxury EV leader,' the letter read. 'Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star. Overall, GM is well positioned to succeed in an ICE market that now has a longer runway.' Glossary of Terms: Net income: The amount of money a company has left over after paying all expenses related to operating their business. Net loss: The amount of money a company owes when its expenses exceed income for the quarter or year. Revenue: How much money a company generated during the designated time before expenses like operating costs or taxes. Stock value: The value that one share of stock in the company is worth at the end of market close on a particular day. Earnings before interest and taxes: The metric that companies prefer to use because it doesn't account for losses incurred in the quarter, therefore it tends to be higher and shows the company in a more favorable light. (This story has been updated to include new information.) Jackie Charniga covers General Motors for the Free Press. Reach her at jcharniga@ This article originally appeared on Detroit Free Press: General Motors' Q2 profits plunge 35% after taking tariff hit Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16 hours ago
- Automotive
- Yahoo
GM stock buckles under multiple headwinds and risky bets on EVs
General Motors (GM) is navigating a rocky road. Trump's tariffs are hitting the company's profits while its EV efforts face an uncertain future. The storied automaker reported that net income dropped 35% year over year, as tariffs hit its profit by $1.1 billion during the quarter. GM warned the toll could grow in the second half of the year, reiterating its previous estimate of a $4 billion to $5 billion hit for the year. Shares dropped 7% during the day, even as the company's adjusted earnings per share of $2.53 and revenue of $47.1 billion beat Bloomberg consensus estimates of $2.33 billion and $46.27 billion, respectively. Its stock is down 4% year to date. GM said it's "making solid progress" in mitigating at least 30% of the expected tariff burden through manufacturing and supply chain shifts. Those include a $4 billion investment in US-based assembly plants, which will add 300,000 units of production capacity for light-duty pickups, full-size SUVs, and crossovers. CEO Mary Barra said on its earnings call that "GM expects to build over 2 million US vehicles annually within 18 months." Citi analyst Michael Ward noted GM appears to be "prepared for the worst case scenario, so there's potential for some upside the way we look at it." Read more: Live coverage of corporate earnings GM's underlying results showed some resilience. During Q2, it sold 974,000 vehicles, a 7.3% increase year over year. It sold 46,300 electric vehicles, up from 31,900 last quarter. RBC Capital's Tom Narayan said in a research note that there's a broader market trend where companies that report earnings "beats and/or raises are still seeing stock sell-offs." He said it reflects investor concerns about tariffs, rising costs, and a challenging macroeconomic environment. For GM, its EV division's profitability also remains uncertain, as competition heightens and consumer demand slows. The $7,500 federal EV tax credit, key to EV affordability, expires in September. Barclays analyst Dan Levy said that "these changes indicate profitability is probably gonna get a little trickier." GM was supposed to use scale to drive profit for EVs, which is harder to do when sales are slowing, Levy added. Barra, however, reaffirmed the company's commitment to profitability on every EV model. She did not provide a hard timeline but said, "I'm very bullish on where we're gonna be on EVs as we continue to move forward in the next couple of years." Meanwhile, GM is regaining ground in China, with profitable joint ventures, new hybrid models, and tighter inventory control. The company posted year-over-year sales growth in the region for the second consecutive quarter and returned to profitability this quarter. Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Sign in to access your portfolio
Yahoo
16 hours ago
- Automotive
- Yahoo
GM's $1.1 billion tariff hit bolsters mounting evidence that Americans are the ones footing the bill for Trump's import taxes
had a more than $1 billion chunk taken out of its profits due to tariff costs, the company reported on Tuesday. GM, as well as other automakers like Stellantis, have contributed to evidence indicating American companies and consumers—not exporters—are the ones paying for tariffs. General Motors is the latest U.S. auto giant to say tariffs have taken a chunk from their earnings. The company beat earnings expectations on Tuesday, but reported a decline in second-quarter profits, including a $1.1 billion hit as a result of hefty import taxes. GM reported a 2% dip in sales to $47 billion, as well as $1.9 billion in quarterly profits, compared to $2.9 billion in the same period last year. Anticipating the impact of President Donald Trump's auto tariff policy—which outlined a 25% levy for many imported vehicles—GM withdrew its annual guidance last quarter, predicting an up to $5 billion pummelling from the levies. The company announced last month plans to invest $4 billion in domestic manufacturing plants in order to offset the cost of imports, as well as increase production capacity. Still, GM's reliance on compact cars made in South Korea has made it vulnerable to the levies. 'In addition to our strong underlying operating performance, we are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape,' CEO Mary Barra wrote in a letter to shareholders on Tuesday. GM's rival Stellantis, which owns Jeep and Ram Trucks among other brands, announced on Monday $2.7 billion in net losses for the first half of the year as North American sales continued to slump. Those struggles were exacerbated by the 'early effects of U.S. tariffs,' according to Stellantis, which had a more than $350 million negative impact on the company. America is eating tariff costs The auto companies' tariff hit reinforced concerns—and emerging evidence—that Americans are the ones footing the bill for Trump's sweeping tariff policy. Despite the U.S. Treasury collecting a record-setting $100 billion in customs duties so far this year, there has not been a meaningful reduction in the price of imported goods indicating exporters absorbing increased costs on their ends, according to a Deutsche Bank analyst note published on Monday. Instead, import prices have remained steady through June. 'The top-down macroevidence seems clear: Americans are mostly paying for the tariffs,' Deutsche Bank analyst George Saravelos said in the note. Saravelos posited that because the Consumer Price Index has so far indicated only modest levels of inflation, 'it follows that American importers are mostly absorbing the tariffs into their profit margins.' The phenomenon is exemplified by Stellantis and GM eating billions in tariff costs. Auto tariffs are no exception Bernstein senior analyst Daniel Roeska said auto companies have started to exhaust their strategy of absorbing tariff costs into their own margins as car prices are poised to skyrocket later this year. 'There are only two people who can pay for [tariffs]: either the shareholders or the consumer,' Roeska told Fortune. 'And in the end, there's going to be some sharing between those two halves. And so our view has been and continues to be that prices for cars are going to push up in the second half.' There's already indications American consumers will be the next to take the tariff punch. Car companies are beginning to roll back discounts and incentives implemented months earlier to boost sales, as evidenced by Ford Motors switching away from its employee discount plan for prospective buyers in favor of a $0 down and 0% interest or financing plan. While GM's plan to move some manufacturing to the U.S. will help the company save on tariff and transport costs, it will also incur steeper labor costs. The strategic move is a good one, according to Roeska, but it illustrates that companies will largely encounter trade offs when it comes to managing the inevitable impacts of tariffs. 'There's not much you can do,' Roeska said. 'If the policy is to put tariffs on cars, then that will increase the cost of cars, and ultimately, that will likely increase the price of cars.' This story was originally featured on
