GM Posts Healthy 2024 Results, Girds for Trump TariffsGM Posts Healthy 2024 Results, Girds for Trump Tariffs

General Motors, pumped up by brisk sales of ICE pickups and SUVs, closes out 2024 strong with earnings at the high end of forecasts.

For the fourth quarter, GM posted revenues of $47.70 billion, compared with $44.46 billion per Bloomberg estimates for the final quarter. That's 11% more than the $42.98 billion the company reported a year ago.

GM reported adjusted earnings per share (EPS) of $1.92, versus the $1.83 expected. Adjusted earnings before interest and taxes (EBIT) was $2.509 billion, up 43% compared with a year ago. For all of 2024, GM earned $14.9 billion in adjusted EBIT.

GM lost a total of $2.96 billion in Q4 because of restructuring charges in China and ratcheting down its Cruise robotaxi business.

GM had boosted its guidance for year-end earnings after third-quarter results, forecasting 2024 adjusted profit of $14.0 billion to $15.0 billion. The automaker’s automotive operating cash flow and adjusted automotive free cash flow beat those predictions. But earnings-per-share did not, owing to the company’s previously announced charges related to a restructuring of operations in China and its Cruise self-driving/robotaxi unit.

GM lost a total of $2.96 billion in Q4 because of restructuring charges in China and ratcheting down its Cruise robotaxi business.

GM now sees 2025 profit coming in between $13.7 billion to $15.7 billion. EPS is seen at $11.00 to $12.00 for the year.

2025 will be challenging and difficult to forecast. GM’s BEV sales are climbing as the automaker has launched CUVs such as Chevy Blazer and Equinox that are catching on with buyers. But the looming elimination of the $7,500 federal tax credit and Donald Trump’s threatened 25% tariff on goods imported from Mexico and Canada are two large variables and unknowns impacting this year’s financial performance.

GM CEO Mary Barra says that the company is now "variable profit positive" on EVs. That means the automaker is now making more money than the fixed costs it takes to make them, including labor and materials.

Barra also says she has recently spoken to Trump about the policy proposals that would most directly impact the auto sector.

"Well, I think he (President Trump) very much understands exactly what the ramifications (of tariffs) will be. And I think they’ve been very clear that they want to make sure there’s the right and balanced relationships with many of the different countries that they’re talking about to accomplish the goals of his administration," Barra says in an interview with Yahoo Finance. "So, I do think he has a very good understanding of the implications of tariffs or changing IRA (Inflation Reduction Act) or the stringency from a (emissions) standards perspective."

Trump, however, continues to advance rhetoric that would indicate he doesn’t understand, or is not being truthful about, how tariffs work.

The newly inaugurated president continues to say that foreign countries pay tariffs to the U.S. The reality is that the companies that import goods, like cars and trucks and auto parts, from Canada and Mexico pay tariffs and then pass those costs on to customers, thus raising prices. There is a growing narrative that Trump is using tariffs to get other concessions from those countries, especially around the issue of border security.

GM chief financial officer Paul Jacobson says the automaker has a “playbook” it has been preparing for various outcomes regarding EV tax credits and tariffs.

GM says it assumes a “stable” policy environment despite Trump’s aggressive moves thus far after just a week in the White House.

Presumably, if 25% tariffs go on vehicles and parts from Canada and Mexico, GM will have to raise prices on consumers, which would dampen demand, or it will eat the cost of tariffs, thus hurting profits.