General Motors (GM) sees adjusted earnings in 2025 to be in a similar range to this year, but challenges within the industry continue and Paul Jacobson CEO of the company outlined this during investor day at the company on Tuesday.
For 2024, the company puts out a targeted range for adjusted earnings before interest and taxes of $13 billion to $15 billion, or about $9.50 to $10.50 a share, which is an increase above prior guidance of $12.5 billion to $14.5 billion, or $9 to $10 per share, that was laid out earlier in the year.
Reaching these goals, as well as matching earnings in 2025, would be very impressive, especially considering the fact that sales in the auto industry, not to mention consumer spending, have begun to decline. Analysts on Wall Street have said that 2025 could end up being an extremely challenging year for automakers.
Jacobson declined to elaborate on particular earnings goals for 2025, saying formal guidance will come in the first quarter. However, he said GM’s profits-practically a given market share decline would receive a big boost from an anticipated surge of $2 billion to $4 billion in EV earnings, as well as sales and earnings growth for its traditional gasoline-powered vehicle lines.
Jacobson said GM will sell eight products whose average EBIT margin is about nine points higher than similar products sold last year. “We should expect this benefit to get even stronger in the coming years as we continue to improve our engineering, production and sales practices,” he said.
Capital spending for GM is expected to be flat in 2025, at approximately $10.5 billion to $11.5 billion in 2024. Benefits in EVs are supported by rising volumes and falling unit costs in several areas: raw-material inputs and lower costs of manufacturing the battery.
Variable profit for EVs from GM rose by over 30 percentage points on an annualized basis in Q3. CEO Mary Barra said the company will manufacture and sell between 180,000 and 200,000 EVs in North America by the end of 2024 and reach profitability on a contribution-margin basis by the end of this year. The guidance compares with an earlier target for selling between 200,000 and 250,000 EVs in that region, after an initial goal to produce about 300,000 units.
The lower fixed costs are also expected to provide further earnings support, having reduced netted depreciation and amortization by $2 billion over the past two years, along with stable demand and incentive spending.
Despite these developments, GM did little to update investors during its investor day, and the stock closed at $46.01 Tuesday—a drop of pennies. The stock still is up about 28% this year, but it has faced recent pressure from several analyst downgrades and price target adjustments.
