Automotive manufacturer General Motors (NYSE: GM) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 1.8% year on year to $47.12 billion. Its non-GAAP profit of $2.53 per share was 2.1% above analysts’ consensus estimates.

Is now the time to buy GM? Find out in our full research report (it’s free).

StockStory’s Take

General Motors’ latest quarter saw a negative market reaction, reflecting investor concerns over a drop in year-on-year sales and reduced operating margins. Management attributed the quarter’s results to the impact of new tariffs and higher warranty costs, as well as shifts in production strategy and competitive fleet pricing. CEO Mary Barra noted, “We have demonstrated consistent execution of our production and go-to-market strategies,” but acknowledged ongoing challenges, particularly around supplier quality and software-related warranty claims.

Looking ahead, General Motors’ full-year guidance reflects a cautious approach amid continued tariff headwinds and evolving demand for electric vehicles. Management emphasized ongoing investment in flexible manufacturing and battery technology, aiming to improve EV profitability and adapt to shifting consumer preferences. CFO Paul Jacobson described 2025 as a “transition year” and stated, “We remain focused on controlling what we can,” including cost mitigation, mix optimization, and new battery chemistries to support margins as the company navigates regulatory changes and slower EV market growth.

Key Insights from Management’s Remarks

Management attributed recent performance to the effects of tariffs, evolving EV and ICE demand, and increased investment in manufacturing flexibility and technology.

• Tariff impact and mitigation: The company faced a significant tariff-related cost increase, with over $1 billion in net tariff expenses during the quarter. Management outlined steps to offset at least 30% of the annual $4–$5 billion tariff impact through production shifts, cost controls, and pricing discipline, but acknowledged this will take time to materialize.
• Warranty and software quality: Higher warranty costs, especially related to early electric vehicle launches and certain engine issues, negatively affected margins. Leadership highlighted ongoing efforts to improve supplier quality, expand over-the-air software updates, and simplify component design to address these concerns.
• EV and ICE market share: General Motors gained both retail and fleet market share in the U.S., driven by strong performance in crossovers like the Chevrolet Equinox and continued demand for both ICE and EV models. The Equinox EV and Blazer EV have contributed to Chevrolet becoming the number two EV brand in the U.S.
• Investments in flexible manufacturing: The company announced $4 billion in new U.S. assembly plant investments to increase capacity for high-margin vehicles and reduce tariff exposure. These investments are expected to improve the company’s ability to shift production between ICE and EVs as market demand dictates.
• Battery technology and software services: Management detailed progress on new battery chemistries, including lithium manganese rich and LFP cells, to lower costs and support future EV profitability. The company is also expanding Super Cruise and OnStar software revenue streams, with deferred revenues from software services reaching $4 billion.

Drivers of Future Performance

General Motors’ outlook is centered on navigating tariff costs, improving EV profitability, and maintaining stable pricing amid dynamic demand.

• Tariff uncertainty persists: Management expects continued pressure from tariffs, with the third quarter likely seeing higher costs before mitigation efforts take greater effect. The company is counting on both trade negotiations and domestic capacity additions to reduce tariff impact in coming years.
• EV profitability focus: Leadership is prioritizing cost reduction in EVs through new battery chemistries, lighter vehicle architectures, and standardization of components. The company anticipates slower EV demand in the near term but sees long-term growth potential, particularly as charging infrastructure expands and battery costs decline.
• Stable ICE business and flexible production: General Motors is leveraging its established ICE business to maintain profitability while investing in the flexibility to adjust production mix. This approach aims to ensure the company can respond rapidly to shifts in consumer preferences, regulatory changes, or economic conditions.

Catalysts in Upcoming Quarters

In the upcoming quarters, the StockStory team will closely watch (1) progress on tariff mitigation and the pace of domestic manufacturing expansion, (2) improvements in warranty and software-related quality issues, and (3) execution on EV profitability initiatives, including battery cost reductions and Super Cruise monetization. Developments in trade policy and consumer demand for both ICE and EV vehicles will remain important markers of strategic progress.

General Motors currently trades at $49, down from $53.26 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

Our Favorite Stocks Right Now

When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.