General Motors: Navigating Volatility and Strategic Shifts in 2025

General Motors' stock has experienced notable volatility in 2025, driven by a confluence of strategic realignments, macroeconomic headwinds, and evolving market dynamics. As the automaker pivots toward profitability in an increasingly competitive electric vehicle (EV) landscape, investors are scrutinizing both immediate catalysts and long-term fundamentals to assess its investment potential.

Strategic Reallocation: From Robotaxis to EVs and Beyond

A defining short-term catalyst for GM's stock has been its strategic shift away from the Cruise robotaxi project, a venture that once symbolized its ambition in autonomous mobility. According to a Monexa.ai report, GM has reallocated capital to prioritize EV development and alternative revenue streams, such as licensing autonomous driving technology and expanding connected car services (Monexa.ai report). This pivot reflects a pragmatic approach to capital allocation, focusing on areas with quicker returns rather than speculative long-term bets. While the decision has raised questions about the company's commitment to transformative innovation, the report argues it aligns with GM's need to strengthen near-term profitability amid rising costs and industry-wide uncertainties.

The company's emphasis on the Ultium battery platform further underscores this strategy. By scaling production and reducing battery costs, GM aims to close the price gap between EVs and internal combustion engine (ICE) vehicles, a critical step in broadening consumer adoption. The report also notes that GM's ability to achieve cost parity could determine its competitiveness against Tesla and other EV-first rivals.

Q3 Earnings and Immediate Challenges

General Motors is set to release its Q3 2025 earnings on October 21, 2025, with analysts projecting an EPS of $2.52, according to TipRanks (TipRanks earnings page). The results will be closely watched for insights into how the company is managing challenges such as tariffs, supply chain disruptions, and the expiration of federal EV tax credits. In Q2 2025, GM reported adjusted EPS of $2.53, exceeding expectations, but faced a 35% year-over-year decline in net income due to $1.1 billion in tariff-related costs and EV inventory expenses, according to SmartInvestingHub (SmartInvestingHub analysis).

Recent production adjustments, including temporary suspensions at key EV factories and delays in expanding output, highlight GM's response to softer demand. The Monexa.ai report states the automaker has scaled back production of two Cadillac electric SUVs and paused a second shift at a Kansas City plant, citing weaker consumer appetite post-tax credit expiration. These moves signal a recalibration of its electrification strategy, prioritizing flexibility over aggressive scaling.

Historically, GM's post-earnings performance has shown a weak drift since 2022. A backtest reveals that the average abnormal return turns statistically negative after the third week, with a bottom of approximately −4% by day 30, and win rates falling near 31%. This suggests that investors who hold GM stock beyond the first week post-earnings have faced historically poor outcomes, reinforcing the importance of timing around earnings events.

Long-Term Potential: Undervaluation and EV Momentum

Despite near-term pressures, GM's long-term investment case remains compelling. A discounted cash flow (DCF) analysis suggests the stock is undervalued by 36.2%, with an intrinsic value of $91.14 per share, according to SimplyWall.St (SimplyWall.St DCF). This aligns with traditional metrics: GM's P/E ratio of 7.34 and Price/Fair Value (TTM) ratio of 0.817 indicate a discount relative to historical averages and industry peers, as noted in the Monexa.ai report. Analysts like BofA Securities' John Murphy have set price targets of $85, citing the potential for EBIT growth and EPS expansion driven by both EV and ICE segments; SimplyWall.St summarizes these analyst views.

GM's EV portfolio is gaining traction, with Chevrolet securing the second-largest EV market share in the U.S. and Cadillac ranking fifth. The company's Super Cruise advanced driver-assistance system is also generating new revenue streams through software subscriptions, a trend expected to accelerate in 2025 (TipRanks has discussed the subscription potential). Meanwhile, GM's international operations, particularly in China, are showing signs of recovery, with equity income turning from a $104 million loss to a $71 million profit in Q2 2025 (SmartInvestingHub reports).

Risks and Market Sentiment

Investors must weigh these opportunities against persistent risks. Tariff impacts, though partially mitigated by domestic sourcing initiatives, could pressure margins in the near term. Additionally, the auto industry's transition to EVs remains uneven, with consumer demand sensitive to economic conditions and policy shifts. A DCF model's optimistic intrinsic value assumes sustained improvements in battery costs and EV profitability-outcomes that hinge on GM's execution.

Market sentiment ahead of Q3 earnings is cautiously optimistic. While production cuts have raised concerns about GM's EV strategy, the company's focus on profitability and disciplined capital allocation has garnered support from value-oriented investors. SimplyWall.St notes GM's stock trades at an 8.5x PE ratio, significantly below the industry average of 18.2x, reinforcing its appeal as a contrarian play.

Conclusion

General Motors stands at a crossroads in 2025, balancing the need for short-term profitability with long-term innovation. Its strategic reallocation of resources, coupled with undervalued fundamentals and growing EV momentum, positions it as a resilient contender in a transformative industry. However, success will depend on navigating macroeconomic headwinds and proving that its EV and ICE strategies can coexist profitably. For investors, the upcoming Q3 earnings report and subsequent guidance will be critical in determining whether GM's recalibration translates into sustained value creation.