General Motors Q2 Earnings: A Mixed Bag with Tariffs Weighing on Margins, EV Sales Surging

General Motors (GM) reported Q2 earnings with revenues down 1.8% and net income down 35% compared to the same period last year. Despite this, normalized EPS exceeded expectations by $0.05 and revenue surpassed consensus by $1.13 billion. Tariffs weighed on GM's margins, with EBIT down from 10.9% in Q2 2024 to 6.1%. However, EV sales surged 111% YoY, and GM aims to achieve EV profitability by early 2026. The company is positioned as a cheap value stock, with encouraging traction in the EV space.

General Motors (GM) reported its second-quarter (Q2) 2025 earnings, revealing a mixed bag of results amidst ongoing tariff pressures and strong electric vehicle (EV) sales. The company's net income declined by 35% to $1.9 billion, driven by a $1.1 billion net impact from tariffs, increased warranty costs, and EV inventory adjustments [1].

Despite the headwinds, GM's revenue came in at $47.1 billion, down 1.8% year-over-year but $1.13 billion above analyst expectations. The adjusted operating income (EBIT-adjusted) dropped to $3.0 billion, a 31.8% year-over-year decrease, primarily due to tariffs and warranty costs [2]. The automaker's non-GAAP profit of $2.53 per share exceeded analyst estimates by 2.1%, and adjusted EBITDA was $5.17 billion, slightly below expectations [2].

GM maintained a 17.4% share of the U.S. market, up 0.7 percentage points year-over-year, and remained the U.S. leader in full-size trucks and SUVs for the sixth consecutive year. EV sales were a standout, with Chevrolet ranking as the No. 2 EV brand in the U.S. during Q2, and Cadillac leading the U.S. luxury EV segment [1]. GM plans to add 12 new battery electric models globally through 2027 and has expanded battery partnerships to support its EV strategy [1].

In response to tariff pressures, GM announced a $4 billion investment in U.S. manufacturing to add 300,000 units of capacity focused on high-margin pickups, SUVs, and crossovers by 2027. The initiative aims to reduce exposure to import tariffs and meet strong domestic demand [1]. Adjusted automotive free cash flow was reported at $2.8 billion, and GM reaffirmed its full-year 2025 guidance, with EBIT-adjusted expected between $10 billion and $12.5 billion [1].

CEO Mary Barra emphasized GM's focus on cost discipline, flexible manufacturing, and expanding digital services, including OnStar and Super Cruise, which doubled its fleet year-over-year, with more than 500,000 vehicles enabled by Q2 [1]. The company's market capitalization stood at $47 billion, down from $53.26 before the earnings report [2].

Key Takeaways:
- GM's net income fell 35%, but revenue and adjusted income beat estimates.
- Tariffs and warranty costs significantly impacted margins.
- Strong U.S. demand for trucks, SUVs, and EVs maintained retail traffic and inventory turnover.
- GM's $4 billion U.S. capacity investment aims to boost high-margin vehicle production and reduce tariff exposure.
- EV leadership and future pipeline position GM well for the evolving market.

References:
[1] https://www.cbtnews.com/gm-profits-fall-35-in-q2-despite-strong-u-s-sales/
[2] https://finance.yahoo.com/news/gm-q2-deep-dive-tariffs-053317487.html