Investing.com — General Motors (NYSE:) Chief Executive Mary Barra used an investor day in Tennessee on Tuesday to reassure shareholders that its profit margins for its internal combustion engine (ICE) cars have not peaked and demand for electric vehicles is improving.
Barra added that earnings before interest and taxes for next year are forecast to be “similar” to the range posted in 2024, aided in part by $2 billion to $4 billion in year-over-year cost savings in its battery electric vehicle (EV) division.
The company did not provide specific 2025 guidance, but analysts said the statement implies that GM’s core earnings during the year will be between $13 billion to $15 billion. Wall Street consensus estimates see the figure at $12.4 billion, according to FactSet data cited by Goldman Sachs.
In particular, Barra outlined a push to achieve more stability in the business due in large part to a slower-than-expected transition to EVs. Barra said EVs are tipped to achieve positive variable profitability, or revenue minus a variety of input costs, in the fourth quarter, although the unit has underperformed GM’s once-lofty goals.
“By investing in product innovation and controlling costs, GM is seeing significant margin improvement on several model launches vs. their predecessors,” the Goldman Sachs analysts wrote in a note to clients.
Still, executives stressed that GM will need to scale up its EV presence to ensure its mid-term competitiveness at a time when increasingly strict emissions standards could weigh on sales of ICE vehicles.
GM President Mark Reuss said GM has moved to lower the costs of EV production by reducing the amount of parts used per vehicle. He added that demand for GM’s gas-powered offerings remains solid despite looming emissions standards that are due to ramp up later in the decade. GM is aiming to roll out plug-in hybrid versions of its cars in 2027.
Analysts at Wells Fargo said the launch of several new gas-powered sport-utility vehicles, stable fixed costs, and rebounding sales in China will help undergird future GM’s returns. However, they flagged that these profits could be offset by pricing headwinds and labor costs.
Meanwhile, analysts at Jefferies said there were “some gaps in disclosure” from GM, including a lack of details around the funding of its Cruise automated driving segment and expenses related to overhauling its exposure to the Chinese auto market.
(Reuters contributed reporting.)
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