Tariffs spoil GM’s good news
General Motors (GM) reported a strong second quarter for 2025, surpassing earnings expectations and increasing earnings per share to $2.53 (compared to expected earnings of $2.44 per share). The automaker reports more than $47 billion in revenue for Q2 2025, which is over $750 million better than expected, and states that its guidance for the year remains on track. In a statement, GM CEO Mary Barra says the company is invigorated by its growth in China and its electrified vehicle portfolio.
Despite the positive news, GM stock is down approximately six percent in after-hours trading, and its year-over-year revenue is down, marking the largest year-over-year decline for GM since 2021, a period marred by the COVID-19 pandemic and widespread supply chain issues. The per-share earnings are also lower than this time last year. What has put GM in its worst position since the global shutdown? Tariffs.
General Motors
How tariffs are wreaking havoc for GM
General Motors’ full-year guidance, though still sound, is a result of a first-quarter pivot. Earlier this year, GM announced that it would revise its 2025 prospectus to reflect the potential for up to $5 billion in lost revenue due to tariffs. In May, Barra wrote, “We are updating our full-year EBIT-adjusted guidance to a range of $10 billion – $12.5 billion, including a current tariff exposure of $4 billion – $5 billion.”
Barra also noted, “There are ongoing discussions with key trade partners that may also have an impact.” This suggests that tariffs would not only affect fully built GM vehicles imported to the United States, but also that supply chain partners may raise pricing should tariffs be imposed.
In total, tariffs have cost GM $1.1 billion in 2025. Net income decreased 35 percent to $1.9 billion in Q2 2025, and total EBIT (earnings before interest and taxes) declined 32 percent to $3 billion globally, with a sharper decrease in North America, where EBIT fell 46 percent to $2.4 billion.
Where GM is investing and making money
Though General Motors boldly predicted it would be all-electric by 2035, consumer demand isn’t there. The company has since discarded its all-in-one plan for electrification, saying buyers will dictate the direction the company takes with the production of new vehicles. GM reports sales of 974,000 vehicles in Q2 2025, with a mere 46,300 being EVs. Barra told investors GM is focusing on improving per-vehicle profitability for EVs rather than scalability of the product line.
So far, GM is re-investing in ICE vehicles. In June, the automaker announced plans to invest $4 billion in three North American plants: two in Mexico, one in the United States. The investment was focused on two plants in Mexico that produce gas-powered Chevrolet Blazer and Chevrolet Equinox SUVs, and to convert an idled Michigan plant to make ICE SUVs and trucks starting in 2027.
GMC
Final thoughts
Waning interest in EVs has been a developing storyline for North America in 2025, and GM is feeling it. Whether you like its vehicles, GM is a massive automaker, and its moves have a ripple effect throughout the industry. Even when it’s reactive, GM is influential.
Tariffs are a bargaining chip for the current administration, and GM is paying the price. Investments in North American facilities are sound for several reasons. Still, the auto industry operates on a global supply chain, which tariffs can cripple, regardless of the vehicle’s powertrain. Moreover, the government is allowing the federal EV tax credit of $7,500 to expire in September, which is believed to be a major draw for buyers considering an EV.
GM may have beaten expectations for Q2 2025, but it’s clearly in preservation mode. Pivoting to increasing ICE production, absorbing the exposure from tariffs, and maintaining pricing is a disciplined approach – we will just have to see how long GM is prepared to toe the line before its bottom line suffers.