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GM's EV Reset: Billions Lost, Future Reimagined
28 Jan
Summary
- GM reported $12.7 billion adjusted EBIT and $10.6 billion free cash flow for 2025.
- A $7.6 billion EV restructuring charge impacted the second half of 2025.
- Shareholders benefited from $6 billion in stock repurchases and a 20% dividend boost.
In 2025, General Motors reported substantial financial achievements, including $12.7 billion in adjusted EBIT and $10.6 billion in adjusted automotive free cash flow. The Detroit automaker also secured its highest U.S. market share in a decade, with its fourth consecutive year of market share growth attributed to low inventories and strong pricing for trucks and SUVs.
However, GM faced significant headwinds in its electric vehicle division, booking $7.6 billion in restructuring charges for the latter half of 2025. These costs stemmed from decisions like discontinuing the BrightDrop van and impairing certain EV assets, with approximately $4.6 billion expected to be settled in cash, primarily in 2026.
Despite the EV setbacks, GM generated nearly $25 billion in free cash flow over the past two years. The company returned value to shareholders by repurchasing $6 billion of stock in 2025, reducing its share count by nearly 35% since late 2023. A fresh $6 billion buyback authorization and a 20% dividend increase underscore confidence in future earnings.
Looking ahead to 2026, GM anticipates adjusted EBIT between $13 billion and $15 billion, with North American margins expected to return to 8%-10%. The company will invest $10 billion to $11 billion annually in 2026 and 2027, focusing on expanding manufacturing for profitable trucks and SUVs. Software services, including a record 12 million OnStar subscribers, are projected to add $400 million in high-margin revenue in 2026.
GM's EV strategy is shifting towards a more measured rollout that aligns with customer demand and policy changes. While continuing to believe in EVs, the company is also introducing hybrids and focusing on next-generation battery technology. This strategic pivot aims for a slower, more profitable EV transition, a direction that investors appear to support, leading to a significant rise in GM's stock.
