GM Beats Q2 Earnings and Announces Gas-Powered Cadillacs as Nearly $11 Billion EV Retreat Nears Completion
The automaker raised EBIT guidance to $14 billion to $16 billion, lifted adjusted EPS forecasts to $12 to $14, and revealed that Cadillac will launch new gas-powered CT5, XT5, and XT6 models starting next spring.
Summary:
GM beat Wall Street’s second-quarter estimates by 37 cents a share on Tuesday, raising its full-year earnings guidance for the second time this year. The company also announced that Cadillac will introduce new gas-powered vehicles in 2027, signaling an end to GM’s all-electric strategy for the brand.
Revenue: $48 billion (above analyst expectations of $47 billion).
Adjusted Earnings: Nearly $4 billion, up roughly 30 percent year over year.
CFO Paul Jacobson noted that GM stock is a "bargain" at around $75 per share, a more than 40 percent increase from a year ago.
The Cadillac Announcement: An End to GM’s Electric Strategy?
The decision to launch new gas-powered Cadillacs starting next spring is the clearest indication yet that GM’s all-electric strategy for the brand is no longer the focus. Previously, GM planned for Cadillac to sell only electric vehicles by the end of this decade, but CEO Mary Barra revealed on Tuesday that:
- Next-generation gas-powered Cadillacs will arrive in showrooms next spring and continue through 2028.
- This transition means Cadillac will offer both gasoline and electric models, effectively rebuilding the brand as a dual-powertrain lineup.
Financial Guidance:
GM raised its full-year adjusted EBIT guidance to $14 billion to $16 billion and adjusted EPS forecast to $12 to $14, each increased by $500 million from prior ranges. However, net income guidance was lowered to approximately $8 billion to $10 billion, reflecting ongoing charges from the EV retreat.
The majority of these charges have been incurred: nearly $11 billion in EV-related writedowns since the second half of last year covering cancelled battery contracts, idled plants, and scrapped production plans. GM has paid approximately $4.5 billion out of expected total cash charges of just above $7 billion through Q2.
Regional Performance:
North America remains a driver for GM, with adjusted profit margins exceeding 8.5 percent (up more than two points from a year ago) and average vehicle transaction prices holding steady at $52,000. Warranty costs also declined. GM International, including China joint ventures, achieved profitability.