General Motors (GM, Financial) Chief Financial Officer, Paul Jacobson, stated during the company’s Investor Day that the automaker expects its adjusted earnings for 2025 to be similar to this year's performance. GM has set an adjusted EBIT (Earnings Before Interest and Taxes) target for 2024 between $13 billion and $15 billion, translating to earnings per share of $9.5 to $10.50. This target surpasses the earlier goal of $12.5 billion to $14.5 billion, or $9 to $10 per share.
If GM achieves its 2024 financial targets and repeats them in 2025, it would be a notable accomplishment considering the slowdown in auto sales and consumer spending. Various Wall Street analysts anticipate 2025 to be a more challenging year for automakers. Jacobson did not provide specific financial targets for 2025 but mentioned that electric vehicle profits are expected to increase by $2 to $4 billion, alongside growth in traditional gasoline-powered car sales and profits. Contrary to what many expect, he foresees an uptick in earnings for most automakers.
Jacobson highlighted that GM plans to introduce eight new models with EBIT margins approximately 9 percentage points higher than their predecessors. He expressed optimism for profit growth in the coming years due to more efficient car design, production, and sales methods. GM's capital expenditure for 2025 is anticipated to remain consistent with this year, with 2024 guidance expecting $10.5 billion to $11.5 billion in capital spending.
Electric vehicles are seen as a growth driver owing to increased sales and reduced costs in raw materials and battery production. However, GM reported a decline of over 30 percentage points in variable profit for electric vehicles compared to the previous year, as of the third quarter. CEO Mary Barra revealed plans to produce and sell approximately 200,000 electric vehicles in North America in 2024, with a target to reach breakeven in production or margins by the end of this year. This is a revision from earlier targets aiming for 200,000 to 250,000 vehicles, and originally 300,000 units.
GM's expected earnings in 2025 will also benefit from reduced fixed costs. Over the past two years, fixed costs have decreased by $2 billion after accounting for depreciation and amortization. Demand and incentive spending have remained relatively stable, supporting the company's financial outlook.
