GM Earnings: Lower Guidance from Tariffs Could Have Been Far Worse

Key Morningstar Metrics for General Motors

• Fair Value Estimate: $75.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High

What We Thought of General Motors’ Earnings

On May 1, General Motors GM held its first-quarter earnings call after delaying it on April 29. It also lowered 2025 guidance due to the impact of US tariffs. Total company adjusted EBIT guidance is now $10 billion-$12.5 billion and adjusted diluted EPS guidance is $8.25-$10.00, down from $11-$12 given Jan. 28.

Why it matters: We said in our April 29 note that it was unclear if GM’s withdrawing 2025 guidance at that time meant lower guidance or no new guidance would be coming on May 1. We consider it good news that GM can still issue guidance, now including tariffs, unlike many other firms.

• GM guides for $4 billion-$5 billion of tariff EBIT impact, which it thinks can be mitigated down to $2.8 billion-$3.5 billion. Cost measures such as working with suppliers to have more US content and assembling 50,000 more pickups annually in Indiana instead of Mexico and Canada help.
• Pricing is a key assumption in the new guidance. GM said May 1 that pricing is higher than it expected at the start of the year and contributed about $900 million in incremental EBIT in the quarter. GM now sees its 2025 pricing up 0.5%-1.0% instead of down 1.0%-1.5%, but due to demand rather than from tariffs.

The bottom line: We are increasing our fair value estimate for no-moat GM to $75 per share from $73. The change is from increasing 2025 EBIT for a $3.1 billion tariff headwind, down from a $7.7 billion impact in our prior model. We think guidance will fall further if the US enters a recession.

• Management expects further tariff policy changes in 2025, which we agree is possible. GM said $2 billion of its $4 billion-$5 billion tariff exposure is from the four vehicles it imports into the US from South Korea. If the two nations can work out an auto tariff deal, that could mean upside for GM.
• The pricing expectation change is about a $3 billion favorable move for 2025 earnings before tariffs, though $900 million of that came in the first quarter.