Latest news with #PaulJacobson
Times
18 hours ago
- Automotive
- Times
General Motors' profits fall by a third after $1.1bn hit from tariffs
America's largest carmaker has reported a $1.1 billion hit to its quarterly profits from President Trump's trade war. General Motors' second-quarter core profit fell 32 per cent to $3 billion as it continued to deal with the fallout from Trump's tariff policies. Earnings in its US business, the company's main profit centre, suffered from import duties on cars made in Canada, Mexico and South Korea. The Detroit-based carmaker expects the tariff impact on profits to worsen in the third quarter and repeated a previous estimate that trade headwinds will cost it up to $5 billion. However, it is aiming to mitigate at least 30 per cent of that impact through manufacturing adjustments, targeted cost initiatives and pricing. Mary Barra, chief executive of General Motors, said they were attempting to 'greatly reduce our tariff exposure', citing $4 billion of new investment in the automaker's US assembly plants. The carmaker expects to build more than 2 million vehicles in the US each year after it scales production. Paul Jacobson, chief financial officer, said: 'Over time, we remain confident that our total tariff expense will come down as bilateral trade deals emerge and our sourcing and production adjustments are implemented.' Shares of General Motors fell $3.69, or 6.9 per cent, to $49.52 in morning trading in New York. The automaker's revenue in the three months to the end of June fell nearly 2 per cent to about $47 billion from a year ago. General Motors said it dealt with higher warranty costs during the quarter, which was partly due to an increase in warranty claims from software issues on some of its early electric vehicle launches. • Nvidia's Jensen Huang unveils superchip and General Motors tie-up EV sales totalled 46,300 in the second quarter, up from 31,900 in the first quarter. However, overall in the United States, EV sales growth has begun to slow. The $7,500 EV tax credit under the Inflation Reduction Act is set to expire in September for many models. 'Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star,' Barra wrote in a letter to shareholders. 'As we adjust to changing demand, we will prioritise our customers, brands, and a flexible manufacturing footprint, and leverage our domestic battery investments and other profit-improvement plans.'
CBS News
a day ago
- Automotive
- CBS News
GM quarterly profit slumps 35%, but it sticks by full year outlook lowered in May
General Motors' profit declined 35% in its second-quarter, including a $1.1 billion hit from tariffs, but the automaker easily topped expectations and stuck by its full-year financial outlook that it lowered in May. GM CEO Mary Barra also said in a letter to shareholders on Tuesday that the automaker is attempting to "greatly reduce our tariff exposure," citing $4 billion of new investment in its U.S. assembly plants. "In addition to our strong underlying operating performance, we are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape," she said. Barra said during GM's conference call that the automaker expects to build more than 2 million vehicles in the U.S. each year as it scales production. GM said that it's making solid progress in mitigating at least 30% of the $4 billion to $5 billion gross tariff impact it anticipates for the year through manufacturing adjustments, targeted cost initiatives and with pricing. The company expects the impact from the Trump administration's tariffs to take a bigger toll in the third quarter because of indirect costs related to the duties. Chief Financial Officer Paul Jacobson remained optimistic, however. "Over time, we remain confident that our total tariff expense will come down as bilateral trade deals emerge and our sourcing and production adjustments are implemented," he said. For the three months ended June 30, GM earned $1.89 billion, or $1.91 per share. A year earlier the company earned $2.93 billion, or $2.55 per share. Stripping out certain items, earnings were $2.53 per share. That handily beat the $2.34 per share analysts polled by FactSet were calling for. Revenue declined to $47.12 billion from $47.97 billion, but still topped Wall Street's estimate of $45.84 billion. Jacobson said that GM dealt with higher warranty expenses during the quarter, which was partly due to increase warranty claims from software issues on some of its early EV launches. Jacobson said GM provided extended warranties as needed and is working to improve supplier quality. Shares fell nearly 2% before the opening bell on Tuesday. EV sales totaled 46,300 in the second quarter, up from 31,900 in the first quarter. Yet overall in the U.S. EV sales growth has begun to slow. The $7,500 EV tax credit under the Inflation Reduction Act is set to expire in September for many models. "Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star," she wrote. "As we adjust to changing demand, we will prioritize our customers, brands, and a flexible manufacturing footprint, and leverage our domestic battery investments and other profit-improvement plans." Wedbush analyst Dan Ives believes Barra is doing a good job dealing with the issues the auto industry is facing. "While the tariff headlines continue to put further pressure on the bottom line for the foreseeable future, we believe Barra & Co. continues to impressively navigate the complex backdrop successfully while seeing continued high demand for its entire fleet of EVs and (internal combustion engine) vehicles," he wrote in a client note. GM maintained its full-year financial forecast. In May General Motors lowered its profit expectations for the year as the carmaker braced for a potential impact from auto tariffs as high as $5 billion in 2025. The Detroit automaker said at the time that it anticipated full-year adjusted earnings before interest and taxes in a range of $10 billion to $12.5 billion. The guidance includes a current tariff exposure of $4 billion to $5 billion. A month later GM announced plans to invest $4 billion to shift some production from Mexico to U.S. manufacturing plants. The company said at the time that the investment would be made over the next two years and was for its gas and electric vehicles. President Donald Trump signed executive orders in April to relax some of his 25% tariffs on automobiles and auto parts, a significant reversal as the import taxes threatened to hurt domestic manufacturers. Automakers and independent analyses have indicated that the tariffs could raise prices, reduce sales and make U.S. production less competitive worldwide. Trump portrayed the changes as a bridge toward automakers moving more production into the United States. The tariffs ordered by Trump are hitting the entire auto sector, which sends vehicles and parts across the northern and southern borders of the U.S. repeatedly as they are assembled. The Center for Automative Research says that a uniform 25% tariff on all trading partners would have an increased cost of $107.7 billion to all U.S. automakers and an increased cost of $41.9 billion for the Big Three automakers in Detroit, Stellantis, GM and Ford. GM reported its financial results a day after Jeep maker Stellantis said that its preliminary estimates show a 2.3 billion euros ($2.68 billion) net loss in the first half of the year due to U.S. tariffs and some hefty charges. Stellantis will release its financial results for the first half of the year on July 29.
CNBC
a day ago
- Automotive
- CNBC
GM says EVs are its 'North Star' as legacy automaker chases Tesla
The Chevrolet display is seen at the New York International Auto Show on April 16, 2025. While Tesla remains the No. 1 electric vehicle manufacturer in the U.S. by a wide margin, General Motors said on Tuesday it has secured the No. 2 position and believes it has an "inherent advantage" when it comes to EVs. Executives on GM's quarterly earnings call on Tuesday said the company is focused on reaching and improving profitability for its EVs. When asked on the call about how GM aims to do that when Tesla is facing the same uphill climb, GM CFO Paul Jacobson said the company's advantage lies in the diversity of its lineup across gas and electric vehicles, as EV demand fluctuates. "A lot is made about Tesla's simplicity and their scale," Jacobson said. "And clearly, within a couple of narrow segments, they do have that, and they've realized some good advantages. And hats off to them. It also leaves them overexposed to a demand set that has been highly volatile." GM currently has 12 EVs in its lineup, while Tesla has five models. Tesla does not break out sales by model, but lumps them together in groups. Jacobson's comments come as automakers are faced with changing demand for EVs, heightened by President Donald Trump's new tax-and-spending bill, which is set to end the $7,500 tax credit for new electric vehicles and $4,000 credit for used EVs after Sept. 30. Sales of new EVs in the second quarter of 2025 were down 6.3% year over year, which marks only the third decline on record, according to the auto industry forecaster Cox Automotive. Those sales amounted to a 4.9% uptick from the first quarter of 2025, according to Cox Automotive, which Cox Senior Analyst Stephanie Valdez said may represent the start of a rush to buy EVs before the tax credit ends. Valdez predicted there will be record new EV sales in the third quarter of 2025, followed by a collapse in the fourth quarter as the EV market adjusts to its "new reality" without EV tax credits. GM CEO Mary Barra acknowledged that EV growth has been slower than expected, but said on the earnings call Tuesday that "we believe the long-term future is profitable electric vehicle production, and this continues to be our North Star." Amid this fluctuating demand, a July 17 Barclays note said Tesla's demand and fundamentals remain weak, while its autonomous vehicle and robotaxi narratives have been front and center. In the second quarter, Tesla reported around 384,000 vehicle deliveries, a 14% year-over-year decline and its second straight quarterly decrease. Deliveries are the closest approximation of vehicle sales reported by Tesla but are not precisely defined in the company's shareholder communications. But Tesla is still the vast EV leader by far. GM's electric vehicle sales totaled 46,300 for the quarter, more than double the 21,900 a year ago. That's a relatively small portion of the Detroit automaker's total vehicle sales in the second quarter of 974,000. Cox Automotive noted that GM's 78,000 EVs in the first half of 2025 amount to more than twice the volume posted in 2024. Jacobson said on Tuesday's call that GM is prepared for changing EV demand because it has built flexibility into its manufacturing plants by investing in both EVs and internal combustion engine cars. "That built-in flexibility for us to switch between EV and ICE and make sure that we meet customers where they are is an inherent advantage that we have because we can absorb some of the costs of that manufacturing facility with more ICE production if EV demand goes down," Jacobson said. He highlighted GM's new investments in its Spring Hill plant in Tennessee and Fairfax plant in Kansas as an example of this diversification. GM announced last month that it was investing $4 billion in several American plants and is set to increase U.S. production of both gas and electric vehicles. GM said on Tuesday that Chevrolet holds the No. 2 spot and Cadillac sits at No. 5 in EV brand rankings. — CNBC's Lora Kolodny contributed to this report.
Bloomberg
a day ago
- Automotive
- Bloomberg
GM to Maintain Pricing Strategy, Despite Trump Tariffs
General Motors Co. says President Donald Trump's tariffs cost the automaker $1.1 billion in profits. Higher warranty costs and a buildup in inventory of electric vehicles also hurt the figures. But GM has not raised sticker prices to recoup tariff costs. Paul Jacobson, General Motors chief financial officer and executive vice president, speaks on "Bloomberg Open Interest." (Source: Bloomberg)
Int'l Business Times
a day ago
- Automotive
- Int'l Business Times
General Motors Profits Fall On Tariffs
General Motors reported Tuesday that second-quarter profits tumbled by more than a third due to tariffs as it confirmed its full-year forecast. GM's results topped expectations, but shares fell as the automaker projected weaker profitability in the second half of 2025. The Detroit automaker, which has adjusted billions of dollars in investment in light of shifting US trade and environmental policies, said it benefited from continued solid pricing in its home market. Profits overall fell 35.4 percent to $1.9 billion year-on-year, with a $1.1 billion hit from tariffs accounting for much of the drop. Revenues dipped 1.8 percent to $47.1 billion, in spite of higher auto sales globally compared with the year-ago period. GM was among the carmakers that benefited from a surge in demand this spring from US consumers who wanted to beat US tariffs. GM pointed to sales growth in North America where new and revamped trucks and sport utility vehicles sold briskly. The United States imposed 25 percent tariffs on imported finished cars in early April, a move that affected major GM manufacturing operations in Mexico, Canada and South Korea. Auto companies have also been buffeted by tariffs on imported steel and aluminum and auto parts. GM reaffirmed its forecast of an overall hit of $4-$5 billion from tariffs in 2025 as it continues to import from those three countries "to avoid interruptions for our customers and dealers," Chief Financial Officer Paul Jacobson told analysts. "Over time we remain confident that our total tariff expense will come down as bilateral trade deals emerge and our sourcing and production adjustments are implemented," Jacobson said. Chief Executive Mary Barra declined to predict "a worst-case" tariff scenario, but said the outcome could potentially be better than the current policies on which forecasts are based. The Detroit-based company's outlook for a weaker second half of 2025 reflects "seasonally lower" volumes, increased spending on vehicle launches and the presence of two quarters with a tariff hit, compared to just one, the company said in a slide presentation. GM expects annual operating income of between $10 billion and $12.5 billion after notching $6.5 billion in the first half of the year. GM expects to mitigate "at least" 30 percent of the tariff hit through "manufacturing adjustments, targeted cost initiatives and consistent pricing," according to a slide. In June, GM announced $4 billion over two years to expand production of plants in Michigan, Kansas and Tennessee, making use of unused capacity in its home market as President Donald Trump's tariffs penalize imports of finished vehicles. The June announcement included steps to produce in the United States Chevrolet Equinox and Chevrolet Blazer, two vehicles which are currently assembled in Mexico. GM has so far not shifted production from South Korea, home to production for the Chevrolet Trax, a popular compact SUV that is priced affordably. President Donald Trump has set an August 1 deadline to reach broad trade deals with numerous countries, including South Korea, which faces a broad-based 25 percent tariff if there is no deal. Barra told analysts the company's South Korea operation is one "we've had for a long time that's very efficient and high quality," adding that the company would avoid long-term decisions until it knows the outcome of talks between Washington and South Korea. As GM has shifted production to the United States, it has also ramped up investments in internal combustion engine vehicles (ICE) in light of slowing growth in electric vehicles. Those dynamics will be compounded by the Trump's recent legislation to phase out tax credits for EVs after September. Recent GM investments will boost GM ability to produce either EVs or ICE vehicles at plants depending on demand, Jacobson said. "That flexibility is going to be important for us as we go through the next several years," Jacobson said. Shares of GM fell 7.1 percent in morning trading.
