New GMC trucks are on display at the Hanlees Hilltop GMC sales lot in Richmond, California on July 2, 2024.
Justin Sullivan | Getty Images
DETROIT — General engines expects its 2025 adjusted profit to be in a “similar range” to the company’s results this year, Chief Financial Officer Paul Jacobson said Tuesday at the company’s investor day.
The Detroit automaker’s adjusted earnings before interest and taxes target for 2024 was between $13 billion and $15 billion, or $9.50 to $10.50 per share, up from previous guidance of $12.5 billion. from $14.5 billion, or $9 to $10 per share, earlier this year.
Achieving its 2024 targets as well as similar profits next year would be quite an achievement. Auto industry sales and consumer spending are slowing and many on Wall Street expect 2025 to be a significantly tougher year for automakers.
Jacobson declined to provide specific financial targets until the company officially releases its 2025 financial guidance early next year.
He said earnings, which many expect to decline for most automakers, will be supported by a $2 billion to $4 billion profit improvement for electric vehicles, as well as growth in sales and benefits of traditional gasoline vehicles.
Jacobson said that, based on current assumptions, GM will have eight vehicles in the market that, on average, will have an EBIT margin about nine points higher than previous comparable models.
“We expect to see profits increase in the coming years as the organization continues to adopt more efficient ways to design, produce and sell our vehicles,” Jacobson said.
He said GM’s capital spending should also be consistent in 2025 compared to this year. GM’s financial guidance for 2024 includes planned capital expenditures of between $10.5 billion and $11.5 billion.
The benefits of electric vehicles are split between savings from increased volumes and lower costs, particularly for raw materials and battery production.
GM improved its variable EV profit by more than 30 points year over year through the third quarter, Jacobson said.
GM CEO Mary Barra said Tuesday that the automaker is on track to produce and wholesale about 200,000 electric vehicles for North America in 2024, reaching profitability on a production basis, or contribution margin, by the end of this year. These forecasts are down from the previous target of 200,000 to 250,000 electric vehicles, which was lowered from 300,000 units.
Reductions in fixed costs, which have declined by $2 billion over the past two years, net of depreciation and amortization, along with relatively stable demand and incentive spending by the automaker, will help also to GM’s profits in 2025.
Aside from financial targets for 2025, the automaker provided few significant updates during its investor day.
Shares of GM closed Tuesday virtually unchanged at $46.01. The stock remains up about 28% this year, but it has been under pressure lately due to several downgrades and price target adjustments by Wall Street analysts.
Correction: GM improved its variable EV profit by more than 30 points year over year through the third quarter. A previous version incorrectly stated this figure.
