New GMC trucks are displayed on the sales floor at Hanley's Hilltop GMC in Richmond, Calif., on July 2, 2024.
Justin Sullivan | Getty Images
DETROIT — GM The company expects its 2025 adjusted earnings to be in a “similar range” to the company's results this year, Chief Financial Officer Paul Jacobson said Tuesday during the company's investor day.
The Detroit automaker's 2024 adjusted earnings before interest and taxes are between $13 billion and $15 billion, or $9.50 and $10.50 per share, up from previous guidance of $12.5 billion to $14.5 billion, or $9 to $10. per share, earlier this year.
Achieving its 2024 goals as well as similar earnings next year would be a major accomplishment. Auto industry sales and consumer spending have slowed, and many on Wall Street expect 2025 to be a more difficult year for automakers.
Jacobson declined to provide specific financial targets until the company officially issues its 2025 financial guidance early next year.
Earnings, which many expect to be lower for most automakers, will be supported by better earnings of $2 billion to $4 billion for electric vehicles, as well as increased sales and profits of traditional gas-powered vehicles, he said.
Based on current assumptions, GM will have eight vehicles on the market, which, on average, will be about nine points higher in EBIT margin than previous comparable models, Jacobson said.
“We expect to see the benefits grow in the coming years as the organization continues to embrace more efficient ways to engineer, produce and sell our vehicles,” Jacobson said.
GM's capital spending is also expected to be flat in 2025 with this year, he said. GM's 2024 financial guidance includes expected capital spending of between $10.5 billion and $11.5 billion.
The tailwind for EVs is divided between savings from increases in volume and lower costs, including costs of raw materials and battery production.
GM reduced its variable EV earnings by more than 30 points year over year during 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, achieving profitability on a production basis, or contribution margin, by the end of this year. This guidance is down from the previous target of 200,00 to 250,000 electric vehicles, which was reduced from 300,000 units.
GM's earnings in 2025 are also expected to be helped by expected reductions in fixed costs, which fell by $2 billion over the past two years after deducting depreciation and amortization, as well as relatively stable demand and stimulus spending by the automaker.
Aside from the 2025 financial goals, the automaker provided some important updates at its investor day.
GM shares closed Tuesday unchanged at $46.01. The stock is still up about 28% this year, but has been under pressure recently due to several downgrades and price target adjustments by Wall Street analysts.
