General Motors Company (NYSE:GM) will report its third quarter earnings next Tuesday before markets open, with Wedbush analysts expecting the automaker to deliver solid revenue for the period despite challenges in its EV business and tariff costs.
They project Q3 revenue of $45 billion, pointing to strength across GM’s electric vehicle (EV) and internal combustion engine (ICE) segments. This is above the Wall Street consensus of $44.2 billion.
“The company noted seeing a double-digit increase in deliveries across EV and ICE vehicles year-to-date as the company saw strong sales across all brands with continued strength in pricing power to drive the top-line,” the analysts pointed out.
EV deliveries grew 8% year over year to 66,501 vehicles, in part driven by consumers seeking to take advantage of the $7,500 tax credit before the recent cutoff. Despite this, the analysts also noted headwinds affecting GM’s EV segment.
“With the recent shutoff of consumer EV tax credits, GM has started to re-evaluate its path within the EV business segment as the company expects to see a slowdown in EV demand and adoption,” they wrote.
They noted that GM’s audit committee recently approved $1.6 billion in charges tied to the strategic realignment of EV capacity and manufacturing capabilities, including $1.2 billion in non-cash impairment charges and $0.4 billion in contract cancellation fees and commercial settlements.
Wedbush highlighted that “this realignment does not impact the current EV capacity across its four major EV brands that are currently in production with these models remaining available to consumers.”
Tariffs remain another challenge for the automaker, with GM anticipating between $4 billion and $5 billion in tariff-related costs affecting adjusted EBIT and free cash flow.
“The most recent quarter saw a $1.1 billion net impact from tariffs in the most recent quarter, but the mitigation offsets were minimal as it takes more time to see these mitigation efforts play out on the bottom line, which we expect to become more prevalent in the back-half of this year,” Wedbush wrote.
GM also recently announced a $4 billion investment plan in domestic manufacturing plants across Michigan, Kansas, and Tennessee aimed at boosting US production and navigating the tariff environment, the analysts pointed out.
Wedbush maintained its ‘Outperform’ rating on GM with a 12-month price target of $65, implying upside from its share price of $57.
“While the tariff headlines and recent EV impairment charges continue to put further pressure on the bottom line in the near-term, we believe GM continues to impressively navigate the complex backdrop while seeing stable demand for its entire fleet with its ICE portfolio driving incremental delivery growth moving forward,” the analysts concluded.