General Motors (GM) has revised its 2025 profit forecast downward due to an anticipated $5bn tariff impact and plans to increase production of its battery modules made in the US.
This adjustment follows recent developments and a reprieve from the White House regarding automotive tariffs.
GM CEO Mary Barra informed shareholders that the company will continue discussions with the Trump administration on evolving trade policies.
The Detroit-based automaker released this updated forecast after retracting a previous one issued in January, which did not account for the automotive tariffs.
Following modifications by the Trump administration, GM now expects an annual adjusted core profit of $10bn to $12.5bn, factoring in a tariff exposure of $4bn to $5bn.
To mitigate the tariff impact, GM is collaborating with suppliers to increase US content, enhancing compliance with the US-Mexico-Canada (USMCA) trade agreement.
General Motors chief financial officer Paul Jacobson statement reported by Reuters: "Since the election, our manufacturing and supply chain teams have been focused on developing strategies to help mitigate the impact of potential tariffs. These strategies are now actively being put into action ... we'll take additional mitigation measures, including cost reduction targets, where it makes sense to do so."
Barra highlighted efforts to boost production of US-made battery modules as a cost-effective strategy to increase US content.
GM's earlier guidance for earnings before interest and taxes was between $13.7bn and $15.7bn.
The company now forecasts annual net income of $8.2bn to $10.1bn, a reduction from the prior range of $11.2bn to $12.5bn.
Additionally, GM projects 2025 full-year capital spending to be between $10bn and $11bn.
Reuters reported GM's decision to boost light-duty truck production at its Fort Wayne, Indiana, assembly plant.
Barra was quoted by the news agency as saying that the company is "assuming a pricing environment that's similar to what it is today," despite industry estimates predicting potential price hikes due to tariffs.
The Trump administration's 25% automotive tariffs were implemented in April.
After lobbying efforts by automakers, the administration announced measures to alleviate some tariff costs while companies expand their US operations.
These changes allow automakers to offset tariffs on imported parts used in US-assembled vehicles, exempting them from other tariffs such as 25% levies on steel and aluminium and 10% duties on imports from most other countries.
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