GM raises 2026 profit forecast despite $2.3bn EV retreat hit

General Motors raised its 2026 pre-tax operating earnings forecast to a range of $14 billion to $16 billion, an increase of $500 million from its previous estimate. The upward revision came despite a 31 percent drop in quarterly profit to $1.3 billion, reflecting the automaker's ability to navigate significant strategic and geopolitical headwinds.

The quarterly bottom line was weighed down by a $2.3 billion charge tied directly to the automaker's retreat from electric vehicles. This pivot follows shifting US environmental policy under President Donald Trump. Additionally, the company recorded $177 million in restructuring costs for its China operations.

GM managed to offset these substantial expenses through its core North American business, which remains by far its largest market. While total vehicle sales in the region declined, stronger pricing drove improved profit margins. The company reported "record" sales of full-sized pickup trucks, alongside robust demand from commercial and government fleet customers. These factors pushed revenue up almost two percent to $48 billion.

Tariff exposure remains a central focus for the company and its investors. GM maintained its full-year projection of a $2.5 billion to $3.5 billion hit from US tariffs enacted by the Trump administration. In a letter to shareholders, Chief Executive Mary Barra noted that the manufacturer is actively shifting more production back to the United States to reduce this exposure. That strategy gained urgency on Monday when Trump ordered new 50 percent tariffs on various Canadian goods, a White House move covering products including cars amid broader North American trade negotiations. Jacobson said the company views a finalized trade accord as a priority, adding "we're confident that the governments will be able to work through it."

Consumer demand has so far proven resilient to broader geopolitical disruptions. Jacobson noted that buyers have remained "very resilient," with GM observing no shifts in vehicle preference despite higher gasoline prices resulting from the US-Iran war.

Looking further ahead, GM anticipates that 2027 results will be "better" than this year, driven largely by an increased supply of top-selling sport utility vehicles. However, executives cautioned that the new 2026 forecast assumes no material escalation in the Middle East and no significant jump in commodity costs, though the company did note "slightly better" near-term commodity dynamics.