MW General Motors takes $1.1 billion tariff hit, dinging profit and sending stock reeling

By Steve Gelsi and Claudia Assis

GM's stock is the worst S&P 500 performer on Tuesday

General Motors Co.'s stock fell more than 7% on Tuesday after the carmaker's better-than-expected quarterly results were no match for worries about continued tariff impacts and demand, along with $1.1 billion in tariff costs.

GM (GM) also warned that the third-quarter tariff impact would be higher than in the second quarter and kept its 2025 estimate of tariff costs at between $4 billion and $5 billion.

GM's stock was the worst performer on the S&P 500 index SPX Tuesday, on track for its lowest close since June 30, when it closed at $49.21, and for its largest one-day percentage drop since March 27, when it fell 7.4%.

Investors appeared to be disappointed that GM didn't raise guidance for the year, Garrett Nelson at CFRA said in a note.

The company kept its 2025 guidance for adjusted earnings in a range of $8.25 to $10 a share, compared with analyst projections of $9.31 a share.

"As we are noticing this earnings season, beats and/or raises are still seeing stock sell-offs," RBC Capital analyst Tom Narayan said in a note.

GM Chief Executive Mary Barra said carmakers have faced slower growth in electric vehicles and are pivoting to a "longer runway" for the internal-combustion engine.

"We believe the long-term future is profitable electric vehicle production, and this continues to be our north star," Barra said in a letter to shareholders.

The company is "making solid progress" on efforts to ease about a third of its tariff costs through "manufacturing adjustments, targeted cost initiatives and consistent pricing."

As part of that effort, GM said it is planning to raise prices by 0.5% to 1% in North America.

GM's profit for the three months ending June 30 fell to $1.9 billion, or $1.91 a share, from $2.9 billion, or $2.55 a share, in the year-ago quarter. Excluding nonrecurring items, adjusted earnings per share were down to $2.53 from $3.06 but were above the average analyst EPS estimate compiled by FactSet of $2.32.

Second-quarter revenue at the carmaker fell to $47.1 billion from $48 billion in the year-ago period but topped the analyst estimate of $45.84 billion.

GM said it grew its share of the U.S. car market by 0.7%, to 17.4%.

Total global vehicle deliveries for the second quarter rose to 1.54 million from 1.43 million last year. North American deliveries increased to 747,000 from 696,000 in the year-ago quarter.

GM's chief financial officer, Paul Jacobson, said the company is keenly focused on the outcome of trade negotiations with Canada, Korea and Mexico.

"The trade deals with Mexico, Canada and Korea are going to be important," Jacobson said, according to a FactSet transcript. "We're not speculating on what those are going to look like going forward, but there is a possibility and a likelihood, if you will, that ultimately a tariff rate gets set at a lower level, which would ultimately bring that impact down."

GM said sales of its electric vehicles rose 111% to capture 16% of the U.S. market, with Cadillac rated as the top-selling U.S. luxury brand among electric vehicles.

The Detroit car giant reiterated plans to build prismatic battery cells with LG and, in 2027, to use LFP and LMR battery chemistries.

The stock has slipped about 6% this year, while the S&P 500 index has gained around 7%.

-Steve Gelsi -Claudia Assis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 22, 2025 12:10 ET (16:10 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.