GM’s shares jumped up to 9% on Tuesday, boosting its market value by more than $7 billion, following moves from Detroit’s largest automaker. Alongside revealing a huge $7.6 billion writedown related to its electric vehicle goals, the company also impressed Wall Street with strong cash flow, larger shareholder returns, and a solid 2026 forecast.
The Detroit-based automaker, long considered a symbol of traditional U.S. car manufacturing, announced 2025 adjusted EBIT of $12.7 billion—hitting the upper limit of its guidance—and $10.6 billion in adjusted automotive free cash flow. GM also noted that 2025 was its tenth year with the highest U.S. market share and fourth consecutive year of share growth, driven by low dealer stock levels, minimal incentives, and stable pricing for trucks and SUVs.
EV Strategy Reset via Writedown
The quarter’s main negative news stemmed from GM’s well-documented challenges in its electric vehicle division. The company’s leadership recorded a total of $7.6 billion in EV-related restructuring costs during the second half of 2025, covering impairments and cash expenses linked to scaling down capacity after demand and U.S. policy moved away from ambitious EV goals.
GM stated the charges arise from actions including scaling back certain EV operations and impairing specific EV assets, plus contract terminations and supplier agreements; roughly $4.6 billion of the total will be paid in cash, primarily in 2026, with $400 million already settled last year. Even with this adjustment, GM stressed it hasn’t devalued its core retail EV lineup and still anticipates EVs to turn profitable over time as new battery technologies, cost reductions, and more balanced market conditions emerge.
Cash Generation and Discipline Earn Investor Approval
What overshadowed the writedown was GM’s capacity to generate cash and distribute it to shareholders—even while absorbing tariff expenses and restructuring its EV portfolio. Jacobson noted that over the past two years, GM has generated almost $25 billion in free cash flow, while investing over $20 billion in capital projects and paying off $1.8 billion in debt just in 2025.
Shareholders are directly benefiting from this windfall. GM bought back $6 billion worth of its stock in 2025—including $2.5 billion in the fourth quarter—reducing its diluted share count by over 465 million shares (nearly 35%) since late 2023, leaving around 930 million shares outstanding at the end of the year. The board greenlit a new $6 billion buyback plan and increased the quarterly dividend by 20% to 18 cents per share; Jacobson stated these moves reflect confidence in sustainably higher annual free cash flow.
[Name], a Yale Management School professor, highlighted CEO Mary Barra’s performance as among the best of any leader in 2025, noting GM faced an “unimaginable year” of volatility following Trump’s “Liberation Day” in April. Since then, the company has exceeded expectations every quarter—even after raising its EBIT guidance twice—while completing $3.5 billion in buybacks and paying down $1.3 billion in debt. GM was the top-performing major automaker stock of the year, rising 60%—its strongest year since exiting bankruptcy in 2009.
Returning to 8%–10% Margins in North America
On Tuesday, GM also presented an outlook that reassured investors it can increase earnings even amid a turbulent macroeconomic and regulatory landscape. For 2026, the company forecasts adjusted EBIT of $13 billion to $15 billion, adjusted EPS of $11 to $13, and adjusted automotive free cash flow of $9 billion to $11 billion—supported by a planned return to 8%–10% EBIT margins in North America.
While cutting EV spending, GM is focusing more on its profitable core products and software-based services. The company plans to invest $10 billion to $11 billion annually in 2026 and 2027, with roughly $5 billion each year allocated to expanding U.S. manufacturing capacity for high-demand pickups and SUVs, and to reduce tariff impacts by shifting production to the U.S.
In technology, GM reported a record 12 million OnStar subscribers in 2025—including over 120,000 Super Cruise users. The advanced driver-assist service is projected to contribute $400 million in high-margin revenue in 2026, pushing total deferred software and services revenue to around $7.5 billion. CEO Mary Barra stated GM intends to launch a next-gen software-defined vehicle architecture and a new “eyes-off, hands-off” driving system in 2028, starting with the Cadillac Escalade I. This will be paired with a new LMR battery chemistry designed to reduce EV cell and pack costs by thousands of dollars.
A Slower, More Profitable Shift to EVs
Barra described the writedown and capacity reductions as a shift to a more cautious EV rollout that aligns better with customer demand and the evolving U.S. policy environment. GM has sold its stake in an Ultium battery plant, converted Orion Assembly back to producing internal-combustion vehicles, and plans to launch hybrids in key segments while continuing to expand its EV lineup.
“We still believe in EVs,” Barra told investors, pointing out that nearly 100,000 new EV customers chose GM in 2025 and that drivers who switch to EVs rarely go back to gasoline. For now, Wall Street seems to back the company’s slower-yet-profitable strategy: even with a multibillion-dollar hit to its EV business, investors drove GM’s stock up significantly, betting that Detroit’s iconic automaker has found a way to navigate the transition on its own terms.