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After rallying by about 8% over the past week, shares of General Motors (GM) have executed a sharp U-turn and are trading with sizable losses following the automaker's 4Q24 earnings report. Once again, GM exceeded EPS and revenue expectations -- a feat it has accomplished now in ten consecutive quarters -- although the magnitude of the Q4 earnings beat is much more modest compared to the past few quarters. Recall that when GM delivered its impressive blowout Q3 results in October, it acknowledged that some of the upside was due to a pull forward from Q4, particularly surrounding the ramp of full-size SUV production. It appears that this benefit reversed itself in Q4, leading to the smaller EPS beat.

Overall, though, GM's quarterly results were strong, bolstered by an EV business that's gaining momentum and market share. In fact, the company's EV market share nearly doubled on a yr/yr basis to 12.5%, led by healthy demand for the Chevrolet Equinox EV and the Cadillac LYRIQ, which was the best-selling electric mid-size luxury SUV in Q4. Offsetting this bullish news was GM's outlook for FY25 and the uncertainty revolving around the impact of tariffs and the potential removal of federal EV tax credit.

• While the company's FY25 EPS guidance of $11.00-$12.00 was ahead of expectations, the outlook doesn't contemplate the possible effects of tariffs or the loss of the EV tax credit. CEO Mary Barra stated that GM will adjust their outlook as needed and that the company has a plan in place to contend with various scenarios that may arise from the Trump Administration's policies. 
• Further, GM is modeling a price decline of 1.0-1.5% in North America and a modest decline in wholesale volumes. As such, the company's FY25 adjusted EBIT guidance of $13.7-$15.7 bln equates to a yr/yr decline of about 1% based on the midpoint of the projected range.
• Still, GM is expecting to achieve significant profitability improvements in its EV business. Specifically, based on its forecast of 300,000 EV sales in FY25, the company sees an earnings tailwind near the low end of its $2.0-$4.0 bln EBIT target. Since its launch in 2Q24, the Equinox EV has delivered a variable profit improvement of $1,000, driven by scale and lower battery costs. 
• Another positive is that the company is seeing some progress in its struggling China business. In Q4, GM posted positive equity income before restructuring costs in China as it continues to cut costs there.

GM's EV business provided a spark again while solid demand and healthy pricing for trucks and SUVs on the ICE (internal combustible engine) side also contributed to the upside Q4 results. However, the solid quarterly results are being brushed aside as GM guides for a yr/yr decline in adjusted EBIT due to an expected dip in ICE volumes and price.