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- GM 3Q25 - Raising numbers. What's next? Bull case $92 Bear case $48
GM 3Q25 - Raising numbers. What's next? Bull case $92 Bear case $48
Cheat Sheets
GENERAL MOTORS (GM)
🚗 Auto Giant | EPS $2.80 (Beat) | Revenue $48.6B (Beat) | Raised 2025 Guidance | China Profitable Again
Tariff Impact $1.1B ↓ | NA Margin 6.2% (9% ex-tariffs) | 17% US Share ↑ | Record Q3 EV Sales | 2026 Will Be Better
💰 Market Cap: $55B | 🏢 162k Employees | 🌐 Global Operations
👩💼 CEO Mary Barra | 🎯 4 Brands | 🇺🇸 Detroit, MI
$66.78
📈 +$8.78 (+15.1%) Today
+15% YTD | Hit 52-wk High
Price Targets (12-18 Months)
Current Price: $66.78
$92.00
Bull Case (+38%)
Premium Multiple
🚀 Needs:
2026 beats expectations • Tariff relief from trade deals • EV losses shrink faster • Warranty costs drop • China stays profitable • Software revenue scales to $4B+
$77.00
Base Case (+15%)
Steady State
⚖️ Needs:
2026 "better than 2025" = $13B+ EBIT • NA margins recover to 8-9% • Tariff offsets continue • EV losses improve • Maintains share buybacks
$48.00
Bear Case (-28%)
Multiple Compression
⚠️ Risk:
Tariffs stay at 25%/35% • China chip shortage hits production • Warranty stays elevated • EV writedowns continue • Recession crushes truck demand
The TL;DR
💰 What Happened
• Q3 EPS: $2.80 BEAT (est $2.31) - crushed it again
• Revenue: $48.6B (est $45.3B) - big beat on top line
• EBIT-Adjusted: $3.4B (est $2.7B) - destroyed expectations
• RAISED 2025 guidance: EBIT $12-13B, EPS $9.75-10.50, FCF $10-11B
• US Market Share: 17% (up 50bps YoY) = highest Q3 since 2017
• North America: 6.2% margin (would be 9% without tariffs)
• China: PROFITABLE for 4th straight quarter ($80M equity income)
• Tariffs: $1.1B hit but offset 30%+ through self-help
• Buybacks: $1.5B in Q3, $3.5B YTD = share count down 15%
• EV Sales: Record Q3 = 67k units, 16.5% market share (#2 in US)
• Revenue: $48.6B (est $45.3B) - big beat on top line
• EBIT-Adjusted: $3.4B (est $2.7B) - destroyed expectations
• RAISED 2025 guidance: EBIT $12-13B, EPS $9.75-10.50, FCF $10-11B
• US Market Share: 17% (up 50bps YoY) = highest Q3 since 2017
• North America: 6.2% margin (would be 9% without tariffs)
• China: PROFITABLE for 4th straight quarter ($80M equity income)
• Tariffs: $1.1B hit but offset 30%+ through self-help
• Buybacks: $1.5B in Q3, $3.5B YTD = share count down 15%
• EV Sales: Record Q3 = 67k units, 16.5% market share (#2 in US)
✅ Bull Case
• Beat and raise AGAIN = consistent execution machine
• 2026 "will be better than 2025" per CFO = growth coming
• China profitable 4 quarters straight ($80M) = turnaround real
• US share 17% (highest Q3 since 2017) = gaining ground
• Tariff offsets working (30%+ mitigation already)
• Software revenue $2B YTD, 70% margins = monster potential
• OnStar subscribers +34% YoY to 11M = scaling
• Share count down 15% YoY = aggressive buybacks working
• Trading 6x forward = still stupid cheap for this execution
• 2026 "will be better than 2025" per CFO = growth coming
• China profitable 4 quarters straight ($80M) = turnaround real
• US share 17% (highest Q3 since 2017) = gaining ground
• Tariff offsets working (30%+ mitigation already)
• Software revenue $2B YTD, 70% margins = monster potential
• OnStar subscribers +34% YoY to 11M = scaling
• Share count down 15% YoY = aggressive buybacks working
• Trading 6x forward = still stupid cheap for this execution
⚠️ Bear Case
• $1.6B EV writedown in Q3 = massive bet not paying off
• Warranty up $900M YoY "too high" per CFO = quality issues
• EV demand "softened significantly" in Oct per management
• Stopped BrightDrop, sold MI battery plant = scaling back hard
• Tariffs still 25% Mexico/35% Canada = $1.1B+ quarterly hit
• China chip shortage risk "very fluid" = production threat
• Lower EV capacity utilization = higher per-unit costs
• NA margins 6.2% (not the 8-10% target) = pressure remains
• Warranty up $900M YoY "too high" per CFO = quality issues
• EV demand "softened significantly" in Oct per management
• Stopped BrightDrop, sold MI battery plant = scaling back hard
• Tariffs still 25% Mexico/35% Canada = $1.1B+ quarterly hit
• China chip shortage risk "very fluid" = production threat
• Lower EV capacity utilization = higher per-unit costs
• NA margins 6.2% (not the 8-10% target) = pressure remains
🎯 The Real Story
The EV pivot is REAL: $1.6B writedown ($1.2B non-cash) for transitioning Orion to ICE, stopping hydrogen fuel cells, selling MI battery plant to LG. Management admits "near-term EV adoption will be much lower than planned" = total strategy shift.
Tariffs dominating everything: $1.1B Q3 hit, offset 30%+ through "self-help" (onshoring, supplier changes, pricing). But Mexico/Canada still 25%/35% with NO trade deal in sight. Management confirms this continues into 2026.
China actually working: 4th straight profitable quarter, share UP 30bps to 6.8%, "comparing favorably to global peers" per CFO. This is a legit turnaround story nobody's pricing in.
Software = the sleeper: $2B revenue YTD at 70% margins, OnStar subs +34% to 11M, Super Cruise doubled YoY to 500k customers. Management expects "robust double-digit growth through end of decade" = potential $4-5B high-margin revenue stream.
2026 guidance matters: "Will be better than 2025" = at $12.5B midpoint, we're talking $13B+ EBIT next year. Multiple paths to get there (EV losses down, warranty improving, tariff offsets scaling, software growing).
Tariffs dominating everything: $1.1B Q3 hit, offset 30%+ through "self-help" (onshoring, supplier changes, pricing). But Mexico/Canada still 25%/35% with NO trade deal in sight. Management confirms this continues into 2026.
China actually working: 4th straight profitable quarter, share UP 30bps to 6.8%, "comparing favorably to global peers" per CFO. This is a legit turnaround story nobody's pricing in.
Software = the sleeper: $2B revenue YTD at 70% margins, OnStar subs +34% to 11M, Super Cruise doubled YoY to 500k customers. Management expects "robust double-digit growth through end of decade" = potential $4-5B high-margin revenue stream.
2026 guidance matters: "Will be better than 2025" = at $12.5B midpoint, we're talking $13B+ EBIT next year. Multiple paths to get there (EV losses down, warranty improving, tariff offsets scaling, software growing).
🐂 Bull Thesis
🎯
Execution = Unmatched Consistency
Beat Streak: Beat and raised guidance again = this team DELIVERS quarter after quarter
US Share: 17% in Q3 (highest since 2017) = taking ground from Ford and Stellantis
Pricing Discipline: Below industry incentives for 10th straight quarter = premium positioning maintained
Inventory Control: Dealer inventory down 16% YoY to 527k units, EV inventory down 30% Q/Q = no desperation
Morgan Stanley Analyst: "You have higher margins and higher growth than Tesla, trading 6x earnings not 200x" = respect
Track Record: "Structurally transformed GM over past decade...profitable growth and durable cash flows" per CFO
US Share: 17% in Q3 (highest since 2017) = taking ground from Ford and Stellantis
Pricing Discipline: Below industry incentives for 10th straight quarter = premium positioning maintained
Inventory Control: Dealer inventory down 16% YoY to 527k units, EV inventory down 30% Q/Q = no desperation
Morgan Stanley Analyst: "You have higher margins and higher growth than Tesla, trading 6x earnings not 200x" = respect
Track Record: "Structurally transformed GM over past decade...profitable growth and durable cash flows" per CFO
🇨🇳
China Turnaround = Nobody Believes It
4 Straight Quarters: Profitable for Q4 in a row ($80M Q3 equity income) = trend confirmed
Share Gains: Market share UP 30bps YoY to 6.8% = winning in brutal market
Peer Comparison: "Comparing favorably to many global peers" per CFO = outperforming expectations
Full Year: Management confirms "expect full year to be profitable" = 2025 will be positive
Why It Matters: Everyone wrote off China, but GM restructured and fixed it = pure upside surprise
The Setup: Zero credit in valuation for this turnaround = stock reprices when Street realizes
Share Gains: Market share UP 30bps YoY to 6.8% = winning in brutal market
Peer Comparison: "Comparing favorably to many global peers" per CFO = outperforming expectations
Full Year: Management confirms "expect full year to be profitable" = 2025 will be positive
Why It Matters: Everyone wrote off China, but GM restructured and fixed it = pure upside surprise
The Setup: Zero credit in valuation for this turnaround = stock reprices when Street realizes
💻
Software = The Hidden Gold Mine
Revenue: $2B YTD from OnStar, Super Cruise, software services = scaling fast
Margins: "About 70%" per CEO = almost pure profit incremental revenue
Growth: "Robust double-digit revenue growth through end of decade" = compounding at 15%+
OnStar: 11M subscribers (up 34% YoY) = installed base exploding
Super Cruise: 500k customers (nearly doubled YoY) = ADAS adoption accelerating
Deferred Revenue: Up 14% Q/Q to $5B = future cash locked in
The Math: $4-5B software revenue at 70% margins by 2030 = $3B+ incremental EBIT nobody models
Margins: "About 70%" per CEO = almost pure profit incremental revenue
Growth: "Robust double-digit revenue growth through end of decade" = compounding at 15%+
OnStar: 11M subscribers (up 34% YoY) = installed base exploding
Super Cruise: 500k customers (nearly doubled YoY) = ADAS adoption accelerating
Deferred Revenue: Up 14% Q/Q to $5B = future cash locked in
The Math: $4-5B software revenue at 70% margins by 2030 = $3B+ incremental EBIT nobody models
📈
2026 Setup = Multiple Upside Levers
Guidance: CFO said 2026 "will be better than 2025" = $13B+ EBIT target
EV Losses: Right-sizing capacity = lower fixed cost absorption, improving profitability path
Warranty: "Too high, need to do better" = supplier quality, AI tools, proactive fixes = $500M+ opportunity
Tariff Offsets: Already at 30%+, MSRP program expanded = more mitigation coming
Software Scaling: 70% margin business growing double-digits = pure earnings upside
Buybacks: $3.5B YTD, shares down 15% = "continue trending lower" per CFO = relentless
Valuation: 6x 2026 EBIT at $13B = criminally cheap for consistent compounder
EV Losses: Right-sizing capacity = lower fixed cost absorption, improving profitability path
Warranty: "Too high, need to do better" = supplier quality, AI tools, proactive fixes = $500M+ opportunity
Tariff Offsets: Already at 30%+, MSRP program expanded = more mitigation coming
Software Scaling: 70% margin business growing double-digits = pure earnings upside
Buybacks: $3.5B YTD, shares down 15% = "continue trending lower" per CFO = relentless
Valuation: 6x 2026 EBIT at $13B = criminally cheap for consistent compounder
🐻 Bear Thesis
⚡
EV Strategy = Massive Retreat
$1.6B Charge: $1.2B non-cash writedown in Q3 = admitting EV bet was wrong
Orion Flip: Converting EV plant BACK to ICE (Escalade + pickups 2027) = full reversal
Sold MI Plant: Battery plant to LG = giving up on in-house cell production
Stopped BrightDrop: Commercial van program shut down completely = another EV failure
More Charges: "Additional charges in Q4" per CFO = writedowns not done
Demand Cliff: "EV demand softened significantly" in Oct, "trend will continue into early 2026"
Utilization: Lower EV capacity = "higher variable costs" = losing MORE per vehicle
Orion Flip: Converting EV plant BACK to ICE (Escalade + pickups 2027) = full reversal
Sold MI Plant: Battery plant to LG = giving up on in-house cell production
Stopped BrightDrop: Commercial van program shut down completely = another EV failure
More Charges: "Additional charges in Q4" per CFO = writedowns not done
Demand Cliff: "EV demand softened significantly" in Oct, "trend will continue into early 2026"
Utilization: Lower EV capacity = "higher variable costs" = losing MORE per vehicle
💱
Tariffs = Endless Bleeding
Q3 Hit: $1.1B tariff impact (less than expected due to lower Korea imports) = still massive
Offset: Only 30%+ mitigated through pricing/footprint = still losing $700M+ per quarter
Full Year: $3.5-4.5B gross tariff exposure = $2.5B+ net hit after offsets
2025 Rates: Mexico 25%, Canada 35%, Korea tariffs = NO trade deals done
Management: When asked about 2026 tariff assumptions, CFO said "nothing, no change built in"
The Reality: Tariffs not going away, onshoring takes years = structural margin headwind continues
Math: NA margins would be 9% WITHOUT tariffs, actual 6.2% = 280bps drag
Offset: Only 30%+ mitigated through pricing/footprint = still losing $700M+ per quarter
Full Year: $3.5-4.5B gross tariff exposure = $2.5B+ net hit after offsets
2025 Rates: Mexico 25%, Canada 35%, Korea tariffs = NO trade deals done
Management: When asked about 2026 tariff assumptions, CFO said "nothing, no change built in"
The Reality: Tariffs not going away, onshoring takes years = structural margin headwind continues
Math: NA margins would be 9% WITHOUT tariffs, actual 6.2% = 280bps drag
🔧
Warranty = Quality Crisis
Q3 Shock: Warranty expense up $900M YoY = absolutely brutal hit
CFO Quote: "This is too high, and we need to do better" = admitting it's a problem
Actions: Asking dealers to help lower costs, supplier validation, AI tools = sounds desperate
Stabilization: "Cash outlays stabilize over past few months" = stopped bleeding but not improving
Root Cause: Multiple issues across GM, suppliers, dealers = systemic quality problems
Risk: If warranty stays elevated or gets worse, wipes out margin improvement plans
Track Record: GM has struggled with quality for years = fixing this is hard
CFO Quote: "This is too high, and we need to do better" = admitting it's a problem
Actions: Asking dealers to help lower costs, supplier validation, AI tools = sounds desperate
Stabilization: "Cash outlays stabilize over past few months" = stopped bleeding but not improving
Root Cause: Multiple issues across GM, suppliers, dealers = systemic quality problems
Risk: If warranty stays elevated or gets worse, wipes out margin improvement plans
Track Record: GM has struggled with quality for years = fixing this is hard
🎲
Supply Chain = Ticking Time Bomb
China Chips: "Monitoring supply...potential to impact production" = CEO flagged major risk
Situation: "Very fluid...teams working around the clock" = actively disrupted RIGHT NOW
No Timeline: "Don't have specific timing...will keep you posted" = total uncertainty
Governments Talking: Hoping for resolution but NO guarantees = could drag on
Impact: If production stops or slows = destroys Q4 guidance immediately
Pattern: Living through COVID semiconductor shortage AGAIN = déjà vu nightmare
Risk: This could crater the "2026 will be better" narrative if it's not resolved fast
Situation: "Very fluid...teams working around the clock" = actively disrupted RIGHT NOW
No Timeline: "Don't have specific timing...will keep you posted" = total uncertainty
Governments Talking: Hoping for resolution but NO guarantees = could drag on
Impact: If production stops or slows = destroys Q4 guidance immediately
Pattern: Living through COVID semiconductor shortage AGAIN = déjà vu nightmare
Risk: This could crater the "2026 will be better" narrative if it's not resolved fast
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
