General Motors Company (GM) Earnings

Management highlights

### Core Vehicle Business Performance and Product Pipeline - GM delivered solid Q2 results, with 42%+ U.S. full-size pickup market share (10+ percentage points above the closest competitor) and grew share year-over-year in H1 2026. U.S. incentive spend has remained below the industry average for over three years, supporting strong pricing discipline. - Profitability per unit has improved dramatically since 2020: crossover portfolio EBIT per unit increased 4x, while full-size pickup and full-size SUV EBIT per unit each rose over 25%. - The next-generation Chevrolet Silverado and GMC Sierra light-duty pickups will launch in December 2026 with upgraded design, performance, and technology; GM plans to maintain record year-over-year production volumes across three assembly plants, alongside a new V8 engine launch. Next-generation Cadillac ICE vehicles will launch starting spring 2027, complementing Cadillac's growing luxury EV portfolio. - Onshoring of U.S. production will bring total domestic capacity to over 2 million units starting 2027, reducing tariff exposure. - U.S. dealer inventory ended Q2 at 511,000 units (55 days of supply), within GM's targeted 50-60 day range. ### Digital and Software Growth - 1 million new software/subscription subscriptions are expected in 2026, driving over $3 billion in recognized annual revenue. Super Cruise will be made standard on high-end Silverado/Sierra trims and optional on most other models, adding an estimated 160,000 incremental Super Cruise-enabled vehicles in 2027. - Deferred digital revenue reached $6.3 billion at end-Q2 2026 (up almost 50% year-over-year), with Q2 2026 recognized revenue of $800 million (up 20% year-over-year). Double-digit annual revenue growth is expected through 2027 and beyond, with software-like 70% margins historically reported for OnStar. ### New Growth Business Initiatives - GM Insurance has scaled from 3 U.S. states in 2024 to 21 states today, covering over 60% of GM's U.S. sales, with an 80% coverage target in the near term. The business generates recurring premium revenue, incremental parts/vehicle sales, and improves customer loyalty. - GM Defense is on track to hit 2026 revenue of ~$700 million with positive full-year adjusted EBIT, targeting a 30%+ top-line CAGR over the next several years and double-digit margins. The U.S. Army plans to procure over 10,000 Infantry Squad Vehicles (up from an initial 1,200 unit order) pending congressional appropriations, with total expected awards exceeding $1 billion, and the business is expanding to new customers including allied nations and U.S. federal agencies. ### EV Restructuring and Capital Allocation - GM recorded $2.3 billion in incremental EV restructuring charges in Q2 2026, bringing total EV-related charges to $10.9 billion since H2 2025, of which ~$7.2 billion will be cash-impact. Management expects substantially all material cash restructuring charges are now complete, after concluding negotiations with suppliers and JV partners to align EV capacity with slower-than-expected EV market growth and updated regulatory policy. - GM repurchased $2 billion in shares in Q2 2026, bringing H1 2026 total repurchases to $2.8 billion (retiring 36 million shares). End-Q2 diluted share count is 893 million, 8% lower than Q2 2025 and 35% lower than Q2 2023, with $3.5 billion remaining under the current repurchase authorization.

Guidance

- Full-year 2026 adjusted EBIT guidance raised to $14 billion-$16 billion, up from the prior range of $13.5 billion-$15.5 billion. - Full-year 2026 diluted adjusted EPS guidance raised to $12-$14, up from the prior range of $11.50-$13.50 per share. - Full-year 2026 adjusted automotive free cash flow guidance raised to $9.5 billion-$11.5 billion, up from the prior range of $9 billion-$11 billion. - Guidance assumes no material escalation of Middle East conflict and no significant increase in inflation from current levels. GM maintains its U.S. total vehicle SAAR forecast of ~16 million units for 2026. - GM expects full-year 2026 EV losses to improve by $1 billion-$1.5 billion year-over-year, with $500 million of this benefit already realized in H1. - Full-year 2026 warranty improvement is now guided to $1 billion-$1.5 billion year-over-year, up from the prior forecast of $1 billion; $500 million of benefit was realized in H1, with most remaining benefit expected to flow through Q3 2026. - North America full-year 2026 pricing is now expected to be up ~0.5% year-over-year, at the high end of prior guidance. - Gross full-year 2026 tariff costs are expected to be $2.5 billion-$3.5 billion, flat year-over-year. - Commodity, logistics, and DRAM cost headwinds are guided to $1.5 billion-$2 billion for full-year 2026, with larger headwinds expected in H2 2026 than H1. - 2026 onshoring investment is expected to total $1 billion-$1.5 billion, with the majority of costs incurred in H2 2026. - Management expects 2027 to deliver growth in revenue, margins, EBIT, and adjusted automotive free cash flow, driven by continued EV profitability improvement, digital revenue growth, incremental warranty gains, fixed cost efficiencies, a full year of new full-size pickup sales, and increased full-size SUV capacity. Share repurchases will support further EPS growth in 2027.

Segment performance

North America: Adjusted EBIT of $3.4 billion, up 40% year-over-year, with an 8.6% adjusted EBIT margin (an improvement of 2.5 percentage points year-over-year, contributing 87.2% of total company adjusted EBIT). Performance was driven by strong pricing, lower EV losses from capacity right-sizing, and warranty/regulatory tailwinds, partially offset by commodity and onshoring cost headwinds. GM International (excluding China equity income): Adjusted EBIT of $100 million, contributing 2.6% of total company adjusted EBIT. Middle East wholesales were hurt by shipping disruptions, but strong South American performance partially offset this headwind. China: Equity income of $100 million, contributing 2.6% of total company adjusted EBIT. The segment returned to profitability following completed restructuring despite a challenging market environment. GM Financial: Adjusted EBT of $600 million, contributing ~15.4% of total company adjusted profit on an EBT basis. The segment has grown its balance sheet 25% since 2019 while outperforming peer captive finance firms on profitability, and remains on track to hit its full-year adjusted EBT guidance of $2.5 billion-$3 billion. Total Company: Q2 2026 total revenue of $48 billion (up $900 million year-over-year), adjusted EBIT of $3.9 billion (up $900 million year-over-year), and adjusted automotive free cash flow of $5 billion (up $2.2 billion year-over-year).

Risks & headwinds

- Slower-than-expected EV market growth and regulatory policy changes required costly capacity and supply chain restructuring, with $10.9 billion in total charges incurred since H2 2025, though management expects most material cash charges are now complete. - Sustained elevated commodity, logistics, and DRAM prices are expected to create a $1.5 billion-$2 billion headwind for full-year 2026, with larger impacts in H2. - Escalation of the ongoing Middle East conflict could drive additional commodity price inflation and disrupt global shipping, which would negatively impact results. - Ongoing trade policy discussions around U.S. content requirements for North American trade could create additional tariff costs if new rules are not negotiated favorably. - Intense pricing competition in EV and autonomous vehicle technology, particularly in China, could pressure long-term pricing and margins for GM's software and autonomy offerings. - Launch of the new full-size pickup generation will incur incremental launch costs in Q4 2026, creating a year-over-year volume headwind of ~35,000 units in the quarter.

Analyst Q&A

• Q: Joe Spak (UBS) asked if Super Cruise will expand beyond full-size pickups to other vehicle lines, and if pricing will change as availability scales. /

  A: Management stated Super Cruise expansion is a long-term growth priority, with high 30%-40% current attach rates after the included initial service period. No pricing changes were announced, but management noted scaling is enabled by falling component costs, and the feature contributes to the company's growing $6.3 billion deferred revenue base, with 1 million new total digital subscriptions expected in 2026. The expansion will benefit results across 2027 and beyond, not just the next year.

• Q: Dan Levy (Barclays) asked why the guidance increase was relatively modest despite multiple H1 2026 operational beats, and what upside exists for pricing on the upcoming new full-size truck launch. /

  A: Management explained commodity costs have stabilized at previously guided higher levels, and the guidance raise only reflects H1 outperformance, with no assumption of further commodity deflation or conflict resolution. For the new trucks, GM will add new features and expects richer trim mix at launch, with opportunity for incremental pricing given the segment's strong current pricing and GM's dominant market share; significant upside will build through 2027 and 2028 as the launch completes.

• Q: Andrew Percoco (Morgan Stanley) asked about GM's strategy for sodium-ion battery storage with Peak Energy, including timeline and rationale. /

  A: Management noted sodium-ion chemistry is well-suited for low-cost grid storage, with advantages including abundant raw materials, wide temperature performance, and lower cooling/maintenance requirements, with potential future use in passenger vehicles. GM is partnering with Peak Energy to pursue this opportunity in a capital-efficient manner, avoiding large upfront capital investments in a currently crowded sector, with production-validated cells expected at GM's development center in 2027-2028, targeting production before the end of the 2020s.

• Q: Tom Narayan (RBC) asked about long-term autonomous driving pricing, given intense deflationary competition in China. /

  A: Management noted China's current extreme pricing competition for autonomous features is unsustainable and will require market consolidation long-term. In the U.S., GM holds a leadership position with Super Cruise, and customers recognize the value of the technology, so sustainable pricing power is expected for the foreseeable future. Full consumer-ready general-purpose autonomy remains years away, so premium pricing for Level 2+ features will remain viable for an extended period as the technology develops.