# General Motors Company (GM) — Business, Risks and Management Discussion Fiscal period covered: third quarter of 2026 (three and nine months ended September 30, 2026). GM's fiscal year is the calendar year. All amounts are US dollars as reported. --- ## Business *From the 2025 Form 10-K (fiscal year ended December 31, 2025), accession 0001467858-26-000013.* General Motors designs, builds and sells trucks, crossovers, cars and automobile parts under the Chevrolet, GMC, Cadillac and Buick brands, and sells software-enabled services and subscriptions (OnStar, Super Cruise) on those vehicles. Most of its revenue comes from selling vehicles wholesale to a network of independent dealers: 4,566 dealerships in North America and 6,276 outside it at the end of 2025. The rest comes mainly from GM Financial, its captive lender, which earns interest on retail loans, lease income and dealer floorplan financing. In 2025 total net sales and revenue were $185.0 billion. GM North America (GMNA) contributed $154.3 billion, GM International (GMI) $13.4 billion and GM Financial $17.1 billion. Profit is concentrated in full-size internal-combustion (ICE) pickups and SUVs. On a weighted-average basis, trucks carry roughly 160% of the GMNA portfolio's average variable profit, against about 40% for crossovers and 60% for cars. **Segments.** GM reports three segments: - **GMNA** sells vehicles in the U.S., Canada and Mexico and is by far the largest profit pool. In 2025 it shipped 3.30 million wholesale units, 86.8% of GM's total. Since February 2025 it has also housed GM's personal-vehicle autonomous driving work, after GM bought out Cruise's minority holders and wound down the Cruise robotaxi business. - **GMI** sells vehicles outside North America, mainly in South America (Brazil), South Korea and the Middle East (503,000 wholesale units in 2025). It also holds GM's equity stakes in its China joint ventures with SAIC. SAIC General Motors and SAIC-GM-Wuling sell Buick, Cadillac, Chevrolet, Baojun and Wuling vehicles. GM accounts for them under the equity method, so their sales are not in GM's revenue. - **GM Financial** provides retail loans and leases across the credit spectrum, plus floorplan and dealer loans, in North America and South America and through joint ventures in China. In 2025 it financed 33% of GM's U.S. retail sales (39% in 2024). Prime loans made up 80% of its North American originations. Its revenue was 46% leased-vehicle income, 41% retail finance charges and 7% commercial finance charges. **Scale and market position.** In 2025 GM's total vehicle sales were 6.18 million worldwide, including joint-venture sales. GM sold 2.85 million vehicles in the U.S., a 17.2% market share, and held a 33.0% share of the U.S. truck segment. It sold 1.88 million vehicles in China, a 7.1% share. Fleet sales, generally less profitable than retail, were 17.7% of total vehicle sales. GM has 50 U.S. manufacturing plants and parts facilities in 19 states, including 11 vehicle assembly plants. In 2025 it announced about $4.0 billion of investment to bring production onshore at plants in Tennessee, Kansas and Michigan, and nearly $1.0 billion for a new generation of V8 engines in New York. At year-end 2025 it employed about 155,000 people. Roughly 47,000 U.S. hourly employees are represented by unions, mostly the UAW. Research and development spending was $8.5 billion in 2025 ($9.2 billion in 2024). GM's two largest suppliers accounted for about 12% of its purchases. **Electric vehicles and batteries.** GM sells EVs including the Chevrolet Equinox EV, Cadillac LYRIQ and ESCALADE IQ, and GMC Sierra EV. Its battery cells come from Ultium Cells, a joint venture with LG Energy Solution, which has plants in Warren, Ohio and Spring Hill, Tennessee. In 2025 U.S. policy changed: consumer EV tax incentives were terminated, CAFE civil penalties were set to zero and emissions rules were loosened. GM says EV demand slowed as a result. It realigned EV capacity to match that demand, recording $7.9 billion of charges in GMNA in 2025, and says the realignment does not affect the Chevrolet, GMC and Cadillac EVs currently in production. Its plan is to keep investing in ICE vehicles alongside EVs and to introduce new battery chemistries to lower pack costs. **Software and autonomy.** OnStar operates in more than 20 markets. Super Cruise, GM's hands-free driver-assistance system, works on more than 600,000 miles of compatible roads in the U.S. and Canada. GM no longer funds robotaxi development. Its autonomous-driving work now targets advanced driver assistance and, eventually, fully autonomous personal vehicles. --- ## Risk factors *From Item 1A of the 2025 Form 10-K, accession 0001467858-26-000013. The Q3 2026 Form 10-Q (accession 0001467858-26-000059) states that these risk factors have not changed materially, other than as updated in Part II, Item 1A of GM's Form 10-Q for the quarter ended March 31, 2026 (accession 0001467858-26-000035). That update is summarized at the end of this section.* These are the risks most likely to move GM's earnings and cash flow: - **EV strategy and adoption.** GM's long-term strategy depends on selling EVs profitably. That requires scale, lower battery costs and secure raw materials. EV adoption has been slower than expected since U.S. consumer incentives ended. This has already produced the $7.9 billion of 2025 realignment charges and losses on EV inventory. GM warns that further capacity cuts could follow, along with claims from suppliers. - **Dependence on full-size ICE trucks and SUVs.** These vehicles earn GM's highest margins and fund its spending on EVs, autonomy and software. A shift toward smaller or more fuel-efficient vehicles, for example after an oil-price spike, or tighter fuel-economy rules would hit the core profit pool. - **Tariffs.** U.S. and foreign tariffs on vehicles, parts and raw materials, and the review of the U.S.-Mexico-Canada Agreement, could cost more than GM estimates. Tariffs reduced 2025 EBIT-adjusted by $3.1 billion. GM does not expect its mitigation steps, such as production changes and paused imports, to fully offset the cost in the near term. It may have to change its production footprint, with possible impairments and restructuring charges. - **Competition and excess capacity.** The industry has a history of overcapacity and high fixed costs, which leads to incentive-driven price competition. Lower-cost manufacturers from China and India are expanding into GM's markets. Start-ups and technology companies are challenging the traditional business model. - **China.** Intense domestic competition has eroded joint-venture profits. GM recorded a $2.1 billion impairment and $2.0 billion of extra equity losses in 2024, plus $0.6 billion of restructuring charges in 2025. It expected SAIC General Motors to incur further restructuring charges in 2026. The 10-K noted that the main China joint-venture agreement expires in 2027. During Q3 2026, GM extended the SAIC General Motors term to 2047 (see Current quarter). Chinese government policy, U.S.-China tensions and China's control of battery raw materials add further regulatory and supply risk. - **Joint ventures and offtake commitments.** Many operations, including battery cells and raw-material sourcing in the U.S. and Canada, China and Korea, run through joint ventures that GM does not fully control. Offtake agreements commit GM to buy fixed quantities of battery materials. If EV volumes disappoint, these commitments can drain cash and inflate inventory. - **Autonomous driving.** Developing ADAS and AV technology for personal vehicles still requires heavy capital spending, scarce AI and software talent, and training data. It is exposed to fast-changing regulation, liability for accidents and well-funded technology competitors. - **Supply chain and plant disruption.** Just-in-time production, single-source parts and plants that depend on each other mean that a shortage at a supplier or a stoppage at one facility can halt high-margin output. Labor disruptions, weather and geopolitical events are named triggers. - **Labor.** Substantially all hourly employees are unionized. Collective bargaining limits GM's ability to cut fixed costs and creates a risk of strikes or work stoppages. - **Emissions and fuel-economy regulation.** Rules remain unharmonized across jurisdictions and keep changing. Compliance can mean restricting profitable ICE sales, buying credits or paying penalties. If regulations are withdrawn, purchased emissions credits can be impaired. GM previously impaired CAFE credits, and the 10-K flagged $1.1 billion of acquired GHG credits at risk. - **Cybersecurity and connected vehicles.** Attacks on GM's IT systems, its suppliers or in-vehicle systems could compromise data or vehicle safety. GM states that no incident to date has had a material impact. - **Data privacy.** Privacy, AI and consumer-protection laws are tightening, including the CCPA/CPRA, GDPR and the EU AI Act. GM faces litigation and enforcement over its former OnStar Smart Driver data program (see Current quarter). - **Litigation and recalls.** Recall costs can be large, especially on global platforms. Recovery from suppliers may be limited. Matters include the Takata and ARC airbag-inflator cases. - **GM Financial.** The lender's ability to support vehicle sales depends on funding markets, credit losses, used-vehicle prices and lease residual values, interest and currency rates, and financial-services regulation. - **Pensions and taxes.** Weak markets or lower discount rates could raise pension funding requirements. Tax law changes, including to Inflation Reduction Act incentives, or disputes over full realization of those incentives could raise GM's tax expense. **Update from the Q1 2026 Form 10-Q (accession 0001467858-26-000035).** That filing states there were no material changes to the 10-K risk factors other than one added risk: geopolitical conflict and instability in the Middle East and other regions, including conflicts involving Iran and neighboring countries. GM warns these conflicts could disrupt its supply chain and logistics, restrict transactions involving certain territories, entities or individuals, and raise the cost of raw materials, commodities, energy and other inputs. The filing adds that the conflicts have already disrupted the normal flow of oil and refined petroleum products and pushed up oil and gasoline prices. Higher fuel prices raise energy and transportation costs across GM's supply chain. If prolonged, they could shift buyers toward smaller, more fuel-efficient vehicles and weaken demand for its higher-margin full-size ICE SUVs and pickups. --- ## Management's discussion — fiscal 2025 *From Item 7 of the 2025 Form 10-K, accession 0001467858-26-000013.* In 2025 strong full-size truck and SUV demand held up underlying earnings, but tariffs and the EV write-down cut reported profit sharply. Total net sales and revenue fell 1.3% to $185.0 billion. Net income attributable to stockholders fell to $2.70 billion from $6.01 billion, and diluted EPS to $3.27 from $6.37. Excluding special items, EBIT-adjusted was $12.7 billion against $14.9 billion. EPS-diluted-adjusted was $10.60 in both years, because a smaller share count offset lower adjusted earnings. ROIC-adjusted was 19.3% (20.8% in 2024). Adjustments excluded from EBIT-adjusted totaled $9.84 billion. They were made up of $7.91 billion for the EV strategic realignment, $0.84 billion for China restructuring, $0.66 billion for legal matters and $0.22 billion for Cruise restructuring, plus smaller items. About $4.7 billion of the EV charges were supplier settlements, contract cancellation fees and battery-joint-venture settlements, payable in cash later. - **GMNA:** Revenue fell 2.0% to $154.3 billion. Wholesale volume fell to 3.30 million units from 3.46 million, partly because of planned production cuts for product upgrades. Favorable mix and pricing partly offset the decline, helped by lean dealer inventories. EBIT-adjusted fell 28.1% to $10.45 billion, and the margin to 6.8% from 9.2%. The decline came mainly from $3.1 billion of tariff costs and $1.3 billion of higher warranty and recall costs. Management's stated priority is returning GMNA to its historical 8–10% EBIT-adjusted margin. - **GMI:** EBIT-adjusted rose to $737 million from $303 million on better pricing and mix. The China joint ventures swung to a $316 million equity loss, from a $4.41 billion loss in 2024 that included impairments. - **GM Financial:** Revenue rose 7.5% to $17.06 billion on higher yields and portfolio balances. EBT-adjusted slipped 5.5% to $2.80 billion as interest, operating and lease costs rose. - **Tax:** The effective tax rate was 10.8%; ETR-adjusted was 18.9%. **Cash and capital allocation.** Automotive operating cash flow was $18.7 billion (2024: $23.9 billion), against capital expenditures of $9.2 billion. GM returned cash through a $2.0 billion accelerated share repurchase (43 million shares), $4.0 billion of open-market buybacks (about 61 million shares) and $0.5 billion of dividends. It also lent $1.8 billion to Ultium Cells LLC so that Ultium could repay its Department of Energy loans. Automotive available liquidity was $35.7 billion at year-end. The capital allocation framework targets ROIC-adjusted of 20% or more and an average automotive cash balance of $18.0 billion, and returns surplus cash to shareholders. In January 2026 the Board added $6.0 billion of buyback capacity, bringing the total to $6.3 billion, and raised the quarterly dividend to $0.18. **Initial 2026 outlook (January 2026).** GM guided to net income attributable to stockholders of $10.3–11.7 billion, EBIT-adjusted of $13.0–15.0 billion and diluted and adjusted EPS of $11.00–13.00. It assumed tariff costs of $3.0–4.0 billion and capital spending, including battery joint-venture investment, of $10.0–12.0 billion. It also warned that further EV-related charges would come in 2026, though well below the 2025 level. --- ## Current quarter — Q3 2026 *From the Form 10-Q for the quarter ended September 30, 2026, accession 0001467858-26-000059, and the third-quarter earnings release furnished on Form 8-K, accession 0001467858-26-000056.* **Headline results.** Q3 2026 revenue rose 2.9% to $50.0 billion. Net income attributable to stockholders was $3.34 billion against $1.33 billion a year earlier, and diluted EPS $3.73 against $1.35. The year-ago quarter carried $1.93 billion of special-item adjustments, mostly the first EV charge; this quarter's were only $238 million. EBIT-adjusted rose 21.6% to $4.11 billion, an 8.2% margin (6.9% a year earlier). EPS-diluted-adjusted was $3.70 against $2.80. The tax rate was 14.3%, including a $208 million benefit from a change to a subsidiary's legal-entity tax classification. **What drove the quarter, by segment:** - **GMNA:** EBIT-adjusted rose 43.4% to $3.59 billion, and the margin to 8.7% from 6.2%. That is within the 8–10% range management aims to earn on a sustained annualized basis. Lower costs drove most of the gain: $0.9 billion less warranty expense and $0.4 billion lower EV-related inventory write-downs, partly offset by $0.2 billion less equity income from Ultium Cells and higher engineering costs. Wholesale volume rose 3.5% to 870,000 units on full-size pickups and crossovers. Pricing was a $0.2 billion headwind because of model-year timing. GM's U.S. market share was 16.1% (16.8% a year earlier) in a slightly smaller market. - **GMI:** EBIT-adjusted fell to $28 million from $226 million. Material, logistics and manufacturing costs rose even though revenue grew 12.1% on Brazilian volume. Equity income from the China joint ventures fell to $32 million from $80 million. China industry sales fell to 5.4 million units from 6.9 million, and GM's China sales to 358,000 from 469,000. During the quarter GM signed an agreement extending the term of the SAIC General Motors joint venture through May 15, 2047, subject to certain conditions. GM's ownership and accounting do not change, and the financial impact is insignificant. - **GM Financial:** EBT-adjusted fell 16.9% to $668 million. Operating expenses rose with the growth of its insurance and vehicle-protection businesses, and the provision for loan losses increased. Average debt and funding costs were slightly lower. Leased EVs made up 23.5% of lease residual values, up from 21.1% at year-end. **Nine-month trends.** For the first nine months, revenue was $141.7 billion (+1.4%), net income attributable to stockholders $7.27 billion and EBIT-adjusted $12.30 billion (+24% from $9.90 billion). GMNA's EBIT-adjusted margin was 9.1% against 7.0%. Three policy and restructuring threads shaped the year: - **Tariffs:** On February 20, 2026, the U.S. Supreme Court held that the International Emergency Economic Powers Act did not authorize tariffs. GM recorded $0.7 billion of net favorable adjustments for refundable tariffs through September. It now estimates 2026 tariff costs at $2.5–3.5 billion, down from the initial $3.0–4.0 billion. - **EV realignment:** Net charges were $3.6 billion year to date. They consisted of $2.5 billion for commercial negotiations with suppliers and joint-venture partners, $1.3 billion of losses on supply agreements and $0.5 billion on compliance-related assets, net of $0.7 billion of recoveries under a cost-sharing arrangement. About $2.7 billion will be paid in cash, and $4.2 billion of cash went out on these charges in the period. The 10-Q describes the additional net charges recorded in Q3 itself as insignificant. GM believes it has substantially finished recognizing material cash charges for the realignment. - **Emissions rules:** The EPA's April 2026 repeal of its greenhouse-gas "endangerment finding" removed vehicle GHG regulations and triggered the $0.5 billion compliance-asset charge. $0.7 billion of compliance-related assets remained on the balance sheet. Litigation over the repeal, and over NHTSA's less stringent 2022–2031 CAFE standards, has begun. **Cash, balance sheet and shareholder returns.** Automotive operating cash flow was $8.05 billion in Q3 and $13.7 billion for the nine months. Adjusted automotive free cash flow was $5.88 billion in Q3 and $12.2 billion year to date, after adding back $4.2 billion of EV-realignment cash costs treated as management actions. Automotive available liquidity rose to $37.1 billion, including $18.8 billion of cash, from $35.7 billion at year-end. GM Financial's available liquidity fell to $27.0 billion from $34.8 billion as it drew more on secured facilities, but stayed above its target. GM repurchased 65 million shares for $5.3 billion in the nine months, including 29.5 million in Q3 at an average $85.35. Shares outstanding fell to 849 million from 904 million at the end of 2025. In August 2026 GM set up a $4.5 billion inventory banking facility: banks fund suppliers to hold critical parts inventory for GM, backed by GM payment undertakings that are recorded as unsecured debt. An insignificant amount was drawn at quarter-end. **Legal and regulatory developments in 2026:** - In the first half, GM reached final settlements and consent orders with the Federal Trade Commission and California regulators over its former OnStar Smart Driver data program. Other litigation and state inquiries continue, with $0.5 billion accrued. - GM is a party to two EV supply arbitrations. In June 2026 it filed one against a battery-material joint-venture partner, seeking to terminate a supply agreement. In July 2026 a supplier of EV traction-motor components filed one seeking damages after GM ended a strategic sourcing agreement. - In Q3 GM agreed to settle the 8-speed transmission class actions. The settlement is consistent with its accrual, which was insignificant. - Total accruals for legal matters were $1.6 billion. GM estimates reasonably possible indirect-tax losses of up to $1.0 billion above amounts accrued. **Updated 2026 guidance (October 20, 2026).** The October update narrowed the EBIT-adjusted range, following guidance raises in April, when GM recognized the tariff refunds, and in July. GM states that its net income, automotive operating cash flow and EPS-diluted ranges are based on the updated guidance and the impact of adjustments recorded year to date. All figures exclude future special items: - Net income attributable to stockholders: $8.9–9.5 billion (prior: $8.4–9.8 billion) - EBIT-adjusted: $14.5–15.5 billion (prior: $14.0–16.0 billion) - EPS-diluted: $9.72–10.72 (prior: $8.98–10.98); EPS-diluted-adjusted: $12.75–13.75 (prior: $12.00–14.00) - Automotive operating cash flow: $17.3–20.3 billion (prior: $15.4–19.4 billion); adjusted automotive free cash flow: $11.5–12.5 billion (prior: $9.5–11.5 billion) - Capital spending, including battery joint-venture investment: $10.0–12.0 billion; ETR-adjusted: 20–21% --- ## Subsequent events *From the Q3 2026 Form 10-Q, accession 0001467858-26-000059, and the Q3 2026 earnings release, accession 0001467858-26-000056.* The 10-Q has no separate subsequent-events note. The developments it and the earnings release disclose after September 30, 2026 all concern capital return: - **Buyback completed.** In October 2026 GM fully used the $6.3 billion of repurchase capacity that remained after the Board's January 2026 increase. At the end of Q3, $1.0 billion of that capacity was left. - **New $20.0 billion repurchase authorization.** The Board approved it in October 2026, with no expiration date. GM describes it as a multi-year program that may be suspended or discontinued at any time. - **Quarterly dividend.** The Board declared $0.18 per share, payable December 17, 2026 to holders of record at the close of trading on December 4, 2026. - **Credit ratings.** As of October 14, 2026, all four agencies (DBRS, Fitch, Moody's and S&P) still rated GM investment grade, unchanged since December 31, 2025. Neither filing discloses any acquisition, divestiture, new borrowing or litigation outcome after the quarter end.