General Motors (NYSE:GM) CFO Paul Jacobson used a conference appearance alongside Reuters U.S. Auto Editor Mike Colias to outline how the automaker is managing a shifting policy backdrop, tariff costs, and changing electric vehicle (EV) demand while emphasizing discipline in inventory, capital allocation, and a longer-term push into software and services.
Tariffs, margins, and a push for resilience
Jacobson said the company was “impacted pretty heavily by tariffs,” citing “over $3 billion last year” and noting GM has “signaled $3–$4 billion of tariffs this year.” He added that GM recently discussed restoring “back to our 8%–10% margins in North America,” which he said was “about 12–18 months ahead of when most investors would have thought we were gonna get back there.”
Portfolio breadth and affordability focus
Jacobson highlighted what he described as strength across the product spectrum, from high-priced models such as the Cadillac Escalade to lower-priced vehicles. He said GM holds about a “60% market share” in full-size SUVs and is “number one in retail share in the top quarter of the market.”
He also emphasized gains at lower price points, saying GM sold “over 700,000 vehicles” priced under $30,000 last year. Jacobson said the company has been able to build a portfolio that can “make money top to bottom,” citing models such as the Chevy Trax and the Bolt as examples of progress in lower-priced segments.
In response to a question about GM’s average transaction price and whether shareholders might prefer focusing on higher-priced vehicles, Jacobson argued that GM’s scale enables it to compete profitably at multiple price points and that the under-$30,000 segment has fewer offerings than in prior decades. He said meeting customers “where they are” can support long-term brand growth.
Inventory discipline and free cash flow
Jacobson described efforts to reduce what he called “self-imposed cyclicality” in the auto business. He said GM has taken “about 40%–50% of our inventory out,” ending the year with “48 days of inventory,” and described a targeted inventory range of “50–60 days” versus “100+ days” historically.
He tied that approach to cash generation, saying GM has moved from a business historically generating “about $3 billion of free cash flow” to one that has been “consistently running at the $10 billion range over the last four or five years.” He described that cash flow as a cushion to absorb shocks and continue investing through downturns.
Jacobson also said GM’s balance sheet is “probably never been stronger,” pointing to “minimal pension liabilities” and what he characterized as a strong investment-grade credit profile with an “upward trajectory” in ratings.
EV investment reset, regulatory shifts, and cost reductions
On EVs, Jacobson said GM took “charges in the back half of the year of about $7 billion” tied to EV investments. He framed the move as a reset rather than an exit, saying it reflected an infrastructure previously built for “1 million EVs a year” based on the regulatory trajectory, while consumer adoption was nearer “about 8%–10%–12%” even at peak levels.
Jacobson said the regulatory environment has become “more aligned with where consumer demand sits right now,” and described EVs as a long-term winner but one that will “take some time.” He said GM’s priority is reaching “variable profitability at every vehicle level” and cited planned technical changes—such as moving to “LMR chemistry and the prismatic cans”—that he said could reduce EV costs by “thousands of dollars.”
Colias also pressed on how suppliers are coping with shifting forecasts. Jacobson said the company sought “healthy conversations” and stability rather than “battle,” and noted that supplier commitments to volumes that did not materialize contributed to EV-related restructuring. He described 2025 as a period of repeated production forecast reductions and said the loss of the $7,500 consumer tax credit contributed to the view that demand would remain lower for longer, prompting GM to “reset” with suppliers.
Onshoring, supply chain risks, and software and services
Jacobson reiterated GM’s plan to invest $5 billion to bring more production onshore, including a retooling of Orion—previously positioned for mass EV production—to produce internal combustion engine vehicles, enabling more U.S.-based truck and full-size SUV output beginning in 2027. He said the company expects to produce “almost 2 million vehicles” in the U.S. once the investments come online.
He said GM previously discussed “$1 billion–$1.5 billion” of near-term pressure tied to onshoring-related costs and investments in software and services, explaining that staffing and training will occur ahead of Orion production. He characterized the onshoring decision as ultimately “accretive,” weighing tariff costs against higher domestic wage structures and other factors.
On semiconductors, Jacobson said GM is seeing “inflationary pressure” from memory chips but described it more as a cost issue than an availability issue at present. He also discussed efforts to improve supply chain resiliency since 2021, including work in metals and EV materials and some vertical integration moves, while cautioning that diversification is complex and takes time.
Jacobson pointed to software and services as a major multi-year opportunity. He said GM has increased disclosures and discussed a path to “$7.5 billion of deferred revenue” on its balance sheet, along with growth in offerings such as Super Cruise and OnStar. He described a roadmap that includes scaling Super Cruise and progressing toward “eyes-off, hands-off autonomy” and working “towards that in 2028.”
Addressing questions about consumer willingness to pay for subscriptions or features amid high vehicle prices, Jacobson said GM must deliver clear value and highlighted potential services that integrate with customers’ daily lives, such as concierge-type capabilities and AI-enabled experiences.
In closing comments about investor sentiment, Jacobson said GM still trades at a “double-digit free cash flow yield” and argued the company is working to earn its way out of a long-standing discount by demonstrating consistency. He cited the speed of the North America margin recovery despite tariff headwinds as a recent catalyst and said GM has outlined a growth trajectory into 2027 based on expected tailwinds.
About General Motors (NYSE:GM)
General Motors Company (NYSE: GM) is a global automotive manufacturer headquartered in Detroit, Michigan, that designs, builds and sells cars, trucks, crossovers and electric vehicles, and provides related parts and services. Founded in 1908, GM has long been one of the world’s largest automakers and has evolved into a multi-brand company whose primary marques include Chevrolet, GMC, Cadillac and Buick. Beyond vehicle manufacturing, GM’s operations encompass vehicle financing, connected services and advanced mobility initiatives.
GM develops and markets a broad portfolio of products and technologies, including internal-combustion and battery-electric vehicles, vehicle components and on-board connectivity services.
