BusinessJul 21, 2026
General Motors Is Pivoting Back to Gas. Investors Aren't Sure What to Make of It
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Rhea Lobo
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General Motors gave investors plenty to like, yet the stock couldn't settle on a direction. Three key forces were pulling it in opposite directions.
GM's Q2 adjusted operating profit came in at $3.9B while revenue hit $48B, both coming ahead of forecasts. First-half earnings per share were 25% higher than any first half in GM's history, according to CFO Paul Jacobson.
GM also raised its full-year guidance for the second time this year. It now expects adjusted earnings before interest and taxes of $14B to $16B. Adjusted EPS guidance rose to a range of $12 to $14.
The adjusted EPS figure for Q2 was $3.57, beating the $3.19 estimate. Part of that beat came from a shrinking share count.
GM has been buying back stock, and there are now fewer than 900M shares outstanding, down from roughly 960M a year ago. Fewer shares means earnings per share rises even when total profit stays flat.
GM's North American EBIT margin reached 8.6% while average vehicle transaction prices topped $52K in the quarter. Incentives as a percentage of MSRP averaged 4.7%, well below the industry average of 6.3%.
The GMC Sierra posted a record quarter with sales up 5%, the Chevy Traverse rose 19.5, and the Trailblazer climbed 28.4%.
GM said it's on pace to lead the full-size pickup segment for a seventh consecutive year with roughly 42% market share.
Overall US vehicle sales fell 4.2%, but GM attributed most of that drop to discontinued models like the Cadillac XT4 and XT6 and the Chevrolet Malibu.
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The complicated part of this story is what GM is walking away from. The company has recorded $10.9B in EV-related charges since the second half of 2025. That includes a $2.3B charge taken in Q2 alone. The write-downs are tied to cutting battery capacity and converting factories back to gas engine production.
For context, GM shipped 31K fewer EVs to North American dealerships in Q2 than it did a year earlier. At the same time, it shipped 30K more gas-powered vehicles.
GM says it has now "substantially" completed the major cash charges from this reset. It has paid out $4.5B of an expected $7.2B in total cash charges through Q2.
As part of the shift, GM announced new gas-powered Cadillac vehicles beginning next spring, including new versions of the CT5 sedan, XT5 midsize SUV, and discontinued XT6. This directly reverses an earlier plan to make Cadillac an EV-only brand by the end of this decade.
Despite all of it, GM stock entered this earnings report down roughly 7% year to date. It still trades at under six times estimated 2026 earnings, a very low multiple for a company raising guidance twice in one year.
"Our first-half earnings per share is 25% higher than the first half at any time in our history."
Paul Jacobson, GM CFO
Jacobson called GM's stock a "bargain" at roughly $75 a share during the earnings call. Tariff costs in Q2 were roughly $900M, and the company expects similar exposure in Q3 and Q4. The market appears to be pricing in ongoing uncertainty rather than rewarding current performance.
