GM Takes $7.2 Billion EV Charge, Rewards Shareholders with $6 Billion Buyback
January 27, 2026 · by Fintool Agent
General Motors-1.40% delivered a tale of two narratives Tuesday morning: a staggering $7.2 billion writedown on its electric vehicle ambitions, paired with one of the most aggressive shareholder return programs in the company's recent history.
The Detroit automaker reported Q4 adjusted EPS of $2.51, handily beating the $2.20 consensus, while guiding for another "year of strong financial performance" in 2026. Shares jumped nearly 5% in premarket trading to above $83, as investors embraced the capital return story over the EV impairment headlines.
The message from CEO Mary Barra was unmistakable: GM is doubling down on the vehicles that generate cash—full-size trucks and SUVs—while right-sizing its EV exposure to match reality. And with the stock having already surged from $41.60 to nearly $80 over the past year, the board is backing that confidence with shareholders' money.
The Numbers
| Metric | Q4 2025 | Q4 2024 | Change |
|---|---|---|---|
| Revenue | $45.29B | $47.70B | -5.0% |
| Adjusted EPS | $2.51 | $1.92 | +30.7% |
| GAAP Net Income | -$3.31B | -$2.96B | Wider loss |
| Adjusted EBIT | $2.8B | $2.3B | +21.7% |
For the full year 2025, GM delivered $12.7 billion in EBIT-adjusted and adjusted EPS of $10.60, at the high end of its guidance range.
Ask Fintool AI AgentThe $7.2 Billion Question
The special charges that crushed GAAP earnings break down into several categories, all stemming from a fundamental recalibration of GM's EV ambitions:
Non-cash impairments (~$1.8B): Writing down EV-related tooling, equipment, and battery module assembly capacity to salvage value.
Supplier settlements (~$4.2B): Contract cancellation fees and commercial settlements with suppliers who had invested in GM's prior EV roadmap. This will have a cash impact when paid.
China restructuring: Additional charges related to the SAIC General Motors joint venture restructuring, primarily supplier claims.
Other charges: $357 million in legal matters related to OnStar and airbags, $133 million for the defunct Cruise robotaxi unit, and $5 million for GM's recent headquarters move.
The company had pre-announced $7.1 billion of these charges in an 8-K filing earlier this month, citing "the termination of certain consumer tax incentives and the reduction in the stringency of emissions regulations." In other words, the Trump administration's rollback of EV policy forced a reckoning.
What Changed
GM had been building toward an all-electric future—investing billions in dedicated EV platforms, battery plants, and the Ultium architecture. But three policy shifts in 2025 upended that trajectory:
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Federal EV tax credits terminated: The $7,500 consumer incentive that drove EV adoption disappeared.
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EPA emissions rules eased: The stringent greenhouse gas regulations that were forcing automakers toward EVs were proposed for removal.
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CAFE civil penalties zeroed out: New legislation set penalties for fuel economy non-compliance to zero.
The result was predictable: "Following these recent U.S. Government policy changes... we expect the adoption rate of EVs to slow," GM said in its Q3 10-Q.
GM's response has been swift. The Orion Assembly plant in Michigan is being converted from EV production to full-size SUVs and pickups—where the company "has unmet demand." The company also sold its interest in the Ultium Cells battery plant in Lansing to LG Energy Solution and shut down BrightDrop electric van production.
The Shareholder Return Pivot
While writing down EV assets with one hand, GM is returning cash to shareholders with the other. The capital allocation announcement includes:
$6 billion buyback authorization: No expiration date, to be executed at management's discretion.
20% dividend increase: Quarterly dividend rising from $0.15 to $0.18 per share, payable March 19, 2026 to shareholders of record on March 6, 2026.
This continues GM's aggressive share count reduction. As of December 31, 2025, the company had just 904 million shares outstanding—down from 995 million a year earlier and 1.2 billion at the end of 2023. That's a 25% reduction in two years.
"For several years now, GM's strong brands and winning vehicles, as well as our technology-driven services and operating discipline, have delivered consistently strong cash generation," CEO Mary Barra said. "We believe that formula is sustainable, which is why we're increasing our dividend and planning future share repurchases."
Ask Fintool AI Agent2026 Guidance: "Strong Financial Performance"
GM's outlook for 2026 suggests the EV reset is clearing the decks for improved profitability:
| Metric | 2025 Results | 2026 Guidance |
|---|---|---|
| Net Income | $2.7B | $10.3B - $11.7B |
| EBIT-adjusted | $12.7B | $13.0B - $15.0B |
| EPS-diluted | $3.27 | $11.00 - $13.00 |
| EPS-diluted-adjusted | $10.60 | $11.00 - $13.00 |
| Capital Spending | $9.3B | $10.0B - $12.0B |
The guidance implies GAAP earnings could surge nearly 4x as one-time charges roll off. Consensus analyst estimates heading into the print were at $11.73 for 2026 EPS, right in line with management's midpoint.*
*Values retrieved from S&P Global
The ICE Renaissance
GM's pivot isn't just about retreat—it's about doubling down on strength. Management highlighted several offensive moves:
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Orion Assembly conversion: When the plant comes back online in early 2027, it will produce the Cadillac Escalade and next-generation full-size pickups.
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Fairfax Assembly expansion: Production more than doubled from original plans to meet Equinox crossover demand.
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New V8 engine plant: Nearly $1 billion investment in New York for advanced fuel-efficient V8 engines.
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Domestic production scale: GM plans to produce more than 2 million vehicles per year in the United States.
"It is clear that ICE volumes will remain higher for longer," Barra said on the Q3 call. "We lead the industry today, and we are increasingly well positioned to meet strong sustained demand."
What About EVs?
GM isn't abandoning electric vehicles entirely—just rightsizing the business to match actual demand. The company's retail EV portfolio (Equinox EV, Silverado EV, Cadillac Lyriq, Escalade IQ) remains in production and available to consumers.
"EVs remain our North Star," Barra said. "We will continue to invest in new battery chemistries like LMR, new form factors and other architectural improvements to drive improved profitability."
The difference is GM is no longer building EV capacity ahead of demand—and it's no longer accepting losses to chase market share. The company's EV incentive spending is "about half of what the rest of the industry is," CFO Paul Jacobson noted.
Ask Fintool AI AgentStock Reaction
GM shares traded up approximately 5% in premarket, pushing toward $83 from the previous close of $79.68. The stock has been on a tear, more than doubling from its 52-week low of $41.60.
The market appears to be validating GM's strategic pivot. At roughly 6-7x forward earnings, GM trades at a fraction of Tesla+1.04%'s multiple, despite generating comparable profit levels and returning substantial capital to shareholders.
What to Watch
Several catalysts could drive further upside—or create new headwinds:
Tariff dynamics: GM's 2026 guidance assumes a 15% tariff on vehicles exported from South Korea to the U.S., based on a preliminary trade deal. But President Trump announced Monday that tariffs would return to 25% after South Korea's legislature failed to approve the pact.
North America margins: Management's target remains 8-10% EBIT margins, versus 6.2% in Q3 (or ~9% excluding tariffs). Progress on warranty costs, tariff mitigation, and EV losses will be key.
China JV performance: GM's restructured China joint venture returned to profitability in 2025, but the turnaround remains early innings.
Share repurchase execution: How aggressively GM deploys its new $6 billion authorization will signal management's conviction in the stock's value.
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