GM's 2025 Sales Leadership Masks Persistent EV and Margin Vulnerabilities

What happened

General Motors ended 2025 as the top U.S. automaker by sales, leveraging its strong North American truck and SUV portfolio to offset headwinds from trade policy and EV tax credit changes. This sales performance reinforces the market narrative of a resilient core business funding buybacks and dividends, as highlighted in recent upbeat coverage. However, DeepValue filings reveal a $6 billion EV write-down and ongoing China restructuring charges in early 2026, indicating that transition costs remain substantial and recurring. At a stock price near $85, GM trades at elevated multiples that assume sustained $12-13 billion adjusted EBIT, yet margins are thin and policy-sensitive with limited hybrid offerings. Investors should critically assess whether sales strength translates to durable profitability amid capital-intensive EV shifts and accumulating special items.

Implication

GM's market-leading sales in 2025 underscore its dominance in profitable ICE vehicles, which currently fund aggressive capital returns like the $6 billion buyback plan. However, the company's EV strategy faces significant challenges, with a 43% Q4 sales drop post-tax credit loss and recent multi-billion dollar write-downs signaling ongoing cash drains. Valuation at ~27x trailing EPS leaves little cushion for EBIT shortfalls or additional restructuring charges, which could compress multiples rapidly. Investors must watch for confirmation of $12-13 billion adjusted EBIT in upcoming results and margin improvements in North America, as any weakness would threaten the buyback-funded transition thesis. Overall, the sales data is a positive but superficial indicator that fails to address deeper structural headwinds in EVs and China.

Thesis delta

The new article highlighting GM's sales leadership does not meaningfully shift the investment thesis, as it aligns with the existing narrative of a strong ICE core offsetting transition costs. However, it underscores the need for vigilance: while sales performance supports guidance, the DeepValue report's concerns about EV fragility, recurring charges, and high valuation remain critical and unchanged. Investors should view this as reinforcement of GM's market position but not a reason to discount the underlying profitability and policy risks detailed in filings.