While its electric vehicle business remains under pressure, General Motors delivered a quarterly performance that surpassed expectations, supported by its high-margin truck and SUV lineup, and raised its full-year guidance for the second time this year.

For the second quarter, the company reported adjusted earnings per share of $3.57 and revenue of $48.3 billion, both exceeding market forecasts. Adjusted earnings before interest and taxes rose to $3.94 billion from $3.0 billion a year earlier. The improvement in profitability was driven by lower tariff-related costs, enhanced operational efficiency, and sustained strong sales of high-margin vehicles, underscoring that traditional internal combustion engine business remains the core pillar of the company's profits.

Consequently, General Motors raised its full-year adjusted EBIT guidance to a range of $14.0 billion to $16.0 billion and increased its adjusted EPS outlook to $12 to $14. The company believes that improving EV unit economics, moderate price increases, a more favorable regulatory environment, and continued progress in mitigating tariff costs will support its performance in the second half of the year.

Robust Demand for High-Margin Vehicles Boosts North American Profitability

In a letter to shareholders, General Motors Chair and CEO Mary Barra stated that demand in North America remains solid, primarily driven by the company's truck and SUV portfolio.

In Q2, the company's adjusted EBIT margin in North America improved to 8.6%, warranty costs continued to decline, losses in the EV business narrowed further, and operational efficiency saw gains.

Specifically, the GMC Sierra achieved its best-ever second-quarter sales record, while the Chevrolet Traverse and Trailblazer also posted robust sales performance. Simultaneously, the company continued to control end-customer incentives, keeping its spending below the industry average. The average transaction price rose to over $52,400, with the high-margin product mix further enhancing profitability.

However, management noted that high vehicle prices and elevated interest rates continue to suppress some consumer demand, with affordability remaining a key challenge for future sales.

U.S. Sales Decline as EV Business Faces Continued Headwinds

The improved profitability did not mask the ongoing pressures within the electric vehicle segment.

In the second quarter, General Motors' U.S. deliveries fell by 4.2% year-over-year to approximately 715,000 units. The company attributed this decline partly to the discontinuation of models such as the Cadillac XT4, XT6, and Chevrolet Malibu, which weighed on overall volume. Additionally, a pull-forward of demand ahead of the expiration of the federal EV tax credit contributed to a significant drop in EV sales this quarter.

Sales of the Chevrolet Equinox EV, Blazer EV, and GMC Hummer EV all declined substantially. To date, the company has recorded cumulative charges of approximately $4.5 billion related to its EV initiatives, with the total impact reaching $7.2 billion when including non-cash items.

Despite this, General Motors maintains its position as the second-largest player in the U.S. electric vehicle market, trailing only Tesla.

Easing Tariff Pressures Support Further Upgrade to Profit Outlook

Improvement in tariff-related costs was a key factor contributing to the better-than-expected quarterly results.

In its updated guidance, General Motors cited an "improving regulatory environment" and "continued progress on tariff cost mitigation" as significant reasons for raising its full-year profit expectations, indicating that the tariff pressures which previously troubled the industry are beginning to ease.

This marks the second time General Motors has raised its annual guidance this year. Management anticipates that continued improvement in EV unit economics, ongoing cost control efforts, and further operational efficiency gains should support enhanced profitability in the second half. High-margin vehicles like trucks and SUVs are expected to remain the core drivers supporting the company's performance.