GM raises 2026 profit outlook to $16 billion, driven by improving EV business

Daniel Sparks, The Motley Fool Wed, July 22, 2026 at 1:43 PM PDT | 5 min read

General Motors (NYSE: GM) raised its full-year profit outlook on Tuesday for the second time this year, sending shares up approximately 5%.

The automaker now expects 2026 adjusted earnings before interest and taxes (EBIT) of $14 billion to $16 billion, up from a prior range of $13.5 billion to $15.5 billion. GM also lifted its adjusted earnings per share forecast to $12 to $14, from $11.50 to $13.50, and raised its outlook for adjusted automotive free cash flow to $9.5 billion to $11.5 billion.

Through the first six months of the year, adjusted earnings per share of $7.27 are running 37% ahead of last year.

A Quarter Stronger Than Headline Profits Suggest

On the surface, GM's second-quarter results appear mixed:

• Revenue rose just 1.9% year over year to $48 billion
• Net income fell 31% to $1.3 billion

However, the profit decline is largely attributable to one-time accounting charges. The quarter absorbed $2.3 billion in charges tied to GM's electric-vehicle realignment.

Excluding those items, the quarter showed significant strength:

• Adjusted earnings per share: $3.57, up ~41% year over year
• Adjusted EBIT: $3.9 billion, up ~30% year over year
• Adjusted automotive free cash flow: $5 billion, up 78% year over year
• EBIT-adjusted margin: 8.2%, up from 6.4% a year earlier

North America drove the improvement. "Our 8.6% EBIT-adjusted margin in North America was up 2.5 points from a year ago, and we continue to lower our warranty costs, reduce EV losses, and increase operating efficiency," CEO Mary Barra said in her letter to shareholders.

Pricing remained resilient. GM's average vehicle transaction price was $52,000 during the quarter, and management noted disciplined incentive spending.

The Turnaround Driver: Electric Vehicles

The most surprising contributor to GM's improved outlook is the EV business itself. Over the past year, GM has scaled back its EV ambitions to align with real-world demand — a decision that has carried significant costs. The company has recorded $10.9 billion in EV-related charges since the second half of 2025.

On Tuesday, GM stated that expected material cash charges from the restructuring are now substantially complete. With the cleanup largely behind it, the remaining EV business is losing significantly less money. GM expects its EV losses to improve by $1 billion to $1.5 billion this year compared with 2025.

Key Drivers Behind the Guidance Raise

Management attributed the improved outlook to three factors:

• Steady vehicle pricing
• Falling warranty costs
• Shrinking losses in the electric-vehicle business

Valuation

At approximately $80 per share, GM trades at roughly 6 times the midpoint of its guided adjusted earnings per share for this year.