GM: Revisiting the Bull Thesis

Research evidence excerpt

GM: Revisiting the Bull Thesis

2.1E 45,819.3E 42,787.9E

this business could be an important catalyst for multiple-re-rating. To put EPS, Ops Diluted

some numbers to paper, if we assume our Tesla estimate of $267/kWh and 2025 2.78A 2.52A 2.80A 2.51A

100GWh of annual capacity (industry forecasts suggests 600-700GWh for 2026 3.70A 3.28E 3.34E 2.86E

the US at maturity) with 15% EBIT margins, this could mean an incremental 2027 4.08E 3.79E 3.85E 2.83E

$4B in EBIT, or 27% of GM's '26E Total EBIT level, and all coming in at higher All values in USD unless otherwise noted.

multiples than autos (closer to industrial companies in the ~10x EBITDA Priced as of prior trading day's market close, EST (unless otherwise noted).

level versus GM's auto business which trades closer to 4-5x).

US Tariff Outlook More favorable. Our channel checks (see report) with

US trade experts and auto OEMs/suppliers in our coverage suggest an

improving outlook for US tariffs for GM. There is an increasing potential

for a bilateral deal with Mexico by year-end (tariffs potentially coming

down to 15% from 25%, similar to Japan/Korea/EU, or possibly lower

with US contenting requirements). Interestingly, for autos, US contenting

requirements could be at the 35% level (was previously thought to be 50%),

which we think would not be too onerous for GM to achieve. Our math

suggests reducing US/Mexico tariffs to 15% from 25% could cut GM's $3B

tariff burden by ~$500M, and if they went to zero, then by ~$1B.

'26 EBIT Bridge Suggests Guidance Conservative. Full year '26 guidance

calls for $13.5-$15.5B in Total EBIT. We think this will be raised to the upper-

end of the guide. Starting at '25's $10.5B level, we add $1.25B in improving

EV from rightsizing capacity, $1B in better warranty, $1B in better tariff,