Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This MD&A should be read in conjunction with the accompanying audited consolidated financial statements and notes. Forward-looking statements in this MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to differ materially from those projected. Refer to the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. Risk Factors for a discussion of these risks and uncertainties. The discussion of our financial condition and results of operations for the year ended December 31, 2023 included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024 is incorporated by reference into this MD&A.
Overview Our vision for the future is a world with zero crashes, zero emissions, and zero congestion. We will adapt to customer preferences while executing our growth-focused strategy to invest in ICE vehicles, EVs, hybrids, personal AV technology, software-enabled services, and other new business opportunities. To support strong margins and cash flow, we continue to strengthen our market position in profitable ICE vehicles, such as trucks and SUVs. We plan to execute our strategy with a steadfast commitment to good corporate citizenship through more sustainable operations and a leading health and safety culture.
Our financial performance in 2025 was driven by the strength of our vehicle portfolio, including high margin full-size pickup trucks and SUVs, strong consumer demand for our products, and the execution of our core business strategy. We remain focused on maintaining an efficient cost structure and pricing discipline. We continue to prioritize driving down costs to improve profitability and are aligning EV capacity to expected consumer demand. In December 2024, we announced that we will no longer fund Cruise's robotaxi development work and will refocus our autonomous driving strategy on personal vehicles. In February 2025, we completed the acquisition of the noncontrolling interests in Cruise, began to wind down the Cruise robotaxi operations, and combined the GM and Cruise ongoing personal autonomous technical efforts in our GMNA segment. We are monitoring industry pricing pressures, changing interest rates, inflation, warranty claims, consumer demand trends, and changes to the regulatory environment, including with respect to fuel economy standards, GHG emissions regulations, and corporate taxes.
Over the course of 2025, the U.S. and other governments implemented new tariffs relevant to GM and its suppliers, including tariffs on vehicles and parts imported into the U.S. The tariff environment remains highly dynamic, and the specific tariffs applicable to goods imported by GM and its suppliers continue to evolve, including with respect to imports under the U.S.-Mexico-Canada Agreement and other trade agreements. We have acted with urgency and discipline to maintain strong positioning within the industry. In 2025, impacts to earnings before interest and taxes (EBIT)-adjusted from tariffs were $3.1 billion. Based on the current tariff environment, we estimate that impacts to EBIT-adjusted could range from $3.0 billion to $4.0 billion for the year ending December 31, 2026. Refer to Part I, Item 1A. Risk Factors for a full discussion of the risks associated with the global tariff environment.
The One Big Beautiful Bill Act (the Act), which was signed into law on July 4, 2025, extends and modifies certain key provisions of the U.S. Tax Cuts and Jobs Act of 2017, modifies certain IRA incentives, accelerates the phase-out of clean vehicle and other clean energy credits, and sets civil penalties to zero for noncompliance with CAFE standards. The Act also introduces a new auto loan interest deductibility provision that allows some individuals to deduct up to $10,000 per year in interest on new, U.S.-assembled personal vehicles purchased between 2025 and 2028. In addition, there are other key provisions with a variety of effective dates in the Act that have an insignificant impact for the year ending December 31, 2025, and have been reflected in our financial statements. In July 2025, the EPA proposed to remove GHG regulations for light-, medium-, and heavy-duty on-highway vehicles on a retrospective and prospective basis. Should the EPA remove GHG regulations, we expect that $1.1 billion of the total $1.4 billion carrying amount of our acquired credits may be subject to impairment in the near term, and our ongoing cost of compliance to the GHG regulations would be favorably impacted.
Because of these recent U.S. Government policy changes, including the termination of consumer tax incentives for EV purchases and the reduction in stringency of emissions regulations, industry-wide consumer demand for EVs in North America began to slow in 2025. As a result, we reassessed our EV capacity and manufacturing footprint to align to expected consumer demand and recorded charges of $1.6 billion and $6.0 billion in the three months ended September 30, 2025 and December 31,
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2025. For the year ended December 31, 2025, we recorded total charges in GMNA of $7.9 billion. The reassessment of our EV capacity and manufacturing footprint is complete. While we have completed the reassessment of our EV capacity and manufacturing footprint, we expect to recognize additional material cash and non-cash charges in 2026 related to continued commercial negotiations with our supply base, which we believe will be significantly less than the EV-related charges incurred in 2025. These charges will be reflected as adjustments in our non-GAAP financial measures. Refer to the "Non-GAAP Measures" section of this MD&A for additional information. Our strategic realignment of EV capacity does not impact today's retail portfolio of Chevrolet, GMC, and Cadillac EVs currently in production, and we expect these models to remain available to consumers.
As we continue to assess our performance and the needs of our evolving business, additional restructuring and rationalization actions could be required. These actions could give rise to future asset impairments or other charges, which may have a material impact on our operating results. Refer to the "Consolidated Results" and regional sections of this MD&A for additional information.
We face continuing market, operating, and regulatory challenges in several countries across the globe due to, among other factors, competitive pressures, our product portfolio offerings, heightened emission standards, labor disruptions, foreign exchange volatility, evolving trade policy, automotive industry supply chains, and political uncertainty. Refer to Part I, Item 1A. Risk Factors for a discussion of these challenges.
For the year ending December 31, 2026, we expect earnings per share (EPS)-diluted and EPS-diluted-adjusted of between $11.00 and $13.00, Net income attributable to stockholders of between $10.3 billion and $11.7 billion, and EBIT-adjusted of between $13.0 billion and $15.0 billion. These expected financial results do not include the potential impact of future adjustments related to special items. Refer to the "Non-GAAP Measures" section of this MD&A for additional information.
The following table reconciles expected Net income attributable to stockholders under U.S. generally accepted accounting principles (GAAP) to expected EBIT-adjusted (dollars in billions):
Year Ending December 31, 2026
Net income attributable to stockholders
Income tax expense
Automotive interest expense, net
EBIT-adjusted(a)
(a) We do not consider the potential future impact of adjustments on our expected financial results.
GMNA Industry sales in North America were 20.7 million units in the year ended December 31, 2025, representing an increase of 2.0% compared to the corresponding period in 2024. U.S. industry sales were 16.6 million units in the year ended December 31, 2025, representing an increase of 1.7% compared to the corresponding period in 2024.
Our total vehicle sales in the U.S., our largest market in North America, were 2.9 million units for a market share of 17.2% in the year ended December 31, 2025, representing an increase of 0.6 percentage points compared to the corresponding period in 2024.
We achieved solid margins in the year ended December 31, 2025 driven by the strength of our product portfolio and ongoing cost discipline. However, the evolving tariff and policy landscape could have a material impact on our profitability going forward. We remain focused on improving our EV profitability while maintaining our focus on cost. In addition, our outlook is dependent on continued supply chain availability, the resiliency of the U.S. economy, and overall economic conditions, including the imposition of tariffs, less available offsets and deductions, or other trade restrictions by the U.S. or its trading partners. Looking ahead, our top priority is returning GMNA to its historical 8.0-10.0% EBIT-adjusted margins as quickly as possible.
GMI Industry sales in China were 26.4 million units in the year ended December 31, 2025, remaining flat compared to the corresponding period in 2024. Our total vehicle sales in China were 1.9 million units resulting in a market share of 7.1% in the year ended December 31, 2025, representing an increase of 0.1 percentage points compared to the corresponding period in 2024. Our Automotive China JVs generated an equity loss of $0.3 billion in the year ended December 31, 2025, which includes charges of $0.6 billion related to the previously announced restructuring of SGM. We continue to focus on enhancing the
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competitiveness of our products in the Chinese market and executing restructuring plans. Additional restructuring charges may be incurred going forward.
Outside of China, industry sales were 26.7 million units in the year ended December 31, 2025, representing an increase of 3.4% compared to the corresponding period in 2024. Our total vehicle sales outside of China were 0.9 million units for a market share of 3.5% in the year ended December 31, 2025, representing a decrease of 0.1 percentage points compared to the corresponding period in 2024.
Automotive Financing - GM Financial Summary and Outlook We believe that offering a comprehensive suite of financing products will generate incremental sales of our vehicles, drive incremental GM Financial earnings, and help support our sales throughout various economic cycles. GM Financial's penetration of our retail sales in the U.S. was 33% in the year ended December 31, 2025 and 39% in the corresponding period in 2024. Penetration levels vary depending on incentive financing programs available and competing third-party financing products in the market. GM Financial's prime loan originations as a percentage of total loan originations in North America was 80% in the year ended December 31, 2025 and 81% in the corresponding period in 2024. In the year ended December 31, 2025, GM Financial's revenue consisted of leased vehicle income of 46%, retail finance charge income of 41%, and commercial finance charge income of 7%.
Through its leasing program GM Financial is exposed to residual values, which are heavily dependent on used vehicle prices. Gains on terminations of leased vehicles of $0.6 billion and $0.8 billion were included in GM Financial interest, operating, and other expenses in the years ended December 31, 2025 and 2024. The decrease in gains is primarily due to a decrease in the average gain on the sale of leased vehicles as well as fewer terminated leases in 2025. The following table summarizes the estimated residual value based on GM Financial's most recent estimates and the number of units included in GM Financial Equipment on operating leases, net by vehicle segment (units in thousands):
December 31, 2025
December 31, 2024
Residual Value
Units
Percentage
Residual Value
Units
Percentage
Crossovers
Trucks
SUVs
Cars
Total
Consolidated Results We review changes in our results of operations under five categories: Volume, Mix, Price, Cost, and Other. Volume measures the impact of changes in wholesale vehicle volumes driven by industry volume, market share, and changes in dealer stock levels. Mix measures the impact of changes to the regional portfolio due to product, model, trim, country, and option penetration in current year wholesale vehicle volumes. Price measures the impact of changes related to Manufacturer’s Suggested Retail Price and various sales allowances. Cost primarily includes: (1) material and freight; (2) manufacturing, engineering, advertising, administrative and selling, and warranty expense; and (3) non-vehicle related activity. Other primarily includes foreign exchange and non-vehicle related automotive revenues as well as equity income or loss from our nonconsolidated affiliates. Refer to the regional sections of this MD&A for additional information.
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Total Net Sales and Revenue
Years Ended December 31,
Favorable/ (Unfavorable)
Variance Due To
Volume
Mix
Price
Other
(Dollars in billions)
GMNA
GMI
Corporate
Automotive
Cruise
GM Financial
Eliminations/reclassifications
Total net sales and revenue
Refer to the regional sections of this MD&A for additional information on Volume, Mix, Price, and Other.
Automotive and Other Cost of Sales
Years Ended December 31,
Favorable/ (Unfavorable)
Variance Due To
Volume
Mix
Cost
Other
(Dollars in billions)
GMNA
GMI
Corporate
Cruise
Eliminations
Total automotive and other cost of sales
The most significant element of our Automotive and other cost of sales is material cost, which makes up approximately two-thirds of the total amount. The remaining portion includes labor costs, depreciation and amortization, engineering, freight, and product warranty and recall campaigns.
Factors that most significantly influence a region's profitability are industry volume, market share, and the relative mix of vehicles (trucks, crossovers, cars) sold. Variable profit is a key indicator of product profitability. Variable profit is defined as revenue less material cost, freight, the variable component of manufacturing expense, and warranty and recall-related costs. Vehicles with higher selling prices generally have higher variable profit. Refer to the regional sections of this MD&A for additional information on Volume and Mix.
In the year ended December 31, 2025, increased Cost was primarily due to: (1) charges of $7.7 billion due to our EV strategic realignment; (2) increased material and freight costs of $3.3 billion, including $3.1 billion due to tariffs; (3) increased warranty-related costs and campaigns of $1.3 billion; (4) unfavorable net realizable value inventory adjustments, primarily EV-related, of $0.3 billion in the year ended December 31, 2025 compared to similar favorable inventory adjustments of $0.5 billion in the year ended December 31, 2024; (5) charges of $0.5 billion due to legal matters for our former OnStar Smart Driver program; and (6) increased manufacturing costs of $0.5 billion; partially offset by (7) the reduction of charges related to Cruise restructuring of $1.1 billion; and (8) decreased engineering costs of $0.9 billion, driven primarily by the wind down of Cruise robotaxi operations. In the year ended December 31, 2025, favorable Other was primarily due to net foreign currency changes in the Mexican peso.
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Automotive and Other Selling, General, and Administrative Expense
Years Ended December 31,
Year Ended
2025 vs. 2024 Change
Favorable/ (Unfavorable)
Automotive and other selling, general, and administrative expense
In the year ended December 31, 2025, Automotive and other selling, general, and administrative expense decreased primarily due to: (1) the absence of charges related to strategic activities to transition certain Buick dealerships of $1.0 billion; and (2) decreased advertising, selling, and administrative costs of $0.9 billion.
Interest Income and Other Non-operating Income, net
Years Ended December 31,
Year Ended
2025 vs. 2024 Change
Favorable/ (Unfavorable)
Interest income and other non-operating income, net
In the year ended December 31, 2025, Interest income and other non-operating income, net increased primarily due to: (1) $0.5 billion in gains related to revaluation of investments; partially offset by (2) other individually insignificant items.
Income Tax Expense
Years Ended December 31,
Year Ended
2025 vs. 2024 Change
Favorable/ (Unfavorable)
Income tax expense
In the year ended December 31, 2025, Income tax expense decreased primarily d ue to lower pre-tax income.
For the year ended December 31, 2025, our effective tax rate was 10.8% and our effective tax rate-adjusted (ETR-adjusted) was 18.9%. We expect our ETR-adjusted to be between 20% and 21% for the year ending December 31, 2026.
Refer to Note 17 to our consolidated financial statements for additional information related to Income tax expense.
GM North America
Years Ended December 31,
Favorable/ (Unfavorable)
Variance Due To
Volume
Mix
Price
Cost
Other
(Dollars in billions)
Total net sales and revenue
EBIT-adjusted
EBIT-adjusted margin
(Vehicles in thousands)
Wholesale vehicle sales
GMNA Total Net Sales and Revenue In the year ended December 31, 2025, Total net sales and revenue decreased primarily due to: (1) decreased net wholesale volumes primarily due to decreased sales of cars and full-size pickup trucks, due to lower planned production for product upgrades, partially offset by increased sales of crossover vehicles; partially offset by (2) favorable Mix associated with decreased sales of cars and increased sales of full-size SUVs, partially offset by decreased sales of full-size pick-up trucks and increased sales of crossover vehicles; (3) favorable Price as a result of lean dealer inventory levels due to strong demand for our products; and (4) favorable Other due to increased sales of parts and accessories.
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GMNA EBIT-Adjusted The most significant factors that influence profitability are industry volume and market share. While not as significant as industry volume and market share, another factor affecting profitability is the relative mix of vehicles sold. Trucks, crossovers, and cars sold currently have a variable profit of approximately 160%, 40%, and 60% of our GMNA portfolio on a weighted-average basis.
In the year ended December 31, 2025, EBIT-adjusted decreased primarily due to: (1) unfavorable Cost primarily due to increased material and freight costs of $3.0 billion, including $3.1 billion due to tariffs, increased warranty-related costs and campaigns of $1.3 billion, unfavorable net realizable value inventory adjustments, primarily EV-related, of $0.3 billion in the year ended December 31, 2025 compared to similar favorable inventory adjustments of $0.5 billion in the year ended December 31, 2024, and increased manufacturing costs of $0.4 billion, partially offset by decreased advertising, selling, and administrative costs of $0.2 billion; and (2) decreased net wholesale volumes; partially offset by (3) favorable Price; (4) favorable Mix associated with increased sales of full-size SUVs and decreased sales of cars and full-size pickup trucks, including EVs, partially offset by increased sales of crossover vehicles and mid-size pickup trucks and vans; and (5) favorable Other due to net foreign currency changes, primarily in the Mexican peso, and favorable revaluation of investments.
GM International
Years Ended December 31,
Favorable/ (Unfavorable)
Variance Due To
Volume
Mix
Price
Cost
Other
(Dollars in billions)
Total net sales and revenue
EBIT-adjusted
EBIT-adjusted margin
Equity income (loss) — Automotive China
EBIT-adjusted — excluding Equity income (loss)(a)
(Vehicles in thousands)
Wholesale vehicle sales
n.m. = not meaningful
(a) Excludes adjustments related to Automotive China JVs restructuring recorded in GMI. Refer to the "Overview – GMI" section of this MD&A for discussion of these adjustments.
The vehicle sales of our Automotive China JVs are not recorded in Total net sales and revenue. The results of our joint ventures are recorded in Equity income (loss), which is included in EBIT-adjusted above.
GMI Total Net Sales and Revenue In the year ended December 31, 2025, Total net sales and revenue decreased primarily due to: (1) decreased net wholesale volumes in Brazil, Korea, and Ecuador due to decreased sales of passenger cars and crossover vehicles, partially offset by increased wholesale volumes in Argentina and Egypt; and (2) unfavorable Other primarily due to net foreign currency changes in the Argentine peso, Brazilian real, and Egyptian pound; partially offset by (3) favorable Mix primarily in Brazil, partially offset by the Middle East and Egypt; and (4) favorable Price across multiple vehicle lines in Argentina, Brazil, and the Middle East.
GMI EBIT-Adjusted In the year ended December 31, 2025, EBIT-adjusted increased primarily due to: (1) favorable Price; (2) favorable Mix in Brazil and Argentina, partially offset by the Middle East and Australia; and (3) favorable Other primarily due to increased Automotive China JVs equity income (loss), partially offset by net foreign currency changes in the Argentine peso and Brazilian real; partially offset by (4) decreased net wholesale volumes in Brazil and Korea, partially offset by increased wholesale volumes in Argentina and Egypt; and (5) unfavorable Cost primarily due to increased material and logistics costs in Brazil and the Middle East.
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Our Automotive China JVs’ ability to grow vehicle sales in China and generate sustainable equity income continues to be a challenge due to intense competition from our domestic competitors in the Chinese market. In the year ended December 31, 2025, we recognized equity losses of $0.3 billion driven primarily by impairment and restructuring charges of $0.6 billion recorded by certain of our Automotive China JVs. Refer to Note 8 to our consolidated financial statements for additional information. The following table summarizes certain key operational and financial data for the Automotive China JVs (vehicles in thousands):
Years Ended December 31,
Wholesale vehicle sales including vehicles exported to markets outside of China
Total net sales and revenue
Net income (loss)
December 31, 2025
December 31, 2024
Cash and cash equivalents
Debt
GM Financial
Years Ended December 31,
2025 vs. 2024 Change
Amount
Total revenue
Provision for loan losses
EBT-adjusted
Average debt outstanding (dollars in billions)
Effective rate of interest paid
GM Financial Revenue In the year ended December 31, 2025, total revenue increased primarily due to: (1) increased finance charge income of $0.5 billion primarily due to increases in the effective yield and average balance of the portfolio; (2) increased leased vehicle income of $0.5 billion primarily due to an increase in the average balance of the leased vehicles portfolio; and (3) increased other income of $0.2 billion primarily due to an increase in earned premiums and fees on vehicle protection contracts.
GM Financial EBT-Adjusted In the year ended December 31, 2025, earnings before income taxes-adjusted (EBT-adjusted) decreased primarily due to: (1) increased interest expense of $0.5 billion primarily due to an increase in average debt outstanding; (2) increased operating expenses of $0.4 billion primarily due to investments in the insurance and vehicle protection businesses and increases in the related claims expense, as well as a nonrecurring reserve release in 2024; (3) increased leased vehicle expenses of $0.3 billion primarily due to a decrease in lease termination gains and increased depreciation resulting from an increase in the average balance of the leased vehicles portfolio; and (4) increased provision for loan losses of $0.2 billion primarily due to a shift in the credit mix of loan originations; partially offset by (5) increased finance charge income of $0.5 billion primarily due to increases in the effective yield and average balance of the portfolio; (6) increased leased vehicle income of $0.5 billion primarily due to an increase in the average balance of the leased vehicles portfolio; and (7) increased other income of $0.2 billion primarily due to an increase in earned premiums and fees on vehicle protection contracts.
Liquidity and Capital Resources We believe our current levels of cash, cash equivalents, marketable debt securities, available borrowing capacity under our credit facilities, and other liquidity actions currently available to us are sufficient to meet our liquidity requirements in the short- and long-term. We also maintain access to the capital markets and may issue debt or equity securities, which may provide an additional source of liquidity. We have substantial cash requirements going forward, which we plan to fund through our total available liquidity, cash flows from operating activities, and additional liquidity measures, if determined to be necessary.
Our known current material uses of cash include, among other possible demands: (1) capital spending and our investments in our battery cell manufacturing joint ventures of approximately $10.0 billion to $12.0 billion in 2026; (2) payments for engineering and product development activities , including the development of AV technology and software-enabled services; (3) payments associated with previously announced warranty claims, vehicle recalls, and any other recall-related contingencies;
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(4) payments to service debt and other long-term obligations, including discretionary and mandatory contributions to our pension plans; (5) dividend payments on our common stock that are declared by our Board of Directors; (6) payments to purchase shares of our common stock authorized by our Board of Directors; and (7) if the current regulations in the U.S. are not amended, payments of emissions-related regulatory compliance costs. Refer to Note 7, Note 13, and Note 15 to our consolidated financial statements for additional funding requirements for our operating leases, debt, and pension plans. Our material future uses of cash, which may vary from time to time based on market conditions and other factors, are focused on the three objectives of our capital allocation program: (1) grow our business at an average target return on invested capital-adjusted (ROIC-adjusted) rate of 20% or greater; (2) maintain a strong investment-grade balance sheet, including a target average automotive cash balance of $18.0 billion; and (3) after the first two objectives are met, return available cash to stockholders. Our senior management evaluates our capital allocation program on an ongoing basis and recommends any modifications to the program to our Board of Directors not less than once annually.
Following recent U.S. Government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, industry-wide consumer demand for EVs in North America began to slow in 2025. In the three months ended September 30, 2025 and December 31, 2025, to realign our EV capacity and manufacturing footprint to consumer demand, we recorded charges of $1.6 billion and $6.0 billion. For the year ended December 31, 2025, we recorded charges in GMNA of $7.9 billion. These charges include supplier commercial settlements, contract cancellation fees, battery cell JV settlements, and other charges of approximately $4.7 billion, which will have a cash impact when paid. It is reasonably possible that we will recognize additional future material contract cancellation fees and commercial settlements associated with EV-related investments that may adversely affect our cash flows in the period in which they are paid. In addition, we have entered, and plan to continue to enter, into offtake agreements that generally obligate us to purchase defined quantities of output. These arrangements could have a short-term adverse impact on our cash and increase our inventory. We also continue to monitor and evaluate opportunities to our competitive position over the long term while maintaining a investment-grade balance sheet. These actions may include payments to reduce our long-term obligations, and the possibility of acquisitions, dispositions, and investments with joint venture partners, as well as strategic that we believe would generate significant and substantially our business.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. Risk Factors, some of which are outside of our control.
In February 2025, our Board of Directors increased the capacity under our existing share repurchase program by $6.0 billion to an aggregate of $6.3 billion, which was used to execute an accelerated share repurchase (ASR) program to repurchase an aggregate amount of $2.0 billion of our outstanding common stock. In the year ended December 31, 2025, we received and retired 43 million shares upon settlement of the transactions contemplated under these ASR agreements. In addition to shares received under the ASR program, we purchased approximately 61 million shares of our outstanding common stock for $4.0 billion in the year ended December 31, 2025. We had $0.3 billion in capacity remaining under our share repurchase program as of December 31, 2025, with no expiration date. In January 2026, our Board of Directors increased the capacity under our existing share repurchase program by $6.0 billion to an aggregate of $6.3 billion.
In the year ended December 31, 2025, we paid dividends of $0.5 billion to holders of our common stock. In February 2025, our Board of Directors approved an increase in the quarterly common stock dividend of $0.03 to $0.15 per share beginning with the quarterly dividend declared in April 2025. In January 2026, our Board of Directors approved an increase in the quarterly common stock dividend of $0.03 to $0.18 per share beginning with the quarterly dividend declared in January 2026.
In May 2025, we loaned $1.8 billion to Ultium Cells LLC to facilitate full voluntary prepayment of loans Ultium Cells LLC received under the Department of Energy's Advanced Technology Vehicles Manufacturing program. Our loan to Ultium Cells LLC accrues interest at a rate of 5.7% per year, matures in April 2030, and is prepayable without penalties.
Cash flows that occur amongst our Automotive, Cruise, and GM Financial operations are eliminated when we consolidate our cash flows. Such eliminations include, among other things, collections by Automotive on wholesale accounts receivables financed by dealers through GM Financial, payments between Automotive and GM Financial for accounts receivables transferred by Automotive to GM Financial, loans to Automotive and Cruise from GM Financial, dividends issued by GM Financial to Automotive, tax payments by GM Financial to Automotive, and Automotive Cruise related cash expenditures. The presentation of Automotive liquidity and GM Financial liquidity presented below includes the impact of cash transactions amongst the sectors that are ultimately eliminated in consolidation. The Cruise restructuring activities are substantially complete as of December 31, 2025. Net cash used in operating activities by Cruise was $1.0 billion, $2.2 billion, and $1.9
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billion in the years ended December 31, 2025, 2024, and 2023. We expect future operating cash flows for Cruise to be insignificant.
Automotive Liquidity Total available liquidity includes cash, cash equivalents, marketable debt securities, and funds available under credit facilities. The amount of available liquidity is subject to seasonal fluctuations and includes balances held by various business units and subsidiaries worldwide that are needed to fund their operations.
We manage our liquidity primarily at our treasury centers as well as at certain of our significant consolidated overseas subsidiaries. Over 83% of our cash and marketable debt securities were managed within North America and at our regional treasury centers at December 31, 2025. We have used, and will continue to use, other methods, including intercompany loans to utilize these funds across our global operations as needed.
Our cash equivalents and marketable debt securities balances are primarily denominated in U.S. dollars and include investments in U.S. Government and agency obligations, foreign government securities, time deposits, corporate debt securities, and mortgage and asset-backed securities. Our investment guidelines, which we may change from time to time, prescribe certain minimum credit worthiness thresholds and limit our exposures to any particular sector, asset class, issuance, or security type. The majority of our current investments in debt securities are with A/A2 or better rated issuers.
In March 2025, we renewed our five-year, $10.0 billion facility, which now matures March 25, 2030. We also renewed our three-year, $4.1 billion facility, which now matures March 25, 2028, and renewed our 364-day, $2.0 billion revolving credit facility allocated for the exclusive use of GM Financial, which now matures March 24, 2026.
We use credit facilities as a mechanism to provide additional flexibility in managing our global liquidity. Our Automotive borrowing capacity under credit facilities totaled $14.4 billion and $14.3 billion at December 31, 2025 and 2024, which consisted primarily of two credit facilities. Total Automotive borrowing capacity under our credit facilities does not include our 364-day, $2.0 billion facility allocated for exclusive use of GM Financial. We did not have any borrowings against our primary facilities, but had letters of credit outstanding under our sub-facility of $0.5 billion at December 31, 2025 and 2024.
If available capacity permits, GM Financial has access to our automotive credit facilities. GM Financial did not have borrowings outstanding against any of these facilities at December 31, 2025 and 2024. We had intercompany loans from GM Financial of $0.4 billion and $0.3 billion at December 31, 2025 and 2024, which primarily consisted of commercial loans to dealers we consolidate. We did not have intercompany loans to GM Financial at December 31, 2025 and 2024. Refer to Note 5 to our consolidated financial statements for additional information.
In May 2025, we issued $2.0 billion in aggregate principal amount of senior unsecured notes with a weighted average interest rate of 5.7% and maturity dates ranging from 2028 to 2035. The net proceeds from this offering were used for general corporate purposes, including to fund a portion of the $1.8 billion five-year term loan to Ultium Cells LLC and to refinance a portion of our senior notes. In September 2025, we exercised our option to redeem at par value the remaining $1.25 billion in aggregate principal balance of our $2.0 billion senior unsecured notes with a maturity date of October 1, 2025.
Several of our loan facilities, including our credit facilities, require compliance with certain financial and operational covenants as well as regular reporting to lenders. We have reviewed our covenants in effect as of December 31, 2025 and determined we are in compliance and expect to remain in compliance in the future.
GM Financial's Board of Directors declared and paid dividends on its common stock of $1.5 billion in the year ended December 31, 2025 and $1.8 billion in the years ended December 31, 2024 and 2023. Future dividends from GM Financial will depend on several factors including business and economic conditions, its financial condition, earnings, liquidity requirements, and leverage ratio.
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The following table summarizes our Automotive available liquidity (dollars in billions):
December 31, 2025
December 31, 2024
Automotive cash and cash equivalents
Marketable debt securities
Automotive cash, cash equivalents, and marketable debt securities
Available under credit facilities(a)
Total Automotive available liquidity
(a) We had letters of credit outstanding under our sub-facility of $0.5 billion at December 31, 2025 and 2024.
The following table summarizes the changes in our Automotive available liquidity (dollars in billions):
Year Ended December 31, 2025
Operating cash flow
Capital expenditures
ASR program, shares repurchased, and dividends paid
Issuance of senior unsecured notes
Payment of senior unsecured notes
Loan to Ultium Cells LLC, net
Cruise robotaxi operations wind down
Investment in nonconsolidated affiliates
Increase in available credit facilities
Other non-operating
Total change in automotive available liquidity
Automotive Cash Flow (Dollars in billions)
Years Ended December 31,
2025 vs. 2024 Change
Operating Activities
Net income
Depreciation, amortization, and impairment charges
Pension and OPEB activities
Working capital
Accrued and other liabilities and income taxes
Other(a)
Net automotive cash provided by (used in) operating activities(b)
(a) Includes $1.8 billion in dividends received from our nonconsolidated affiliates in the year ended December 31, 2025; $1.5 billion in dividends received from GM Financial in the year ended December 31, 2025 and $1.8 billion in dividends received from GM Financial in the years ended December 31, 2024, and 2023; $0.6 billion and $4.1 billion for the Automotive China JVs impairment and restructuring-related equity losses in the years ended December 31, 2025 and 2024; and changes in other assets and liabilities.
(b) Includes $(1.2) billion, $8.2 billion, and $4.8 billion in the years ended December 31, 2025, 2024, and 2023, which are eliminated within the consolidated statements of cash flows. Amounts eliminated primarily relate to purchases of, and collections on, wholesale finance receivables provided by GM Financial to our dealers and dividends issued by GM Financial to us.
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Years Ended December 31,
2025 vs. 2024 Change
Investing Activities
Capital expenditures
Acquisitions and liquidations of marketable securities, net
Other(a)
Net automotive cash provided by (used in) investing activities(b)
(a) Includes $(1.8) billion term loan to and $0.4 billion loan repayments from Ultium Cells LLC, $(1.1) billion funding to wind down Cruise robotaxi operations, and $(0.8) billion investment in nonconsolidated affiliates in the year ended December 31, 2025; $(1.3) billion and $(0.5) billion investment in Cruise in the years ended December 31, 2024 and 2023, which is inclusive of a $(0.9) billion convertible note issued by Cruise to us in the year ended December 31, 2024; $(0.7) billion investment in Ultium Cells Holdings LLC in the years ended December 31, 2024, and 2023; $(0.3) billion investment in Lithium Americas in the years ended December 31, 2024 and 2023; and $(0.1) billion for the purchase of Cruise common and preferred shares from noncontrolling shareholders in the year ended December 31, 2024.
(b) The investments in Cruise are eliminated within the consolidated statements of cash flows. The redemption of Cruise common and preferred shares from noncontrolling shareholders in 2025 and 2024 are reclassified to financing activities within the consolidated statements of cash flows.
Years Ended December 31,
2025 vs. 2024 Change
Financing Activities
Net proceeds (payments) from short-term debt
Issuance of senior notes
Other(a)
Net automotive cash provided by (used in) financing activities
(a) Includes $(4.0) billion, $(7.1) billion, and $(1.1) billion for payments to purchase common stock in the years ended December 31, 2025, 2024, and 2023; $(2.0) billion and $(10.0) billion in payments related to the ASR programs in the years ended December 31, 2025 and 2023; and $(0.5) billion for dividends paid in the years ended December 31, 2025, 2024, and 2023.
Adjusted Automotive Free Cash Flow We measure adjusted automotive free cash flow as automotive operating cash flow from operations less capital expenditures adjusted for management actions. For the year ended December 31, 2025, net automotive cash provided by operating activities was $18.7 billion, capital expenditures were $9.2 billion, and adjustments for management actions were $1.1 billion. For the year ended December 31, 2024, net automotive cash provided by operating activities was $23.9 billion, capital expenditures were $10.7 billion, and adjustments for management actions were $0.8 billion. Refer to the "Non-GAAP Measures" section of this MD&A for additional information.
Status of Credit Ratings We receive ratings from four independent credit rating agencies: DBRS Limited (DBRS), Fitch Ratings (Fitch), Moody's Investor Service (Moody's), and S&P. All four credit rating agencies currently rate our corporate credit at investment grade. The following table summarizes our credit ratings at January 20, 2026:
Corporate
Senior Unsecured
Outlook
DBRS
BBB (high)
Stable
Fitch
BBB
BBB
Positive
Moody's
Investment Grade
Baa2
Stable
BBB
BBB
Stable
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Automotive Financing – GM Financial Liquidity GM Financial's primary sources of cash are finance charge income, leasing income and proceeds from the sale of terminated leased vehicles, net proceeds from credit facilities, securitizations, secured and unsecured borrowings, and collections and recoveries on finance receivables. GM Financial's primary uses of cash are purchases and funding of finance receivables and leased vehicles, repayment or repurchases of secured and unsecured debt, funding credit enhancement requirements in connection with securitizations and secured credit facilities, interest costs, operating expenses, income taxes, and dividend payments. GM Financial continues to monitor and evaluate opportunities to optimize its liquidity position and the mix of its debt between secured and unsecured debt.
The following table summarizes GM Financial's available liquidity (dollars in billions):
December 31, 2025
December 31, 2024
Cash, cash equivalents, and marketable securities
Available capacity under secured credit facilities
Available under committed unsecured credit facilities
Available under revolving credit facility, exclusive to GM Financial
Total GM Financial available liquidity
GM Financial's available liquidity varies quarterly based on factors including near-term debt issuances and maturities, as well as changes in its earning assets. GM Financial's available liquidity increased, primarily due to increased available capacity under secured credit facilities and an increase in cash and cash equivalents. Available capacity under secured credit facilities increased due to paydowns resulting from the issuance of securitization transactions and unsecured debt. GM Financial generally targets liquidity levels to support at least six months of GM Financial's expected net cash flows, including new originations, without access to new debt financing transactions or other capital markets activity. At December 31, 2025, available liquidity exceeded GM Financial's liquidity targets.
GM Financial Cash Flow (Dollars in billions)
Years Ended December 31,
2025 vs. 2024 Change
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities(a)
Net cash provided by (used in) financing activities(b)
(a) Includes $3.0 billion in the year ended December 31, 2025 driven primarily by purchases of, and collections on, wholesale finance receivables and collection of intercompany loans to Cruise; and $(6.4) billion and $(3.0) billion in the years ended December 31, 2024 and 2023 driven primarily by purchases of, and collections on, wholesale finance receivables, which are eliminated within the consolidated statements of cash flows.
(b) Includes $(1.5) billion i n the year ended December 31, 2025 and $(1.8) billion in the years ended December 31, 2024 and 2023 for dividends to GM, which are eliminated within the consolidated statements of cash flows.
Years Ended December 31,
2025 vs. 2024 Change
Operating Activities
Net income (loss)
Depreciation and amortization
Accretion and amortization of loan and leasing fees
Provision for loan losses
Other non-cash income
Changes in assets and liabilities
Deferred income taxes
Net cash provided by (used in) operating activities
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Credit Facilities In the normal course of business, in addition to using its available cash, GM Financial utilizes borrowings under its credit facilities, which may be secured or unsecured, and GM Financial repays these borrowings as appropriate under its cash management strategy. At December 31, 2025, secured and unsecured credit facilities totaled $27.8 billion and $3.8 billion with advances outstanding of $1.9 billion and $2.9 billion.
GM Financial did not have any borrowings outstanding against our credit facility designated for their exclusive use or the remainder of our revolving credit facilities at December 31, 2025 and 2024. Refer to the "Automotive Liquidity" section of this MD&A for additional details.
Critical Accounting Estimates The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in developing estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Refer to Note 2 to our consolidated financial statements for our significant accounting policies related to our critical accounting estimates.
Product Warranty and Recall Campaigns The estimates related to product warranties are established using historical information on the nature, frequency, and average cost of claims of each vehicle line or each model year of the vehicle line and assumptions about future activity and events. When little or no claims experience exists for a model year or a vehicle line, the estimate is based on comparable models.
We accrue the costs related to product warranty at the time of vehicle sale and we accrue the estimated cost of recall campaigns when they are probable and estimable.
The estimates related to recall campaigns accrued at the time of vehicle sale are established by applying a paid loss approach that considers the number of historical recall campaigns and the estimated cost for each recall campaign. These estimates consider the nature, frequency, and magnitude of historical recall campaigns, and use key assumptions including the number of historical periods and the weighting of historical data in the reserve studies. Costs associated with recall campaigns not accrued at the time of vehicle sale are estimated based on the estimated cost of repairs and the estimated vehicles to be repaired. Depending on part availability and time to complete repairs we may, from time to time, offer courtesy transportation at no cost to our customers. These estimates are re-evaluated on an ongoing basis and based on the best available information. Revisions are made when necessary based on changes in these factors.
The estimated amount accrued for recall campaigns at the time of vehicle sale is most sensitive to the estimated number of recall events, the number of vehicles per recall event, the assumed number of vehicles that will be brought in by customers for repair (take rate), and the cost per vehicle for each recall event. The estimated cost of a recall campaign that is accrued on an individual basis is most sensitive to our estimated assumed take rate that is primarily developed based on our historical take rate experience. A 10% increase in the estimated take rate for all recall campaigns would increase the estimated cost by approximately $0.5 billion.
Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods. Due to the uncertainty and potential volatility of the factors contributing to developing estimates, changes in our assumptions could materially affect our results of operations.
Sales Incentives The estimated effect of sales incentives offered to dealers and end customers is recorded as a reduction of Automotive net sales and revenue at the time of sale. There may be numerous types of incentives available at any particular time. Incentive programs are generally specific to brand, model, or sales region and are for specified time periods, which may be extended. Significant factors used in estimating the cost of incentives include type of program, forecasted sales volume, product mix, and the rate of customer acceptance of incentive programs, all of which are estimated based on historical experience and assumptions concerning future customer behavior and market conditions. A change in any of these factors affecting the estimate could have a significant effect on recorded sales incentives. A 10% increase in the cost of incentives would increase the sales incentive liability by approximately $0.3 billion. Subsequent adjustments to incentive estimates are possible as facts and circumstances change over time, which could affect the revenue previously recognized in Automotive net sales and revenue.
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GM Financial Allowance for Loan Losses The GM Financial retail finance receivables portfolio consists of smaller-balance, homogeneous loans that are carried at amortized cost basis, net of allowance for loan losses. The allowance for loan losses on retail finance receivables reflects net credit losses expected to be incurred over the remaining life of the retail finance receivables, which have a weighted-average remaining life of approximately two years. GM Financial forecasts net credit losses based on relevant information about past events, current conditions, and forecast economic performance. GM Financial believes that the allowance is adequate to cover expected credit losses on the retail finance receivables; however, because the allowance for loan losses is based on estimates, there can be no assurance that ultimate charge-off amounts will not exceed such estimates or that our credit loss assumptions will not increase.
The severity of net credit losses is determined by the amounts GM Financial is able to recover when selling collateral underlying loans that have been charged off. The recovery rate is the percentage of the unpaid principal balance that GM Financial collects, primarily through auction proceeds. GM Financial incorporates its outlook on recovery rates in its retail allowance estimate. Each 5% relative decrease/increase in the forecast recovery rates would increase/decrease the allowance for loan losses by $0.1 billion.
GM Financial also incorporates its outlook on overall economic performance, based on weightings applied to several scenarios, in its retail allowance estimate. If the forecast economic conditions were based entirely on the weakest scenario considered, the allowance for loan losses would increase by $0.2 billion. Actual economic data and recovery rates that are lower than those forecasted by GM Financial could result in an increase to the allowance for loan losses.
The GM Financial commercial finance receivables portfolio consists of financing products for dealers and other businesses. GM Financial provides commercial lending products to its dealer customers th at include floorplan financing, also known as wholesale or inventory financing, which is lending to finance vehicle inventory. GM Financial also provides dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, or to purchase and/or finance dealership real estate. Additionally, GM Financial provides lending products to commercial vehicle upfitters and advances to certain of our subsidiaries. The allowance for loan losses on commercial finance receivables is based on historical loss experience for the consolidated portfolio, in addition to forecasted industry conditions. There can be no assurance that ultimate charge-off amounts will not exceed such estimates or that GM Financial's credit loss assumptions will not increase.
Valuation of GM Financial Equipment on Operating Lease Assets and Residuals GM Financial has investments in leased vehicles recorded as operating leases. Each leased asset in the portfolio represents a vehicle that GM Financial owns and has leased to a customer. At the inception of a lease, an estimate is made of the expected residual value for the vehicle at the end of the lease term, which typically ranges from one to five years. GM Financial estimates the expected residual value based on third-party data that considers various data points and assumptions, including, but not limited to, recent auction values, the expected future volume of returning leased vehicles, significant liquidation of rental or fleet inventory, used vehicle prices, manufacturer incentive programs, and fuel prices.
During the term of a lease, GM Financial periodically evaluates the estimated residual value and may adjust the value downward, which increases the prospective depreciation, or upward (limited to the contractual residual value), which decreases the prospective depreciation.
The customer is obligated to make payments during the lease term for the difference between the purchase price and the contract residual value plus a money factor. However, since the customer is not obligated to purchase the vehicle at the end of the contract, GM Financial is exposed to a risk of loss to the extent the customer returns the vehicle prior to or at the end of the lease term and the proceeds GM Financial receives on the disposition of the vehicle are lower than the residual value estimated at the inception of the lease. Realization of the residual values is dependent on GM Financial's future ability to market the vehicles under prevailing market conditions.
At December 31, 2025, the estimated residual value of GM Financial's leased vehicles was $25.0 billion. Depreciation reduces the carrying value of each leased asset in GM Financial's operating lease portfolio over time from its original acquisition value to its expected residual value at the end of the lease term. If used vehicle prices weaken compared to estimates, GM Financial would increase depreciation expense and/or record an impairment charge on the lease portfolio. If an impairment exists, GM Financial would determine any shortfall in recoverability of the leased vehicle asset groups by year, make, and model. Recoverability is calculated as the excess of: (1) the sum of remaining lease payments plus estimated residual value; over (2) leased vehicles, net less deferred revenue. Alternatively, if used vehicle prices outperform GM Financial's latest estimates, it may record gains on sales of off-lease vehicles and/or decreased depreciation expense.
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The following table illustrates the effect of a 1% relative change in the estimated residual values at December 31, 2025, which could increase or decrease depreciation expense over the remaining term of the leased vehicle portfolio, holding all other assumptions constant (dollars in millions):
Impact to Depreciation Expense
2029 and thereafter
Total
Changes to residual values are rarely simultaneous across all maturities and segments, and also may impact return rates. If a decrease in residual values is concentrated among specific asset groups, the decrease could result in an immediate impairment charge. GM Financial reviewed the leased vehicle portfolio for indicators of impairment and determined that no material impairment indicators were present at December 31, 2025 or 2024.
Pension and OPEB Plans Our defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including an expected long-term rate of return on plan assets, a discount rate, mortality rates of participants, and expectation of mortality improvement.
The expected long-term rate of return on U.S. plan assets that is utilized in determining pension expense is derived from periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks using standard deviations, and correlations of returns among the asset classes that comprise the plans' asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. In December 2025, an investment policy study was completed for the U.S. pension plans. As a result, the weighted-average long-term rate of Return on Assets (ROA) decreased to 6.0% at December 31, 2025 from 6.5% at December 31, 2024. The expected long-term rate of return on plan assets used in determining pension expense for non-U.S. plans is determined in a similar manner to the U.S. plans.
Another key assumption in determining net pension and other postretirement benefits (OPEB) expense is the assumed discount rate used to discount plan obligations. We estimate the assumed discount rate for U.S. plans using a cash flow matching approach, which uses projected cash flows matched to spot rates along a high quality corporate bond yield curve to determine the weighted-average discount rate for the calculation of the present value of cash flows. We apply the individual annual yield curve rates instead of the assumed discount rate to determine the service cost and interest cost, which more specifically links the cash flows related to service cost and interest cost to bonds maturing in their year of payment.
Significant differences in actual experience or significant changes in assumptions may materially affect the pension obligations. The effects of actual results differing from assumptions and the changing of assumptions are included in unamortized net actuarial gains and losses that are subject to amortization to pension expense over future periods. The unamortized pre-tax actuarial loss on our pension plans was $5.7 billion and $6.2 billion at December 31, 2025 and 2024. The year-over-year change is primarily due to higher than expected asset returns partially offset by a decrease in discount rates.
The funded status of the U.S. pension plans improved in the year ended December 31, 2025 to $0.7 billion underfunded status from $1.8 billion underfunded status primarily due to: (1) favorable effect of actual return on plan assets of $4.4 billion; partially offset by (2) service and interest costs of $2.1 billion and (3) decrease in discount rates of $1.2 billion.
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The following table illustrates the sensitivity to a change in certain assumptions for the pension plans, holding all other assumptions constant:
U.S. Plans(a)
Non-U.S. Plans(a)
Effect on 2026 Pension Expense
Effect on December 31, 2025 PBO
Effect on 2026 Pension Expense
Effect on December 31, 2025 PBO
25 basis point decrease in discount rate
25 basis point increase in discount rate
25 basis point decrease in expected rate of ROA
25 basis point increase in expected rate of ROA
(a) The sensitivity does not include the effects of the individual annual yield curve rates applied for the calculation of the service and interest cost.
Refer to Note 15 to our consolidated financial statements for additional information on pension contributions, investment strategies, assumptions, the change in benefit obligations and related plan assets, pension funding requirements, and future net benefit payments. Refer to Note 2 to our consolidated financial statements for a discussion of the inputs used to determine fair value for each significant asset class or category.
Valuation of Deferred Tax Assets The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted is based on an evaluation of possible sources of taxable income and also considers all available positive and negative evidence factors. Our accounting for the valuation of deferred tax assets represents our best estimate of future events. Changes in our current estimates, due to unanticipated market conditions, governmental legislative actions, or events, could have a material effect on our ability to utilize deferred tax assets.
At December 31, 2025, valuation allowances against deferred tax assets were $6.8 billion. Refer to Note 17 to our consolidated financial statements for additional information on the composition of these valuation allowances.
Non-GAAP Measures We use both GAAP and non-GAAP financial measures for operational and financial decision making, and to assess Company and segment business performance. Our non-GAAP measures include: EBIT-adjusted, presented net of noncontrolling interests; EBT-adjusted for our GM Financial segment; EPS-diluted-adjusted; ETR-adjusted; ROIC-adjusted, and adjusted automotive free cash flow. Our calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, related U.S. GAAP measures.
These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons, and benchmark performance between periods and among geographic regions to understand operating performance without regard to items we do not consider a component of our core operating performance. Furthermore, these non-GAAP measures allow investors the opportunity to measure and monitor our performance against our externally communicated targets and evaluate the investment decisions being made by management to improve ROIC-adjusted. Management uses these measures in its financial, investment, and operational decision-making processes, for internal reporting, and as part of its forecasting and budgeting processes. Further, our Board of Directors uses certain of these and other measures as key metrics to determine management performance under our performance-based compensation plans. For these reasons, we believe these non-GAAP measures are useful for our investors.
EBIT-adjusted (Most comparable GAAP measure: Net income attributable to stockholders) EBIT-adjusted is presented net of noncontrolling interests and is used by management and can be used by investors to review our consolidated operating results because it excludes automotive interest income, automotive interest expense, and income taxes as well as certain additional adjustments that are not considered part of our core operations. Examples of adjustments to EBIT include, but are not limited to, impairment charges on long-lived assets and other exit costs resulting from strategic shifts in our operations or discrete market and business conditions, and certain costs arising from legal matters. For EBIT-adjusted and our other non-GAAP measures, once we have made an adjustment in the current period for an item, we will also adjust the related non-GAAP
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measure in any future periods in which there is an impact from the item. Our corresponding measure for our GM Financial segment is EBT-adjusted because interest income and interest expense are an integral part of its financial performance.
EPS-diluted-adjusted (Most comparable GAAP measure: Diluted earnings per common share) EPS-diluted-adjusted is used by management and can be used by investors to review our consolidated diluted EPS results on a consistent basis. EPS-diluted-adjusted is calculated as net income attributable to common stockholders-diluted less adjustments noted above for EBIT-adjusted and certain income tax adjustments divided by weighted-average common shares outstanding-diluted. Examples of income tax adjustments include the establishment or release of significant deferred tax asset valuation allowances.
ETR-adjusted (Most comparable GAAP measure: Effective tax rate) ETR-adjusted is used by management and can be used by investors to review the consolidated effective tax rate for our core operations on a consistent basis. ETR-adjusted is calculated as Income tax expense less the income tax related to the adjustments noted above for EBIT-adjusted and the income tax adjustments noted above for EPS-diluted-adjusted divided by Income before income taxes less adjustments. When we provide an expected adjusted effective tax rate, we cannot provide an expected effective tax rate without unreasonable efforts because the U.S. GAAP measure may include significant adjustments that are difficult to predict.
ROIC-adjusted (Most comparable GAAP measure: Return on equity) ROIC-adjusted is used by management and can be used by investors to review our investment and capital allocation decisions. We define ROIC-adjusted as EBIT-adjusted for the trailing four quarters divided by ROIC-adjusted average net assets, which is the average equity balances adjusted for average automotive debt and interest liabilities, exclusive of finance leases; average automotive net pension and OPEB liabilities; and average automotive net income tax assets during the same period.
Adjusted automotive free cash flow (Most comparable GAAP measure: Net automotive cash provided by operating activities) Adjusted automotive free cash flow is used by management and can be used by investors to review the liquidity of our automotive operations and to measure and monitor our performance against our capital allocation program and evaluate our automotive liquidity against the substantial cash requirements of our automotive operations. We measure adjusted automotive free cash flow as automotive operating cash flow from operations less capital expenditures adjusted for management actions. Management actions can include voluntary events such as discretionary contributions to employee benefit plans or nonrecurring specific events such as a closure of a facility that are considered special for EBIT-adjusted purposes. Refer to the “Liquidity and Capital Resources” section of this MD&A for additional information.
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The following table reconciles Net income (loss) attributable to stockholders to EBIT-adjusted:
Years Ended December 31,
Net income attributable to stockholders
Income tax expense
Automotive interest expense
Automotive interest income
Adjustments
EV strategic realignment(a)
China restructuring actions(b)
Legal matters(c)
Cruise restructuring(d)
Separation costs(e)
GMI exit costs(f)
Headquarters relocation(g)
Buick dealer strategy(h)
GM Korea wage litigation(i)
Total adjustments
EBIT-adjusted
(a) These adjustments were excluded because they relate to our strategic realignment of our EV capacity and manufacturing footprint. These adjustments include $0.3 billion that was recorded in the three months ended June 30, 2025 associated with Ultium's strategic realignment.
(b) These adjustments were excluded because they relate to restructuring activities associated with our operations in China, including an other-than-temporary impairment and restructuring charges recorded in equity earnings associated with our Automotive China JVs.
(c) These adjustments were excluded because they relate to investigations and litigation associated with our former OnStar Smart Driver product and an indemnification charge for a European-wide Takata Corporation (Takata) related recall.
(d) These adjustments were excluded because they relate to restructuring charges resulting from the plan to combine the Cruise and GM technical efforts to advance autonomous and assisted driving, the indefinite delay of the Cruise Origin, and the voluntary pausing in 2023 of Cruise's driverless, supervised, and manual AV operations in the U.S. The adjustments primarily consist of non-cash restructuring charges, supplier-related charges, and employee separation costs.
(e) These adjustments were excluded because they relate to employee separation charges including the acceleration of attrition as part of the cost reduction program announced in January 2023, primarily in the U.S.
(f) T hese adjustments were excluded because they primarily relate to the wind down of our manufacturing operations in Colombia and Ecuador and an asset sale resulting from our strategic decision in 2020 to exit India .
(g) These adjustments were excluded because they relate to the GM headquarters relocation, primarily consisting of accelerated depreciation and other relocation expenditures.
(h) These adjustments were excluded because they relate to strategic activities to transition certain Buick dealers out of our dealer network as part of Buick’s EV strategy.
(i) T hese adjustments were excluded because they relate to the partial resolution of subcontractor matters in Korea .
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The following table reconciles diluted earnings per common share to EPS-diluted-adjusted:
Years Ended December 31,
Amount
Per Share
Amount
Per Share
Amount
Per Share
Diluted earnings per common share
Adjustments(a)
Tax effect on adjustments(b)
Tax adjustments(c)
Return to (return from) preferred shareholders(d)
EPS-diluted-adjusted
(a) Refer to the reconciliation of Net income (loss) attributable to stockholders to EBIT-adjusted within this section of MD&A for adjustment details.
(b) The tax effect of each adjustment is determined based on the tax laws and valuation allowance status of the jurisdiction to which the adjustment relates.
(c) In the year ended December 31, 2023, the adjustment consists of tax benefit related to the release of a valuation allowance against deferred tax assets considered realizable in Korea. This adjustment was excluded because significant impacts of valuation allowances are not considered part of our core operations.
(d) This adjustment consists of a return from the preferred shareholders related to the redemption of Cruise preferred shares from noncontrolling interest holders in the years ended December 31, 2025 and 2024.
The following table reconciles our effective tax rate to ETR-adjusted:
Years Ended December 31,
Income before income taxes
Income tax expense
Effective tax rate
Income before income taxes
Income tax expense
Effective tax rate
Income before income taxes
Income tax expense
Effective tax rate
Effective tax rate
Adjustments(a)
Tax adjustments(b)
ETR-adjusted
(a) Refer to the reconciliation of Net income (loss) attributable to stockholders to EBIT-adjusted within this section of MD&A for adjustment details. These adjustments include Net income attributable to noncontrolling interests where applicable. The tax effect of each adjustment is determined based on the tax laws and valuation allowance status of the jurisdiction to which the adjustment relates.
(b) Refer to the reconciliation of diluted earnings per common share to EPS-diluted-adjusted within this section of MD&A for adjustment details.
We define return on equity (ROE) as Net income (loss) attributable to stockholders for the trailing four quarters divided by average equity for the same period. Management uses average equity to provide comparable amounts in the calculation of ROE. The following table summarizes the calculation of ROE (dollars in billions):
Years Ended December 31,
Net income attributable to stockholders
Average equity(a)
ROE
(a) Includes equity of noncontrolling interests where the corresponding earnings (loss) are included in Net income attributable to stockholders.
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The following table summarizes the calculation of ROIC-adjusted (dollars in billions):
Years Ended December 31,
EBIT-adjusted(a)
Average equity(b)
Add: Average automotive debt and interest liabilities (excluding finance leases)
Add: Average automotive net pension and OPEB liability
Less: Average automotive net income tax asset
ROIC-adjusted average net assets
ROIC-adjusted
(a) Refer to the reconciliation of Net income (loss) attributable to stockholders to EBIT-adjusted within this section of MD&A.
(b) Includes equity of noncontrolling interests where the corresponding earnings (loss) are included in EBIT-adjusted.
Forward-Looking Statements This report and the other reports filed by us with the SEC from time to time, as well as statements incorporated by reference herein and related comments by our management, may include "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements represent our current judgment about possible future events and are often identified by words like “aim,” “anticipate,” “appears,” “approximately,” “believe,” “continue,” “could,” “designed,” “effect,” “estimate,” “evaluate,” “expect,” “forecast,” “goal,” “initiative,” “intend,” “may,” “objective,” “outlook,” “plan,” “potential,” “priorities,” “project,” “pursue,” “seek,” “should,” “target,” “when,” “will,” “would,” or the negative of any of those words or similar expressions. In making these statements, we rely on assumptions and analysis based on our experience and perception of historical trends, current conditions, and expected future developments as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any future events or financial results, and our actual results may differ materially due to a variety of important factors, many of which are beyond our control. These factors, which may be revised or supplemented in subsequent reports we file with the SEC, include, among others, the following: (1) our ability to deliver new products, services, technologies, and customer experiences in response to increased competition and changing consumer needs and preferences; (2) our ability to attract and retain talented and highly skilled employees; (3) our ability to timely fund and introduce new and vehicle models that are to attract a sufficient number of consumers; (4) our ability to deliver a strategic portfolio of EVs; (5) adoption of EVs by consumers; (6) the of our current line of ICE vehicles, particularly our full-size ICE SUVs and full-size ICE pickup trucks; (7) our highly competitive industry, which has been historically characterized by excess manufacturing capacity and the use of incentives, and the introduction of new and vehicle models by our competitors; (8) the unique technological, operational, regulatory, and competitive risks related to our refocused AV strategy on personal vehicles; (9) risks associated with climate change, including evolving regulation of GHG emissions, changing consumer preferences and demand, and the potential increased impacts of weather events; (10) global automobile market sales volume, which can be ; (11) inflationary pressures and high prices and uncertain availability of commodities, raw materials, and other inputs used by us and our suppliers, and in logistics and related costs; (12) our business in China, which is subject to unique operational, competitive, regulatory, and economic risks; (13) the of our ongoing strategic business relationships, particularly with respect to facilitating access to raw materials necessary for the production of EVs, and of our joint ventures, which we cannot operate solely for our and over which we may have limited control; (14) the international scale and footprint of our operations, which us to a variety of unique political, economic, competitive, and regulatory risks, including the risk of changes in government and laws (including labor, trade, tax, and other laws), political uncertainty or and economic tensions between governments and changes in international trade policies, new to entry and changes to or withdrawals from free trade agreements, introduction of new tariffs or changes to announced tariffs directly and indirectly applicable to our industry, changes in foreign exchange rates and interest rates, economic in the countries in which we operate, differing local product preferences and product requirements, changes to and compliance with U.S. and foreign countries' export controls and economic sanctions, differing labor regulations, requirements, and union relationships, differing dealer and franchise regulations and relationships, in obtaining financing in foreign countries, and public health , including the occurrence of a contagious disease or illness; (15) any significant , including any work , at any of our manufacturing facilities; (16) the ability of our suppliers to deliver parts, systems, components, and raw materials without and at such times to allow us to meet production schedules; (17) pandemics, epidemics, disease outbreaks, and other public health ; (18) the possibility that competitors may independently develop products and services similar to ours, or that our intellectual property rights are not sufficient to prevent
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GENERAL MOTORS COMPANY AND SUBSIDIARIES
competitors from developing or selling those products or services; (19) our ability to manage risks related to security breaches, cyberattacks, and other disruptions to our information technology systems and networked products, including connected vehicles; (20) our ability to manage security breaches and other disruptions to our in-vehicle systems; (21) our ability to comply with increasingly complex, restrictive, and punitive regulations relating to our enterprise data practices, including the collection, use, sharing, and security of the personal information of our customers, employees, or suppliers; (22) our ability to comply with extensive laws, regulations, and policies applicable to our industry, operations, and products, including those in the Act and/or relating to fuel economy, emissions, and AVs; (23) costs and risks associated with litigation, governmental investigations, and other proceedings; (24) the costs and effect on our reputation of product safety recalls and alleged defects in products and services; (25) any additional tax expense or exposure or to fully realize available tax incentives; (26) our continued ability to develop captive financing capability through GM Financial; and (27) any significant increase in our pension funding requirements. For a further discussion of these and other risks and uncertainties, refer to Part 1, Item 1A. Risk Factors.
We caution readers not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events, or other factors, except where we are expressly required to do so by law.
