Good morning. Earnings season is taking some twists and turns.
The tariff updates “sound good on paper,” but a U.S.-made car with entirely U.S.-sourced parts is “a fictional tale not possible today,” Wedbush Securities analysts Dan Ives and Sam Brandeis wrote in a Wednesday morning note. The analysts estimate it could take four to five years to establish U.S.-based factories or production hubs. The average auto sticker price will “go up roughly $5,000 to $10,000 when this tariff situation is all settled” and inventory cycles through current stock, Wedbush predicted.
It’s unclear whether no 2025 guidance will be issued or if GM will instead lower the guidance it gave on Jan. 28, according to Morningstar equity strategist David Whiston. “We view the guidance withdrawal as purely from massive tariff uncertainty overhang rather than company-specific problems,” Whiston wrote in a note on Tuesday. “We don’t think any executive on our U.S. autos coverage has sufficient clarity to make capital allocation decisions for the mid-to-long term, let alone a 2025 profit forecast.”
Tuesday’s adjustment to the auto tariff policy should bring some clarity as it limits the tariff exposure primarily to the 25% foreign autos tariff, he said. “But there’s always the risk of more tariff policy amendments,” according to Whiston.
I’m sure analysts will have plenty of questions for GM during its earnings call on Thursday.
