General Motors (NYSE:GM) Chief Financial Officer Paul Jacobson said the automaker’s business is tracking consistently with its expectations for the third quarter, supported by resilient consumer demand, disciplined inventory management and production running near maximum levels across its system.
Speaking with Morgan Stanley auto analyst Andrew Percoco, Jacobson said industry demand had been somewhat stronger than GM anticipated entering the third quarter. However, because GM is primarily a wholesale business and is operating near full production, stronger retail demand has chiefly supported pricing discipline and incentive levels rather than materially changing its production outlook.
2027 outlook centers on controllable factors
Jacobson reiterated GM’s view that revenue, EBIT and free cash flow could grow in 2027, while noting that tariff uncertainty, commodity inflation, fuel prices and logistics costs remain external risks.
He said the company sees several internally controllable opportunities, including the launch of its new truck platform, additional capacity from the Orion facility, onshoring initiatives, lower EV losses, warranty improvements, digital-revenue growth and expansion in defense-related business.
“We have the new truck platform, that should be good for pricing,” Jacobson said, adding that GM’s outgoing truck generation has performed strongly in its final year. He said the company is focused on maintaining long-term brand value rather than pursuing marginal volume through higher incentives or discounting.
Jacobson also pointed to GM’s free-cash-flow record. He said the company averaged approximately $3 billion annually in free cash flow during the first half of the past decade, compared with more than $10 billion annually over the past five years. He said 2026 cash flow has partly been used to address EV production and capacity issues, while GM expects to be “largely free” of those efforts next year.
Warranty and EV profitability remain priorities
Jacobson acknowledged that GM’s quality performance is not where the company wants it to be. He said GM is using predictive analytics, expanded supply-chain oversight and closer coordination among dealers and engineers to reduce warranty costs and catch issues earlier.
Among its efforts, GM is seeking to avoid replacing entire transmissions, engines or powertrains when individual components can be repaired. Jacobson said monthly warranty spending rates have begun to plateau and that the company is starting to see improvement. GM has previously discussed a $1 billion to $1.5 billion opportunity related to warranty performance, though Jacobson described the effort as a multiyear process.
For the next-generation trucks, he said GM’s Gen 6 powertrain has accumulated more than 1.5 million miles of road testing. “Changeovers are hard,” Jacobson said, but added that the company is focused on delivering a successful launch for customers.
On electric vehicles, Jacobson said profitability has been pressured by tariffs and the loss of EV credits that had previously supported variable profitability. GM has responded by rationalizing capacity and concentrating investment on vehicle architecture, battery-cell technology and lower costs rather than expanding its EV lineup.
He said 2027 could represent a relatively flat period in GM’s EV progress, depending on volume, while 2028 could bring a more substantial improvement as the company begins producing LMR battery technology. Jacobson said the technology is expected to provide premium performance and power capability at the cost of LFP battery technology, potentially reducing battery-pack costs by thousands of dollars per vehicle.
Digital services and Super Cruise expansion
Jacobson said GM expects about $3 billion in digital revenue this year and sees continued double-digit growth. The company’s digital strategy includes OnStar connectivity, subscription services and its Super Cruise driver-assistance system.
GM continues to see Super Cruise renewal attachment rates of 30% to 40% after the system’s three-year prepaid period, Jacobson said. He added that approximately 80% of customers who do not renew had not used Super Cruise in the six months before their subscription expired.
The company plans to improve Super Cruise through expanded road coverage and software updates, while working to reduce hardware and software costs and offer the feature more broadly. GM expects its deferred-revenue balance to approach $7.5 billion by year-end, Jacobson said, driven by connected-vehicle services and Super Cruise subscriptions.
Jacobson said GM is targeting “eyes off, hands off” highway driving capability in 2028 on the Escalade IQ. He characterized the eventual expansion of the technology across more of GM’s portfolio as an integration challenge once the underlying technology is established.
Defense, insurance and AI opportunities
Beyond vehicles and software, Jacobson identified GM Defense, energy, insurance and loyalty programs as potential growth areas. He said GM Defense has seen success with the Infantry Squad Vehicle, which is based on a midsize truck platform, and that the company is pursuing additional opportunities without announcing specific programs.
He also cited growth in GM Rewards following its transition to Barclays and said GM Insurance can use vehicle data in underwriting while avoiding the customer-acquisition costs faced by many traditional insurers.
Finally, Jacobson said artificial intelligence is being deployed broadly across GM, from engineering and manufacturing simulations to administrative functions. He said a finance-team AI agent is expected to save 3,000 hours per month in manufacturing reporting by automating work involving systems, variances, sourcing and part numbers.
About General Motors (NYSE:GM)
General Motors Company (NYSE: GM) is a global automotive company headquartered in Detroit, Michigan. Founded in 1908, GM designs, manufactures and sells cars, trucks and sport utility vehicles through its Chevrolet, Buick, GMC and Cadillac brands.
GM’s product portfolio includes gasoline-powered and electric vehicles, full-size pickup trucks, commercial vehicles and luxury automobiles. The company is developing battery-electric and other advanced vehicle technologies, while also offering connected-vehicle services through its OnStar platform.
