Dive Brief:
- General Motors CFO Paul Jacobson expects the automaker’s cash flow will be “substantially better” in 2027 compared with 2026, “because we'll have worked through substantially all of the EV restructuring that we've paid this year,” he said in remarks Wednesday.
- At the U.S. All Stars Conference hosted by J.P. Morgan, Jacobson highlighted the Detroit automaker’s transformation efforts about a year after it first moved to restructure its electric vehicles segment. For the CFO, cash flow remains a critical metric, he said according to a transcript.
- “I'm an old school CFO,” Jacobson told Rajat Gupta, head of equity research for autos at JPMorgan as part of his Wednesday remarks. “I believe cash is king and at the end of the day, it's super important to really drive that cash generation in the business and transfer it and make it pass all the way through to free cash flow through disciplined capital expenditures.”
Dive Insight:
The automaker has made steady progress with its EV restructuring since beginning the initiative in the latter part of 2025, with GM close to putting those efforts — and their respective costs — behind it, Jacobson previously noted in July during its most recent earnings report.
The $2.3 billion in incremental charges related to EV restructuring for the quarter ended June 30 “substantially complete” the material charges it expects to incur as it right-sizes EV capacity, he said at the time. Since the second half of 2025, GM has recorded $10.9 billion in EV-related charges, CFO Dive previously reported.
GM has improved its cash flow during the past decade, going from averaging about $3 billion in free cash flow for the first half of the decade to over $10 billion in the last five, Jacobson, who has served as GM’s CFO since 2020, said Wednesday.
He credited the improvement in part to the company’s focus on its portfolio of vehicles as well as a disciplined approach to its capital allocation strategy, noting that the business’s balance sheet is “arguably stronger than it’s been in decades.”
“That discipline combined with the performance of the company has been a huge catalyst for us that we plug into our capital allocation philosophy, invest in the business because it's critical that we're already working on the vehicles that are going to be dazzling customers 3, 4, 5, 6 years and beyond,” he said Wednesday.
For the full-year 2026, GM expects adjusted automotive free cash flow to range between $9.5 billion to $11.5 billion, according to its second quarter earnings report released July 21.
Weakening consumer demand for EVs has led other automakers, such as Ford and Honda Motors, to walk back or scrap plans for new EV models during the past year, according to reports. Consumer demand for EV vehicles has shifted in recent months to favor both used vehicles and a grater collection of brands, according to a Sept. 15 report by Cox Automotive.
Although sales of new EVs in August rose by 2.5% month-over-month, the estimated 78,895 units sold last month represent a nearly 47% slump year-over-year, according to the report. Sales of used EVs, however, increased by nearly 26% MoM and 14.7% YoY for the same period, Cox found.
Jacobson on Wednesday also highlighted the importance of strong cash flow amid continued inflation and other economic pressure. Cash flow is “the #1 insulating layer against a downturn, and making sure that you can maintain positive free cash flow through a downturn, that would be my ultimate goal,” he said in response to an analyst’s question.
“And while I've said I don't wish for a recession, much like a final exam in college or university, you're ready for it, right?” he said. “Nobody wants to take the final, but you find a point at a time that you're ready for it.”
