UBS analyst Joseph Spak lowered on Thursday General Motors‘ price target by 20.3% to $51. In a new research note, Spak stated that the firm now estimates GM‘s volumes to decline 9% year over year in 2025, followed by “an additional 4% in 2026” due to the new 25% tariffs announced by Donald Trump last week.
Based on Wednesday’s closing price of $45.74, the firm’s new price target implies an upside potential of 10.4%. While warning that the “annual cost headwind” caused by the tariffs “could be ~$5 billion,” UBS downgraded the stock’s rating from Buy to Neutral.
The analyst expects Mexico and Canada-made vehicles to suffer a $4,300 cost increase per unit produced.
“From a cost perspective, we assume vehicles produced in Mexico and Canada have ~50% US content, so we apply a 25% tariff to 50% of the assumed $35k material cost per vehicle (an effective $4.3k increase cost/vehicle made in Mexico/Canada),” Spak wrote.
GM currently builds 52% of its vehicles sold in the US at domestic facilities, while 30% come from Canada and Mexico and 18% from other regions. Ford’s US production stands at 77%, with 21% sourced from Canada and Mexico and 2% from other regions.
For vehicles produced in China plus South Korea and sold in the United States, the firm applied the tariff on the entire vehicle, assuming a cost of about $6,250 per unit, with an “annual cost headwind” that could reach $5 billion.
UBS assumes GM will “look to offset ~50% of the cost” through pricing. “The price increase does not need to be on the vehicle facing the direct tariff impact as GM can use the portfolio to help mitigate,” Spak stated. The group includes brands like Chevrolet, Buick, GMC and Cadillac.
Estimated Price Hike
The analyst does not expect “any meaningful changes” to vehicles produced domestically, while the United States-Mexico-Canada Agreement (USMCA)’s “parts exemption” — which allows tariff-free trade on certain vehicle components — remains in effect.
Spak remarked that “if the USMCA parts exemption goes away, the cost to produce US vehicles would increase and also cause the need for pricing to offset to increase, likely resulting in reduced volumes.”
Several Wall Street analysts have recently noted that the 25% tariffs on imported vehicles and auto parts hit Detroit automakers like Ford and GM the hardest. Earlier this week, Bernstein also lowered General Motors’ price target by 30%, from $50 to $35.
Following President Donald Trump’s announcement of a 90-day delay on the newly imposed tariffs, U.S. stocks surged on Wednesday afternoon with GM shares rising nearly 8%.
Chevrolet currently offers two electric SUVs, the Equinox and the Blazer, with prices starting at $41,900, and the Silverado pickup, from $73,100. The brand’s sales were up 14% in the first quarter, the best since 2019. GM‘s brand sold 10,329 Chevy Equinox, 6,187 Blazer, and 2,383 Silverado EVs in the first three months of the year.
In the luxury segment, Chevrolet revealed a new pure electric Corvette earlier this week, as part of the opening of a new design studio in the UK. Cadillac’s retail sales rose 21%, with its EV portfolio up 37%. It includes its most affordable SUV, the Optiq, with prices from $54,895, which sold 1,716 units.
Last week, General Motors stated it expects to be the market leader in full-size pickups and SUVs, adding that the company aims “to be again the #2 seller electric vehicles in the U.S. with sales up 94% in the quarter.”
