GM CFO Talks Tariffs, Supply Chain Changes

Summary

Podcast Summary: Bloomberg Talks — GM CFO Talks Tariffs, Supply Chain Changes

Date: October 21, 2025
Host: Jonathan Ferro (Bloomberg)
Guest: Paul Jacobson (CFO of General Motors)

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Overview

This episode features a timely and candid conversation with Paul Jacobson, CFO of General Motors, in the wake of GM's strong earnings report and increased financial guidance. The discussion centers on how GM has navigated industry volatility, particularly supply chain challenges, shifting trade policies, EV market uncertainty, and the competitive landscape in China. Jacobson highlights GM’s strategic adaptability, cost management, and ongoing dialogue with policymakers to mitigate tariff impacts.

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Key Discussion Points & Insights

1. Navigating Volatility & Building Resilience

(00:23–01:43)

• Jacobson reflects on leading GM through multiple crises: COVID-19, chip shortages, tariffs, and EV market pivots.
• The focus has been on creating a resilient operational model with disciplined inventory practices and agile market responses.

Notable Quote:

"Since coming to GM in 2020, we've gone through COVID, we've gone through chip shortage, we've gone through tariffs, we've gone through EV pivots and so on. But what we've really tried to do is create a model that is resilient."
— Paul Jacobson (00:57)

2. Balancing Agility With Long-Term Vision

(01:43–02:29)

• Despite short-term market adjustments (e.g., reducing EV capacity), GM maintains its commitment to EVs as the industry's future.
• The strategy involves right-sizing capacity now to ensure future success as customer adoption grows.

Notable Quote:

"We still believe that EVs are the future. And we think that there's an opportunity for us to take a little bit of a pause in demand growth...right-size our capacity and make sure that we can be successful as more and more customers adopt it."
— Paul Jacobson (01:52)

3. Supply Chain Diversification and US Investment

(02:29–03:38)

• COVID revealed supply chain vulnerabilities, prompting diversification, especially away from over-dependence on China.
• GM has made significant investments in U.S. battery materials and manufacturing, including a $4 billion boost to US manufacturing capacity.
• Lessons from the chip crisis led to further expansion of chip sourcing and supplier base.

Notable Quote:

"We've made a number of investments, for example, in battery raw materials and other material U.S. in addition to the $4 billion that we've announced this year to increase our U.S. manufacturing capacity."
— Paul Jacobson (02:44)

4. Funding Supply Chain Overhauls & Inventory Discipline

(03:38–04:49)

• GM’s cost savings have come largely from reduced inventory levels, freeing up working capital for reinvestment.
• Lower inventory enables quicker adaptation to changes in demand and helps stabilize pricing, while supporting sustained shareholder returns and debt reductions.

Notable Quote:

"We've saved a lot of money by rationalizing our inventory balances...we've cut that down. That frees up a lot of working capital to be able to invest and redeploy back into the business."
— Paul Jacobson (03:59)

5. Tariffs: Industry Relief, Policy Engagement & Future Expectations

(04:49–06:43)

• Recent U.S. administrative actions have provided relief on tariffs, expanding MSRP offsets and resulting in a $500 million reduction in GM’s annual tariff forecast.
• Jacobson credits proactive government dialogue for helping GM remain competitive, anticipate policies, and increase domestic investment.
• He anticipates further negotiation-driven stability, especially with pending deals with Korea, Mexico, and Canada, potentially enabling a return to targeted profit margins.

Notable Quotes:

"The announcements that were made Friday ... expand ... to be able to use those MSRP offsets on a wider variety of parts that we're bringing into the country. And as a result ... we were able to lower our total tariff forecast for the year by about half a billion dollars from where we started."
— Paul Jacobson (05:05)

"As we look at those deals being finalized and we start to look into 2026, we think that there's actually an opportunity for us to do better in 2026 than we've done in 2025."
— Paul Jacobson (06:00)

6. Competing—and Surviving—in the Chinese Market

(06:43–07:44)

• GM undertook a major China business restructuring, accepting a reduced market presence in the face of intense competition.
• Despite scaling back, GM’s China operations have remained profitable each quarter in 2025.

Notable Quote:

"We were probably not going to be as big in China as we have been historically...But you know, together with our partners we were able to restructure that business and we've been profitable every quarter this year and look to be able to sustain that."
— Paul Jacobson (07:01)

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Memorable Moments & Quotes

• On Resilience:
  "What we've really tried to do is create a model that is resilient."
  — Paul Jacobson (00:57)

• On Long-Term Planning:
  "It's just an example of how we make sure that we're managing the short term within the face of that longer term vision."
  — Paul Jacobson (02:29)

• On Industry-Government Collaboration:
  "I want to praise the administration for really listening to the concerns of the industry..."
  — Paul Jacobson (05:05)

• On GM's Future:
  "We think that there's actually an opportunity for us to do better in 2026 than we've done in 2025 and start to work our way back up to those 8 to 10% targeted margins."
  — Paul Jacobson (06:00)

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Key Timestamps

• 00:23 — Introduction to GM’s earnings and industry volatility
• 00:57 — Jacobson’s reflection on navigating crises at GM
• 01:52 — GM’s approach to balancing agility and long-term EV strategy
• 02:44 — Supply chain changes and US manufacturing investments
• 03:59 — Inventory management and capital efficiency
• 05:05 — Tariff policy updates and industry-government partnership
• 06:00 — Future trade negotiations with Korea, Mexico, Canada
• 07:01 — Restructuring and profitability in China

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Conclusion

Paul Jacobson provides a transparent, optimistic view of GM’s strategies for managing a rapidly changing global automotive landscape. Through prudent financial management, targeted investments, and proactive engagement with policymakers, GM positions itself as both agile and forward-looking. The episode offers valuable insights into the interplay between global trade, supply chain resilience, and the evolving auto industry, straight from the C-suite.

Transcript

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[Jonathan Ferro]

Let's turn back to earnings. Shares of General Motors jumping after the company beat earnings and raised guidance. The GM cfo Paul Jacobson joins us now for more. Well, the stock is up by more than 9%. We'll spend some time talking about the numbers, but I just wanted to take a step back with you just for a brief moment. You've got real experience navigating volatile industries. Experience in the airline business and experience in the automaker business too. You took over as CFO in the pandemic. Can you talk to us about this year, Paul? Just how agile have you and the team needed to be and how volatile have things been to.

[Paul Jacobson]

Well, Jonathan, first of all, thank you very much for having us. It's a great day to be at GM and celebrate the success of all of our employees and partners worldwide. So really appreciate you being here today, having me today. So you know, at the end of the day it's, it's just another change. I mean since coming to GM in 2020, we, we've gone through Covid, we've gone through chip shortage, we've gone through tariffs, we've gone through EV pivots and so on. But what we've really tried to do is create a model that is resilient. And when you look at our balance sheet, you look at our inv, inventory discipline and the way we've gone to market, there's a lot of things that have changed that allow us to be able to react to the world around us faster. And I think that's, that's paved the way for us to have a, another really strong year in the face of a lot of macro changes.

[Jonathan Ferro]

Paul, in order to increase resilience and maybe agility, do you have to sacrifice long term planning? Is that something that becomes harder?

[Paul Jacobson]

Well, you know, I think what we, what we've really done well as a team, I think is we've kept focus on that long term vision. So, you know, for example, while we've taken a charge on reducing some of our EV capacity, reflecting the demand that's out there, we still believe that EVs are the future. And we think that there's an opportunity for us to take a little bit of a pause in demand growth that we've seen over the last few years structurally improve. It Right, size our capacity and make sure that we can be successful as more and more customers adopt it. So it's just an example of how we make sure that we're managing the short term within the face of that longer term vision.

[Bloomberg Audio Studios Announcer]

So what are the big steps, Paul, that you've taken in order to remain at Agile, particularly with supply chains and removing any kind of direct input from China in particular? How much have you rejiggered where you get your goods?

[Paul Jacobson]

Well, I think we learned a lot in industry from COVID and, and a focused supply chain that was really susceptible to individualized shocks. And I think we've taken the effort to try to make sure that we diversify our, our supply chain base. We've made a number of investments, for example, in battery raw materials and, and other material U.S. in addition to the $4 billion that we've announced this year to increase our U.S. manufacturing capacity. So I think it's been a case of making sure that that's balanced. And then when we went through the chip crisis of 2021, there were some more challenges about making sure that we expand the places where some of our chips are fabricated and our supply base that we use. So this has just been part of it. I think we've learned a lot of lessons over the last five years that have helped us and position us well to be able to thrive in ever changing circumstances. Like all of this costs a lot.

[Bloomberg Audio Studios Announcer]

Of money and I'm just trying to get my head around. We've all been trying to get our head around where it comes from, these extra costs in order to rejigger supply chains to offset any kind of increased costs that might come along the way. How much is coming from whether it's freezing labor forces or trimming around the edges. How much is coming from higher prices on consumer vehicles?

[Paul Jacobson]

Well, I think if you look at what GM has done, we've saved a lot of money by rationalizing our inventory balances. So we used to keep probably about 40% more inventory on the ground at our dealerships around the country. And we've, we've cut that down. That's frees up a lot of working capital to be able to invest and redeploy back into the business. But it also makes sure that we can change much more quickly to changing demand around us. So our pricing has been stabilized and I think that's given us a little bit more comfort to invest a little bit more than what we have historically, but still making sure that we're very disciplined with our capital allocation because we still have opportunities to pay down debt and also return capital to shareholders. So it's that balanced approach that I think has really paved the way for our success.

[Jonathan Ferro]

Paul, you and your colleagues in the industry recently had a big win in Washington, a little bit of reprieve when it comes to the arrangement on the timeline for the tariff costs for imported auto parts. What else are you asking in terms of tariff relief from Washington?

[Paul Jacobson]

Well, you know, I think I want to praise the administration for really listening to the, to the concerns of the industry and making sure that they're helping us to be positioned to be really successful as one of the largest US Industrial producers that are out there. And the announcements that were made Friday essentially take what had already been done by the administration in the spring and expands it a little bit to be able to use those MSRP offsets on a wider variety of parts that we're bringing into the country. And as a result of that, we were able to lower our total tariff forecast for the year by about half a billion dollars from where we started the year. And I think it's that pro active partnership in terms of really making sure that we can remain competitive and help to drive more investment into the US which we've done.

[Jonathan Ferro]

So do you expect more reprieves, especially as the US Goes into negotiations next year with Mexico and Canada?

[Paul Jacobson]

Well, I think what we're looking for is, is a little bit of stability. Obviously, this year has been a bit of a transition year. You know, for us. The, the handshake deal that we have with Korea, we're really eager to get that finalized. We do have some production of some of our lower cost models in K that help with some of the affordability concerns of our consumers here in the US but also obviously, Mexico and Canada are going to be really important to us. But as we look at those deals being finalized and we start to look into 2026, we think that there's actually an opportunity for us to do better in 2026 than we've done in 2025 and start to work our way back up to those 8 to 10% targeted margins that we set for ourselves before the tariffs were put in place.

[Jonathan Ferro]

Well, just finally, can we stay in Asia and finish on China? Paul, for a long time we've said on this program this must be the most competitive market on the planet in any industry. How difficult is it to operate in that country right now and how much harder is it going to get in the future for US Automakers like yourself?

[Paul Jacobson]

You know, about a year ago, Jonathan, we undertook a pretty ambitious restructuring program in China with the realization that, you know, we were probably not going to be as big in China as we have been historically going forward with the amount of just tremendous competition that's in the country going forward forward. But you know, together with our partners we were able to restructure that business and we've been profitable every quarter this year and look to be able to sustain that. So it's really about making sure that we're right size for where we are. We've got great products over there, we've got a long legacy and we've got a good partnership that I think is has really paved the way. And with that work that the team did in China, really proud of what they accomplished and think we can be sustainable there.

[Jonathan Ferro]

Oh, appreciate your insight and your experience as always. Paul Jacobson There, the General Motors cfo.

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