Why GM's 7.13X Forward Multiple Makes It a Bargain Compared to Tesla and Toyota

When you stack General Motors stock valuation against its peers, something remarkable stands out. Trading at just 7.13X forward earnings, GM is dramatically cheaper than Toyota Motor at 10.59X and light-years away from Tesla at 252.81X. For a company that just crushed sales expectations in 2025, this pricing disconnect deserves a closer look.

The Sales Performance That Nobody’s Talking About

General Motors wrapped up 2025 as America’s top-selling automaker for the umpteenth time, but the headline numbers actually tell a richer story. Annual deliveries climbed 5.5% to 2.85 million vehicles, with gains spread across Chevrolet, Cadillac, GMC, and Buick. Market share expanded to roughly 17%, up 50 basis points year-over-year.

The pickup game? Absolutely dominant. GM’s full-size truck empire—combining Chevrolet and GMC—hit 940,000 units for the year, up 7%, marking the strongest two-decade performance. This is the sixth consecutive year holding the pickup crown, a moat that doesn’t get enough credit.

Tesla led the EV charge nationwide, but GM grabbed solid ground as the second-largest electric vehicle seller. EV deliveries surged 48% to 169,887 units throughout 2025. That said, Q4 painted a different picture: total sales dipped 7% year-over-year to 703,001 vehicles, while EV deliveries contracted 43% to 25,219 units. The squeeze came after record Q3 EV sales that benefited from federal tax credit pull-forward demand.

Software and Services: The New Profit Engine

Here’s where GM’s 2026 outlook gets interesting. The automaker’s software and services division is already generating real money. Through Q3, GM had racked up roughly $2 billion in revenues from Super Cruise, OnStar, and related offerings.

The deferred revenue number is even more compelling: $5 billion sitting on the balance sheet by Q3-end, climbing over 90% from the prior year. OnStar’s global subscriber base hit 11 million users (up 34%), with projections to cross 12 million by year-end. Super Cruise adoption is gathering pace, with 500,000-plus active users now, and the company is guiding for Super Cruise revenues exceeding $200 million in 2025.

These recurring revenue streams aren’t just nice-to-haves—they’re reshaping GM’s earnings quality and becoming a genuine competitive moat.

International Turnaround Starting to Materialize

GM’s China restructuring efforts are finally bearing fruit. After rightsizing operations, slimming dealer networks, cutting costs, and rolling out fresh products, the company posted vehicle sales growth of 10% year-over-year in Q3—the second consecutive quarter moving in the right direction.

Market share expanded 30 basis points to 6.8%, while equity income hit $80 million, marking the fourth straight quarterly uptick. The China operation remains a work-in-progress, but momentum is shifting.

Balance Sheet Strength Fuels Shareholder Returns

General Motors exited Q3 with automotive liquidity of $35.7 billion—a fortress balance sheet by any measure. The company repurchased over $3.5 billion of stock from January through Q3 (with $1.5 billion deployed in Q3 alone), trimming the share count by 15% year-over-year to 954 million shares outstanding. Another $2.8 billion remains on the buyback authorization.

This aggressive capital return program, combined with organic growth, makes the valuation gap versus peers even more glaring.

2026 Earnings Trajectory Points Higher

The Zacks Consensus Estimate for 2026 signals an EPS uptick of approximately 13% from 2025 projected levels. Analyst estimates have drifted higher over the past 60 days, reflecting growing confidence in management’s execution.

GM holds a Value Score of A, reinforcing the assessment that the current price undervalues future earnings power.

The Investment Case: Still Underpriced After 60% Rally

General Motors has climbed 60% over the past year—a solid run by any standard. Yet despite this advance, the stock still trades at a meaningful discount to automotive and EV sector peers, suggesting the market hasn’t fully digested GM’s earnings potential.

The fundamentals remain intact: dominant domestic sales position, expanding software revenues, China stabilization, fortress liquidity, and aggressive buybacks. Q4 EV volatility reflects temporary demand normalization, not a structural problem. The consensus view supports steady profit expansion through 2026 and beyond.

At these levels, General Motors represents the rare combination of improving fundamentals, shareholder-friendly capital allocation, and reasonable valuation. The stock currently carries a Zacks Rank #1 (Strong Buy) designation, signaling conviction among the analyst community.