Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
General Motors Co., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 8,914 – 10.45% × 195,877 = -11,554
The financial performance from 2021 to 2025 is characterized by a consistent failure to generate positive economic profit, with a marked deterioration in value creation during the final year of the analyzed period.
- Net Operating Profit After Taxes (NOPAT)
- A general downward trajectory is observed in NOPAT, which declined from US$ 13,885 million in 2021 to US$ 8,914 million in 2025. While a brief recovery occurred in 2023, the overall trend indicates a contraction in operating profitability.
- Invested Capital and Cost of Capital
- Invested capital grew steadily throughout the period, increasing from US$ 167,086 million in 2021 to US$ 195,877 million by 2025. The cost of capital exhibited volatility, initially decreasing from 9.98% in 2021 to a low of 8.49% in 2023, before rising sharply to 10.45% in 2025. The simultaneous increase in the capital base and the cost of capital has resulted in a significantly higher capital charge over time.
- Economic Profit Trends
- Economic profit remained negative across all five years, indicating that the business did not generate returns sufficient to cover its cost of capital. The economic loss widened from US$ -2,790 million in 2021 to US$ -11,554 million in 2025. This accelerating decline in economic profit is the result of a compounding effect: falling NOPAT occurring alongside a rising capital charge.
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Net Operating Profit after Taxes (NOPAT)
General Motors Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in product warranty and related liabilities.
5 Addition of increase (decrease) in reserves related to restructuring and other initiatives.
6 Addition of increase (decrease) in equity equivalents to net income attributable to stockholders.
7 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,301 × 5.00% = 65
8 2025 Calculation
Tax benefit of automotive interest expense = Adjusted automotive interest expense × Statutory income tax rate
= 792 × 21.00% = 166
9 Addition of after taxes interest expense to net income attributable to stockholders.
10 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 854 × 21.00% = 179
11 Elimination of after taxes investment income.
The financial performance, as indicated by Net Income Attributable to Stockholders and Net Operating Profit After Taxes (NOPAT), demonstrates fluctuating results over the five-year period. While both metrics initially show positive figures, a distinct divergence emerges in later years, particularly concerning Net Income.
- NOPAT Trend
- NOPAT experienced a decrease from US$13,885 million in 2021 to US$10,217 million in 2022, representing a substantial decline. A subsequent recovery was observed in 2023, with NOPAT reaching US$11,524 million. This upward momentum continued into 2024, reaching US$10,525 million, before declining again to US$8,914 million in 2025. Overall, NOPAT exhibits volatility, with a general downward trend evident when comparing the beginning and end of the period.
- Net Income Trend
- Net Income Attributable to Stockholders remained relatively stable between 2021 and 2023, fluctuating around the US$10 billion mark. However, a significant decrease is apparent in 2024, falling to US$6,008 million. This decline accelerated in 2025, with Net Income dropping to US$2,697 million. This represents a considerable contraction in profitability as reported to stockholders.
- Relationship between NOPAT and Net Income
- While NOPAT and Net Income generally move in the same direction, the magnitude of change differs. The decline in Net Income from 2023 to 2025 is more pronounced than the corresponding decrease in NOPAT. This suggests that factors beyond core operating profitability, such as financing costs, non-operating expenses, or tax implications, are significantly impacting reported Net Income. The divergence between the two metrics widens in the later years of the period, indicating a growing disconnect between operational performance and overall profitability.
The observed trends suggest a potential weakening in the company’s ability to translate operating profits into net earnings for stockholders. Further investigation into the components of Net Income, beyond NOPAT, is warranted to understand the drivers of this divergence.
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Cash Operating Taxes
General Motors Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The relationship between income tax expense and cash operating taxes demonstrates notable fluctuations over the five-year period. While both metrics represent tax-related financial obligations, their divergence suggests timing differences between accounting recognition and actual cash outflows.
- Income Tax Expense
- Income tax expense decreased significantly from 2021 to 2022, followed by a substantial reduction in 2023. A subsequent increase occurred in 2024, but then decreased again in 2025, reaching its lowest value in the observed period. This pattern indicates considerable volatility in the company’s reported tax liability, potentially influenced by changes in taxable income, tax rates, or the utilization of tax credits and deductions.
- Cash Operating Taxes
- Cash operating taxes exhibited an initial increase from 2021 to 2022, and remained relatively stable through 2023. A decrease was observed in 2024, followed by a return to the 2022-2023 level in 2025. This suggests a more consistent cash outflow for tax purposes, although still subject to year-over-year variation.
- Relationship between Income Tax Expense and Cash Operating Taxes
- A significant difference between income tax expense and cash operating taxes is apparent in each year. In 2021, cash operating taxes were considerably lower than income tax expense. This gap narrowed in 2022 and 2023, but widened again in 2024 and remained substantial in 2025. This discrepancy likely stems from deferred tax items, such as temporary differences between book and tax accounting, or from the timing of tax payments relative to the recognition of taxable income. The consistent difference highlights the importance of considering cash taxes when evaluating the company’s true tax burden and available cash flow.
The observed trends suggest that the company’s effective tax rate, as reflected in income tax expense, is subject to considerable fluctuation. However, the cash taxes paid appear to be more stable, indicating a degree of tax planning or the impact of non-cash tax effects on reported income.
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Invested Capital
General Motors Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of product warranty and related liabilities.
6 Addition of reserves related to restructuring and other initiatives.
7 Addition of equity equivalents to stockholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in progress.
10 Subtraction of available-for-sale debt securities, marketable securities.
The reported invested capital demonstrates a consistent upward trend over the five-year period. Total reported debt & leases and stockholders’ equity both contribute to this increase, though with differing patterns. A detailed examination of each component reveals nuances in the company’s capital structure.
- Invested Capital Trend
- Invested capital increased from US$167,086 million in 2021 to US$195,877 million in 2025. This represents a cumulative increase of approximately 17.2% over the period. The rate of increase was most pronounced between 2022 and 2024, suggesting a period of significant capital deployment or financing activity. The increase between 2024 and 2025 was comparatively modest.
- Debt & Leases Trend
- Total reported debt & leases exhibited a steady increase from US$110,595 million in 2021 to US$131,578 million in 2025. While the increase was consistent year-over-year, the rate of growth slowed in the final year of the observed period. This suggests a potential shift in financing strategy or a deliberate effort to moderate debt accumulation.
- Stockholders’ Equity Trend
- Stockholders’ equity initially increased from US$59,744 million in 2021 to US$67,792 million in 2022, representing a substantial gain. However, subsequent years saw a decline, reaching US$61,119 million in 2025. This decrease could be attributed to factors such as dividend payouts, share repurchases, or net losses impacting retained earnings. The fluctuation in stockholders’ equity introduces variability to the overall invested capital figure.
The combined effect of increasing debt and fluctuating equity resulted in the overall growth of invested capital. The slowing growth in debt during the last observed year, coupled with the continued decline in equity, suggests a potential future stabilization or even a decrease in invested capital if these trends persist. Further investigation into the drivers behind these changes in equity is warranted.
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Cost of Capital
General Motors Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 78,085) | 78,085) | ÷ | 211,459) | = | 0.37 | 0.37 | × | 21.82% | = | 8.06% | ||
| Debt3 | 132,073) | 132,073) | ÷ | 211,459) | = | 0.62 | 0.62 | × | 4.80% × (1 – 21.00%) | = | 2.37% | ||
| Operating lease liability4 | 1,301) | 1,301) | ÷ | 211,459) | = | 0.01 | 0.01 | × | 5.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 211,459) | 1.00 | 10.45% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 49,790) | 49,790) | ÷ | 181,219) | = | 0.27 | 0.27 | × | 21.82% | = | 5.99% | ||
| Debt3 | 130,214) | 130,214) | ÷ | 181,219) | = | 0.72 | 0.72 | × | 4.79% × (1 – 21.00%) | = | 2.72% | ||
| Operating lease liability4 | 1,215) | 1,215) | ÷ | 181,219) | = | 0.01 | 0.01 | × | 4.60% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 181,219) | 1.00 | 8.74% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 44,042) | 44,042) | ÷ | 166,325) | = | 0.26 | 0.26 | × | 21.82% | = | 5.78% | ||
| Debt3 | 121,112) | 121,112) | ÷ | 166,325) | = | 0.73 | 0.73 | × | 4.68% × (1 – 21.00%) | = | 2.69% | ||
| Operating lease liability4 | 1,171) | 1,171) | ÷ | 166,325) | = | 0.01 | 0.01 | × | 4.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 166,325) | 1.00 | 8.49% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 54,837) | 54,837) | ÷ | 166,617) | = | 0.33 | 0.33 | × | 21.82% | = | 7.18% | ||
| Debt3 | 110,566) | 110,566) | ÷ | 166,617) | = | 0.66 | 0.66 | × | 3.68% × (1 – 21.00%) | = | 1.93% | ||
| Operating lease liability4 | 1,214) | 1,214) | ÷ | 166,617) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 166,617) | 1.00 | 9.13% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 77,737) | 77,737) | ÷ | 193,280) | = | 0.40 | 0.40 | × | 21.82% | = | 8.78% | ||
| Debt3 | 114,327) | 114,327) | ÷ | 193,280) | = | 0.59 | 0.59 | × | 2.54% × (1 – 21.00%) | = | 1.19% | ||
| Operating lease liability4 | 1,216) | 1,216) | ÷ | 193,280) | = | 0.01 | 0.01 | × | 3.50% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 193,280) | 1.00 | 9.98% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
General Motors Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (11,554) | (6,442) | (3,956) | (5,504) | (2,790) | |
| Invested capital2 | 195,877) | 194,168) | 182,260) | 172,128) | 167,086) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -5.90% | -3.32% | -2.17% | -3.20% | -1.67% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Ford Motor Co. | -15.37% | -4.18% | -7.48% | -7.51% | -2.71% | |
| Tesla Inc. | -19.72% | -14.69% | -8.62% | 2.22% | -9.82% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -11,554 ÷ 195,877 = -5.90%
4 Click competitor name to see calculations.
The financial trajectory between 2021 and 2025 demonstrates a consistent inability to generate positive economic value, characterized by widening losses and an increasing gap between returns and the cost of capital. While the capital base expanded steadily over the five-year period, this growth did not translate into improved economic profitability.
- Economic Profit
- A negative trend is observed in economic profit, which remained below zero for the entire duration. After an initial decline from -2,790 million US$ in 2021 to -5,504 million US$ in 2022, a brief partial recovery occurred in 2023. However, losses accelerated sharply thereafter, culminating in a significant deficit of -11,554 million US$ by December 31, 2025.
- Invested Capital
- Invested capital exhibited a continuous upward trend, increasing from 167,086 million US$ in 2021 to 195,877 million US$ in 2025. This steady growth indicates a consistent increase in the resources deployed into the business, despite the simultaneous deterioration of economic profit.
- Economic Spread Ratio
- The economic spread ratio remained negative throughout the analysis period, signifying that the return on invested capital failed to meet the cost of capital. The ratio moved from -1.67% in 2021 to a low of -5.90% in 2025. The volatility observed between 2022 and 2024 was superseded by a sharp decline in 2025, indicating a substantial erosion of value creation efficiency.
The divergence between the rising invested capital and the falling economic spread ratio suggests an inefficiency in capital allocation. The widening negative spread indicates that for every dollar of capital invested, the economic loss has increased, with the most severe degradation occurring in the final year of the period.
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Economic Profit Margin
General Motors Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (11,554) | (6,442) | (3,956) | (5,504) | (2,790) | |
| Automotive net sales and revenue | 167,971) | 171,606) | 157,658) | 143,975) | 113,590) | |
| Add: Increase (decrease) in deferred revenue | 1,737) | 1,490) | 1,780) | 570) | (376) | |
| Adjusted automotive net sales and revenue | 169,708) | 173,096) | 159,438) | 144,545) | 113,214) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -6.81% | -3.72% | -2.48% | -3.81% | -2.46% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Ford Motor Co. | -15.72% | -4.50% | -7.83% | -8.26% | -3.43% | |
| Tesla Inc. | -14.42% | -10.12% | -5.21% | 1.33% | -7.24% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted automotive net sales and revenue
= 100 × -11,554 ÷ 169,708 = -6.81%
3 Click competitor name to see calculations.
An analysis of the economic performance from 2021 through 2025 reveals a consistent inability to generate positive economic value, with a significant deterioration in value creation observed in the final year of the period.
- Economic Profit Trend
- Economic profit remained negative throughout the five-year period, indicating that the return on capital did not exceed the company's cost of capital. While there was a temporary improvement in 2023, where losses narrowed to -3,956 million USD from -5,504 million USD in 2022, this trend reversed sharply thereafter. By December 31, 2025, economic profit reached its lowest point at -11,554 million USD, representing a substantial increase in value destruction compared to the 2021 baseline.
- Revenue Performance
- Adjusted automotive net sales and revenue exhibited a growth trajectory for the majority of the period, increasing from 113,214 million USD in 2021 to a peak of 173,096 million USD in 2024. However, a slight contraction occurred in 2025, with revenue declining to 169,708 million USD. The divergence between rising revenues through 2024 and worsening economic profit suggests that scale expansion did not translate into improved capital efficiency.
- Economic Profit Margin Analysis
- The economic profit margin remained negative, reflecting a persistent deficit in economic value added per dollar of revenue. The margin fluctuated between -2.46% in 2021 and -3.72% in 2024 before experiencing a sharp decline to -6.81% in 2025. This acceleration in the negative margin during 2025 indicates a severe disconnect between revenue generation and the cost of the capital employed to produce those sales.
The overall data indicates that despite substantial revenue growth between 2021 and 2024, the company failed to optimize its capital structure or operational returns, culminating in a significant expansion of economic losses by the end of 2025.
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