General Motors (NYSE:GM) shares fell nearly 2% on Monday after Bernstein downgraded the stock from Outperform to Market-Perform, citing concerns over rising earnings challenges and potential capital requirements.

The firm noted that GM’s stock has climbed 85% since November 2023, driven by strong North American performance and substantial shareholder returns, including a $10 billion accelerated share repurchase in late 2023 and a further $6 billion buyback in mid-2024.

However, Bernstein highlighted several emerging issues, leading to an 8% reduction in its 2025 EPS forecast for GM, bringing it down to $8.23. The firm pointed to potential pricing pressures from U.S. inventory buildup, delays in electric vehicle production, and continued losses from GM’s autonomous vehicle division, Cruise, as key contributors to the anticipated earnings headwinds in 2025. Additionally, international business challenges are further adding strain.

Bernstein is particularly cautious ahead of GM’s October Capital Markets Day (CMD), where updates on electric vehicle and software strategies, as well as the Cruise division, are expected. The analysts fear these updates could come with additional capital requirements, negatively impacting free cash flow (FCF).

The firm has also increased its capital expenditure forecast, now at the higher end of GM’s guidance, which led to a reduction in its 2025 FCF estimate to $6 billion. As a result, Bernstein has lowered its forecast for GM’s shareholder distributions between 2025 and 2027 by 17%, now expecting around $10 billion in distributions during that period.