Q4 2023 General Motors Co Earnings Call

Good morning, and welcome to the General Motors Company fourth quarter and calendar year 2023 earnings conference call. During the opening remarks, all participants will be in a listen only mode. After the opening remarks, we will conduct a question and answer session. We are asking analysts to limit their questions to one and a brief follow up to ask a question.

Jim Press Star then one on your telephone keypad to join the queue to withdraw your question Press Star then two as a reminder, this conference call is being recorded Tuesday January 30th 2024, I would now like to turn the conference over to Ashish Kohli Gm's, Vice President of Investor Relations.

Thank you Amanda and good morning, everyone.

Ashish Kohli: We appreciate you joining us as we review Gm's financial results for the fourth quarter and calendar year 2023.

Ashish Kohli: Our conference call materials were issued this morning and are available on Gm's Investor Relations website.

Ashish Kohli: We are also broadcasting this call via <unk>.

Ashish Kohli: Webcast.

Ashish Kohli: Joining us today are Mary Barra, Gm's chair and CEO.

Paul Jacobson.

Paul A. Jacobson: Executive Vice President and CFO.

Dan: Dan burst president and CEO of GM financial we will also be joining us for the Q&A portion of the call.

Dan: On today's call management will make forward looking statements about our expectations.

Dan: These statements are subject to risks and uncertainties that could cause actual results to differ materially.

Dan: These risks and uncertainties include the factors identified in our filings with the SEC.

Dan: Please review the Safe Harbor statements on the first page of our piece and patients are sick.

Dan: Contents of our call will be governed by this language.

Dan: With that I'm delighted to turn the call over to Mary.

Mary Teresa Barra: Thanks, Ashish and good morning, everyone. As we begin 2024, I believe Jim is well positioned for Europe's strong financial performance that builds on everything we accomplished and importantly learned in 2023.

Speaker Change: Consensus is growing but the U S economy, the job market and auto sales will continue to be resilient.

Speaker Change: At G M. We expect healthy industry sales of about 16 million units.

Speaker Change: We have an unmatched ice portfolio in North America rising EV production on the Altium platform and GM financial continues to perform well.

Speaker Change: We're building on a foundation of products that our customers Love and 2023 G. M sold more vehicles in the U S than anyone else all of our U S brands grew their sales year over year, and we gained U S market share with healthy margins, thanks to stable pricing and incentives that were more than 24 central about the industry average.

Speaker Change: The Chevrolet bolt EV and EV had record sales, we led the industry in initial quality for the second year in a row. According to J D power.

Speaker Change: We now have led the industry in combined pick up full size van and full size SUV sales for 10 consecutive years, making us the leader in the highest AGP quadrant of the market and helping us lead the commercial fleet market.

Speaker Change: And we have passed Honda and Toyota and the most affordable quadrant, thanks to attractive and profitable vehicles like the Chevrolet Trax, which is what a car and driver's 10, best trucks and Suvs in Dubuque, and Vista, which is winning with younger buyers in fact more than one in four investor customers are between the ages of 18 and 35.

The broad based momentum we have today is important for our future because our customers are the most loyal in the industry.

Speaker Change: All of this success contributed to full year EBIT adjusted of $12 4 billion and our.

Adjusted Auto free cash flow of $11 7 billion in 2023, which brings our total to more than 22 billion for 'twenty, two and 'twenty three.

Speaker Change: Almost two thirds of that cash has been returned to shareholders through dividends and share repurchases, including the impact of the $10 billion accelerated share repurchase program that we announced in November.

Speaker Change: Through the ASR, we immediately retired 215 million common shares in the fourth quarter. Our current share count is less than 1.2 billion and we are working to reduce this even further to less than 1 billion common shares outstanding which would be about 600 million fewer than at our peak.

Speaker Change: As we look ahead, our priorities and our commitments are clear there.

Speaker Change: They are to maximize the opportunities we have with our winning ice portfolio.

Speaker Change: Grow our EV business profitably deliver strong margins and cash flow and refocus and relaunch crews.

Speaker Change: Across the enterprise, we are taking important steps to deliver on each priority.

Let's start with our ice portfolio.

Chevrolet's crossover lineup had record sales last year and this year, we're enhancing two of its most important models, which compete in growing segments.

Speaker Change: Example, super cruise will be available on the traverse for the first time and we will introduce a new premium Z 71 offered model.

Speaker Change: The 2025 Chevrolet Equinox that we unveiled last week is another Great example, it has more standard safety equipment, new truck inspired styling and a strong focus on technology and importantly, both the traverse equinox equinox will have higher projected margins than the outgoing models.

Speaker Change: You can G. M. C are also also launching new crossovers this year to keep our momentum going.

Speaker Change: And our EV business, we expect our your U S portfolio to be variable profit positive in the second half of the year based on our current expectations for EV demand and production growth strong interest in our vehicles lower commodity prices and other factors will support this.

Speaker Change: Our plan is to produce in wholesale 200000 to 300000 LTM basis Chevrolet GMC Cadillac and break dropped E vs. In North America. This year, but we will be guided by customer demands.

Speaker Change: It is true that pace of E. D growth has slowed which has created some uncertainty.

Speaker Change: We will build to demand and we are encouraged that many third party forecasts have U S. E V deliveries rising from about 7% of the industry in 'twenty three so at least 10% in 2024, which would mean another year of record E b cells.

Speaker Change: We believe our competitive position will improve throughout the year based on higher production of the Cadillac lyrics GMC Hummer EV, the Chevrolet Blazer, EV and the silver Rado E B work trucks.

Speaker Change: We're also excited to have the Chevrolet Equinox C D and the Silverado E. D. R. S. T. The GMC Denali E. G. M. C. C. R E V Denali and the Cadillac Escalade IQ, arriving in showrooms over the course of the year.

Speaker Change: We are confident in the design and performance of these vehicles. For example, the lyric is driving growth at Cadillac sales have increased sequentially every month since September and January deliveries should be in line with December despite winter storms across the country.

Operator: Good morning, and welcome to the General Motors Company 4th Quarter and Calendar Year 2023 Earnings Conference Call. During the open remarks, all participants will be in a listen-only mode.

Speaker Change: We also have more than 10000 or excuse me 100000 reservations and orders for EV pickups that we expect to fulfill in 'twenty four and 'twenty five.

Operator: After the open remarks, we will conduct a question and answer session. We are asking analysts to limit their questions to one and a brief follow-up. To ask a question, press star then 1 on your telephone keypad to join the queue. To withdraw your question, press star then 2.

Speaker Change: However, if demand conditions change, we'll take advantage of our manufacturing flexibility and Springhill Ramos to build more ice models and fewer evs. We can also mix between different E. D products that factor zero ultimately, we will follow the customer.

Operator: As a reminder, this conference call is being recorded on Tuesday, January 30, 2024. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations. Thank you, Amanda, and good morning, everyone.

Speaker Change: The supply chain manufacturing and software changes, we have made will support our growth on the battery front, our ultra themselves joint venture is at full production in Ohio, and the new plant in Tennessee will begin shipping sells this quarter.

Ashish Kohli: We appreciate you joining us as we review GM's financial results for the fourth quarter and calendar year 2023. Our conference call materials were issued this morning and are available on GM's Investor Relations website. We are also broadcasting this call via web. Joining us today are Mary Barra, GM's Chair and CEO, and Paul Jacobson, Executive Vice President and CFO.

Speaker Change: In addition, our supply chain team has moved very quickly to resource to mine or sell components. After the U S. Treasury published its updated IRA guidelines in December.

Speaker Change: This change means that new production going forward of the Chevrolet Blazer, EV and the Cadillac lyric will qualify for the full 7500 dollar consumer credit.

Speaker Change: We work closely with our dealers to ensure consistent pricing for our customers, which we estimate will impact no more than about 25000 vehicles.

Ashish Kohli: Dan Burse, President and CEO of GM Financial, will also be joining us for the Q&A portion of the call. On today's call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the Safe Harbor Statements on the first page of our presentation, as the content of our call will be governed by this language. And with that, I'm delighted to turn the call over to Mary. Thanks Ashish, and good morning everyone.

Speaker Change: Our battery module production is on schedule. The team has improved the automated equipment at our assembly plants used to build modules and installation of new high capacity satellites should be complete by mid year.

Speaker Change: Our software and services team is also in the process of resolving the stability issues. Some customers have experienced with the Chevrolet Blazer E D that impacted their screens and charging experience and they're working with a huge sense of urgency to lift the stop sale soon.

Speaker Change: We disappointed these customers and we know what.

Speaker Change: We are determined to get the software right and we will we have made several organizational and process improvements that will help us deliver the best possible customer experience going forward.

Mary Teresa Barra: As we begin 2024, I believe GM is well positioned for a year of strong financial performance that builds on everything we accomplished and importantly learned in 2023. Consensus is growing that the U.S. economy, the job market, and auto sales will continue to be resilient. At GM, we expect healthy industry sales of about 16 million units. We have an unmatched ICE portfolio in North America.

Speaker Change: Among several important organizational realignments, we established a software quality, but division within the software and services team that has been performing a retrospective on the blazer EV and has improved the current software development and test processes across the enterprise.

I'll come to this activity are getting applied to all programs going forward and they include improved standardization of the software development and release process increased focus on test automation at the vehicle level and additional quality gates and metrics for software at the vehicle level.

Mary Teresa Barra: Rising EV production on the LTM platform and GM Financial continue to perform well. We're building on a foundation of products that our customers love. In 2023, GM sold more vehicles in the U.S. than anyone else. All of our U.S. brands grew their sales year over year, and we gained U.S. market share with healthy margins thanks to stable pricing and incentives that were more than 20% below the industry average. The Chevrolet Bolt EV and EUV had record sales. And we led the industry in initial quality for the second year in a row, according to J.D. Power!

Speaker Change: From a margin and cash flow perspective, we are making good progress on cost reduction and capital efficiency.

Speaker Change: Paired with 2022 our fixed costs net of depreciation and amortization will be down 2 billion as we exit 2024.

Speaker Change: Which will offset the higher impact the impact of higher labor labor costs.

Speaker Change: We're also beginning to see savings from winning with simplicity and all of our current and future programs have embraced this very important way of designing products.

Mary Teresa Barra: And we have now led the industry in combined pickup, full-size van, and full-size SUV sales for 10 consecutive years, making us the leader in the highest ATP quadrant of the market and helping us lead the commercial fleet market. And we have passed Hyundai and Toyota in the most affordable quadrant thanks to attractive and profitable vehicles like the Chevrolet Trax, which is one of Car and Driver's 10 best trucks and SUVs, and the Buick Invista, which is winning with younger buyers. In fact, more than one in four Invista customers are between the ages of 18 and 35.

Speaker Change: Each team is responsible for creating trim series that make vehicles easy to order with a contract customers want and far fewer standalone options.

Speaker Change: By making more equipment standard and trim series with logical price swaps, we can eliminate literally thousands of unique part numbers and dozens of software releases for.

For example, we have eliminated over 1000 and selectable options across our current and near term product programs, which is reducing hardware software ordering and manufacturing complexity and importantly, all the costs associated with them.

Mary Teresa Barra: The broad-based momentum we have today is important for our future because our customers are the most loyal in the industry. All of this success contributed to full-year EBIT adjusted of $12.4 billion and adjusted auto free cash flow of $11.7 billion in 2020, which brings our total to more than $22 billion for 2022. Almost two-thirds of that cash is being returned to shareholders through dividends and share repurchases, including the impact of the $10 billion Accelerated Share Repurchase Program that we announced in November. Through the ASR, we immediately retired 215 million common shares in the fourth quarter.

In 2020 for the savings are expected to be about 200 million to be clear, we're talking about 200 million of savings to execute the same product plan. These savings will grow overtime as we apply the discipline to future products like our next generation full size pickups.

Speaker Change: We're also continuing to balance capital priorities and consistent free cash flow generation, we expect that our 2024 capital spending will be in the 10 five to 11 5 billion, which is roughly flat year over year and down considerably from the 13 billion top of our initial 2023 guidance.

Mary Teresa Barra: Our current share count is less than 1.2 billion, and we are working to reduce this even further to less than 1 billion common shares outstanding, which would be about 600 million fewer than at our peak. As we look ahead, our priorities and our commitments are clear. They are to maximize the opportunities we have with our winning ICE portfolio, grow our EV business profitably, deliver strong margins and cashflow, and refocus and relaunch crews. Across the enterprise, we are taking important steps to deliver on each priority. Let's start with our ICE portfolio. Chevrolet's crossover lineup had record sales last year, and this year we're enhancing two of its most important models, which compete in growing segments. For example, Super Cruise will be available on the Traverse for the first time, and we will introduce a new premium Z71 off-road model. The 2025 Chevrolet Equinox that we unveiled last week is another great example. It has more standard safety equipment, new truck-inspired styling, and a strong focus on technology.

Our forward plans include bringing our plug in hybrid technology to select vehicles in North America.

Speaker Change: Let me be clear jam remains committed to eliminating tailpipe emissions from our light duty vehicles by 2035, but in the interim deploying.

Speaker Change: Deploying plug in technology and strategic segments will deliver some of the environment.

Speaker Change: Your mental benefits of Ebs as the nation continues to build its charging infrastructure.

Speaker Change: We are timing the launches to help us comply with the more stringent fuel economy and tailpipe emission standards that are being proposed and we plan to deliver the program and our capital and cost efficient way because the technology is already in production in other markets, we'll have more to share about this down the road.

Speaker Change: Moving to cruise.

Speaker Change: Last week, we released the results of the third party reviews, and we've already begun to implement significant changes to build a better crews we are committed to earning back the trust with our regulators and the public through our actions.

Speaker Change: Our planned 2020 for investment in cruise reflects our more deliberate and cadence go to market strategy, and we are developing new financial targets and our new roadmap.

Mary Teresa Barra: And importantly, both the Traverse and Equinox will have higher projected margins than the outgoing models. Buick and GMC are also launching new crossovers this year to keep our momentum going. In our EV business, we expect our U.S. portfolio to be profitable in the second half of the year based on our current expectations for EV demand and production growth. Strong interest in our vehicles, lower commodity prices, and other factors will support them. Our plan is to produce and wholesale 200,000 to 300,000 Altium-based Chevrolet, GMC, Cadillac, and BrakeDrop EVs in North America this year, but we will be guided by customer demand. It's true the pace of EV growth has slowed, which has created some uncertainty. We will build to demand, and we are encouraged that many third-party forecasts have U.S. EV deliveries rising from about 7% of the industry in 2023 to at least 10% in 2024, which would mean another year of record EV sales.

Speaker Change: Spending will be down considerably this year, but we will continue to invest in the people who are advancing the software specialized hardware and AI capabilities.

Speaker Change: This reflects our commitment to our vision, which is to deliver the safety benefits of self driving technology and a scalable profitable business I look forward to sharing our timetable for returning cruise avs to the road soon.

Speaker Change: To summarize we learned a lot in 2020 threes and those learnings are helping us build our strengths and addressing our challenges.

Speaker Change: Everyone on the team is committed to building on our momentum and creating shareholder value you'll.

Speaker Change: You'll see in our proxy statement. This spring executive compensation is tied even more closely to delivering our comprehensive ice E. D. A V in software plans, while meeting our financial targets. So our goals are truly aligned with yours.

Speaker Change: Before I turn the call over to Paul I would like to share some thoughts about our next investor day because of the significant changes that are underway at GM and cruise we think it makes sense to wait until later in the year to hosting events.

Mary Teresa Barra: We believe our competitive position will improve throughout the year based on higher production of the Cadillac Lyric, the GMC Hummer EV, the Chevrolet Blazer EV, and the Silverado EV work truck. We're also excited to have the Chevrolet Equinox EV and the Silverado EV RST, the GMC Denali, the GMC Sierra EV Denali, and the Cadillac Escalade IQ arriving in showrooms over the We are confident in the design and performance of these vehicles. For example, the Lyric is driving growth at Cadillac.

Speaker Change: This will give our software team the time to focus on software for our upcoming launches and we will be able to share more tangible proof points on all four pillars pillars of our strategy I E. B, a b and software when we do get together, we will show you what we've not done not just tell you what we're going to do.

Speaker Change: In the meantime, we've already provided a roadmap for E V profitability in 2025, and we will share updates on cruise as we finalize the technology and relaunch plans with that I'll turn it over to Paul to go through our 2023 financials and provide more details on our 2024 outlook then we'll take your questions.

Mary Teresa Barra: Its sales have increased sequentially every month since September, and January deliveries should be in line with December, despite winter storms across the country. We also have more than 100,000 reservations and orders for EV pickups that we expect to fulfill in 2024 and 2025. However, if demand conditions change, we'll take advantage of our manufacturing flexibility in Spring-Hill and Ramos to build more ICE models and fewer EVs. We can also mix between different EV products at Factory Zero.

Thank you Mary and good morning, everyone. I appreciate you all joining us this morning.

I'd like to begin by recognizing the entire GM team for what they accomplished in 2023. When you look back over the last couple of years. The results showed impressive trend in revenue growth EPS consistency and cash generation.

Mary Teresa Barra: Ultimately, we will follow the customer. The supply chain, manufacturing, and software changes we have made will support our growth. On the battery front, our Ultium cells joint venture is at full production in Ohio, and the new plant in Tennessee will begin shipping cells this quarter. In addition, our supply chain team has moved very quickly to source two minor cell components after the U.S. Treasury published its updated IRA guidelines in December. This change means that new production going forward of the Chevrolet Blazer EV and the Cadillac Lyric will qualify for the full $7,500 consumer credit.

Speaker Change: For the full year, our EBIT adjusted of $12 $4 billion came in slightly above the midpoint of the range. We guided to in November. Thanks to the continued strength of the core business.

Speaker Change: We grew revenue by 10% year over year to a record $172 billion and generated $7.68 of EPS diluted adjusted.

Speaker Change: A key focus has been profitable growth and for the full year. We demonstrated this by growing U S market share by 30 basis points, while keeping incentives well below industry averages.

Speaker Change: It's important to mention the 2023 actions, we've taken to reduce fixed costs and the progress made on the $2 billion net cost reduction program. For example, automotive engineering was reduced by $400 million driven by portfolio simplification, realizing the benefits from winning with simplicity as well as our drive to virtual engineer.

Mary Teresa Barra: We work closely with our dealers to ensure consistent pricing for our customers, which we estimate will impact no more than about 25,000 vehicles. Our battery module production is on schedule. The team has improved the automated equipment at our assembly plants used to build modules, and the installation of new high-capacity assembly lines should be complete by mid-year. Our software and services team is also in the process of resolving the stability issues some customers have experienced with the Chevrolet Blazer EV that impacted their screens and charging experience, and they are working with a huge sense of urgency to lift the stop sales soon. We have disappointed these customers, and we know it.

Speaker Change: Marketing spend was reduced by $500 million and we expect another $400 million this year.

Speaker Change: And we saw approximately $500 million from lower bright drops and other growth business spend along with the impact of the voluntary separation program across the enterprise.

Speaker Change: These $1.4 billion of fixed cost reductions were partially offset by $400 million of higher depreciation and amortization meeting our target to achieve half of the $2 billion program in 2023.

Mary Teresa Barra: We are determined to get the software right, and we will. We have made several organizational and process improvements that will help us deliver the best possible customer experience going forward. Among several important organizational realignments, we established a software quality division within the software and services team that has been performing a retrospective on the Blazor EV and has improved the current software development and test processes across the enterprise.

Speaker Change: We began 2023 with $24 billion of auto cash and marketable securities generated full year adjusted auto free cash flow of $11 $7 billion and returned approximately $12 billion to our shareholders through dividends and share repurchases, including the impact of the $10 billion accelerated share.

Mary Teresa Barra: Outcomes of this activity are getting applied to all programs going forward, and they include improved standardization of the software development and release process, increased focus on test automation at the vehicle level, and additional quality gates and metrics for software at the vehicle level. From a margin and cash flow perspective, we are making good progress on cost reduction and capital efficiency. Compared with 2022, our fixed cost net of depreciation and amortization will be down $2 billion as we exit 2024, which will offset the impact of higher labor costs. We are also beginning to see savings from winning with simplicity, and all of our current and future programs have embraced this very important way of designing products. Each team is responsible for creating trim series that make vehicles easy to order with the content customers want and far fewer standalone options. By making more equipment standard in trim series with logical price walks, we can eliminate literally thousands of unique part numbers and dozens of software releases. For example, we have eliminated over 1,000 selectable options across our current and near-term product programs, which is reducing hardware, software, ordering, and manufacturing complexity, and importantly, all the costs associated with it.

Speaker Change: Program initiated in Q4.

Speaker Change: Coming into 2024, we are well positioned with roughly $20 billion of auto cash and marketable securities and we will appropriately balance our capital allocation priorities with a plan to continue to return capital to our shareholders through repurchases and our new higher dividend rate.

Speaker Change: Let's get into Q4 results total company revenue was $43 billion consistent year over year. Despite the impact of the strike. However, we did have a number of cost items that we do not expect to reoccur in 2024 that impacted our margin performance in the quarter.

Speaker Change: We achieved one point or $2 billion in EBIT adjusted of four 1% EBIT adjusted margins and $1 24 in EPS diluted adjusted these.

These results were also impacted by the strike, which had a $900 million EBIT adjusted impact in Q4, and $1 1 billion dollar impact for the full year primary primarily from losing an estimated 95000 units of production.

Speaker Change: Additionally, we increased inventory valuation allowances by $1.1 billion to re measure battery cell and E. D inventory held at year end.

Speaker Change: This adjustment was significantly larger in Q4 versus prior quarters, driven by a combination of increasing cell production in preparation for our 2024 E V acceleration and holding more Evs and company inventory.

Mary Teresa Barra: In 2024, the savings are expected to be about $200 million. To be clear, we're talking about $200 million of savings to execute the same product plan. These savings will grow over time as we apply the discipline to future products like our next generation full-size pickup. We're also continuing to balance capital priorities and consistent free cash flow generation. We expect that our 2024 capital spending will be in the $10.5 to $11.5 billion range, which is roughly flat year over year and down considerably from the $13 billion top of our end initial 2023 guidance. Our forward plans include bringing our plug-in hybrid technology to select vehicles in North America. Let me be clear, JAM remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035. But in the interim, deploying plug-in technology in strategic segments will deliver some of the environmental benefits of EVs as the nation continues to build its charging infrastructure.

Speaker Change: Adjustments for the full year totaled $1 $7 billion, we expect this to be substantially lower in 2024, as we continue to make progress towards our EBIT margin targets on E D.

North America delivered Q4, EBIT adjusted of $2 billion down $1 $6 billion year over year, driven primarily by the $900 million strike impact and $1 billion of inventory adjustments I. Just discussed the performance was also driven by higher pricing and lower fixed costs, which more than offset mix headwinds.

Speaker Change: North American margin of eight 7% was within our targeted 8% to 10% range for the full year and included a one six percentage point impact from the strike and the inventory adjustments.

Speaker Change: Part of this performance is from proactively managing our inventory levels, helping to minimize incentives I'm pleased that we ended the year at 50 days of U S inventory, which is at the low end of our 50 to 60 day target rage and incentives that were more than 20% below the industry average.

Mary Teresa Barra: We are timing the launches to help us comply with the more stringent fuel economy and tailpipe emission standards that are being proposed, and we plan to deliver the program in a capital and cost-efficient way because the technology is already in production in other markets. We'll have more to share about this down the road. Moving to Cruz.

Speaker Change: GM International had another solid quarter with Q4, EBIT adjusted of $300 million, which was consistent year over year I want to thank the entire international team for another year of good execution and delivering $1 $2 billion of EBIT adjusted.

Mary Teresa Barra: Last week, we released the results of the third-party reviews, and we've already begun to implement significant changes to build a better crew. We are committed to earning back trust with our regulators and the public through our actions. Our plan 2024 investment in Cruise reflects our more deliberate and cautious go-to-market strategy, and we are developing new financial targets and a new road. Spending will be down considerably this year, but we will continue to invest in the people who are advancing the software, specialized hardware, and AI capabilities. This reflects our commitment to our vision, which is to deliver the safety benefits of self-driving technology and a scalable, profitable business. I look forward to sharing our timetable for returning Cruise AVs to the road soon.

Speaker Change: GM financial also performed well with Q4 EBT adjusted of $700 million down slightly year over year full year results were $3 billion at the top end of the two and a half to $3 billion guidance range.

Speaker Change: Portfolio credit metrics continue to be strong in part due to a predominantly prime credit mix with net charge offs up slightly due to a moderation in credit performance.

<unk> financial has consistently been an integral part of the business supporting our customers supporting our dealers and paying dividends of $1 $8 billion to G. M. In 2023.

Mary Teresa Barra: To summarize, we learned a lot in 2023, and those learnings are helping us build our strength and address our challenges. Everyone on the team is committed to building on our momentum and creating shareholder value. You'll see in our proxy statement this spring, executive compensation is tied even more closely to delivering our comprehensive ICE, EV, AV, and software plans while meeting our financial targets. So our goals are truly aligned with yours. Before I turn the call over to Paul, I would like to share some thoughts about our next Investor Day. Because of the significant changes that are underway at GM and Cruise, we think it makes sense to wait until later in the year to host an event. This will give our software team the time to focus on software for our upcoming launches, and we will be able to share more tangible proof points on all four pillars of our strategy, ICE, EV, AV, and software. When we do get together, we will show you what we've done, not just tell you what we're going to do.

<unk> expenses were $800 million in the quarter up $300 million year over year and similar to the spend level in Q3.

Speaker Change: Let's look ahead to 2024.

Speaker Change: We expect EBIT adjusted in the 12% to $14 billion range.

P S diluted adjusted to be in the $8 50 to $9 50 range, including an estimated $1 45 per share benefit from last year's accelerated share repurchase based on the current share price, which will be partially offset by roughly 50 cent headwind from a higher tax rate and lower <unk>.

Speaker Change: Income on lower cash balances.

And adjusted automotive free cash flow in the $8 billion to $10 billion range for the year.

I want to summarize a few items in 2023 that we don't expect to repeat and will help to contribute to our higher outlook for this year. Despite some of the potential macro headwinds. These include the $800 million EBIT adjusted impact from the LG agreements and as a reminder, this will save us an additional thousands.

Mary Teresa Barra: In the meantime, we've already provided a roadmap for EV profitability in 2025, and we'll share updates on CRUISE as we finalize the technology and relaunch plan. With that, I'll turn it over to Paul to go through our 2023 financials and provide more details on our 2024 outlook, then we'll take your questions. Thank you, Mary, and good morning, everyone.

Speaker Change: <unk> per vehicle going forward on our path to profitability.

Speaker Change: $1 1 billion EBIT adjusted impact from the strike and a substantial amount of the $1 $7 billion of net realizable value adjustments as we work through the sell inventory improve <unk> profitability and benefit from lower lithium prices.

Paul A. Jacobson: I appreciate you all joining us this morning. I'd like to begin by recognizing the entire GM team for what they accomplished in 2023. When you look back over the last couple of years, the results show an impressive trend in revenue growth, EPS consistency, and cash generation. For the full year, our EBIT adjusted of $12.4 billion came in slightly above the midpoint of the range we guided to in November, thanks to the continued strength of the core business. We grew revenue by 10% year-over-year to a record $172 billion and generated $7.68 of EPS diluted adjustment. A key focus has been profitable growth, and for the full year, we demonstrated this by growing U.S. market share by 30 basis points while keeping incentives well below industry averages.

Speaker Change: In light of the current macro environment, we anticipate a market similar to 2023 with total U S industry volumes of around 16 million units.

Speaker Change: We expect wholesale volume to grow as we rebound from the impact of the strike and continue our track record of market share gains primarily from higher volume.

Speaker Change: However, we do assume mix headwinds from our ice production driven by anticipated actions to proactively manage full sized truck inventory levels.

Speaker Change: We also assume a 2% two 5% pricing headwind year over year, but overall, we remain confident in our ability to balance production inventory levels and profitability, while growing revenues and sustain our north American margins in the 8% to 10% range.

Paul A. Jacobson: It's important to mention the 2023 actions we've taken to reduce fixed costs and the progress made on the $2 billion net cost reduction program. For example, automotive engineering was reduced by $400 million driven by portfolio simplification, realizing the benefits of winning with simplicity as well as our drive to virtual engineering. Marketing spend was reduced by $500 million, and we expect another $400 million this year.

Speaker Change: We are on track to realize the remaining $1 billion of net fixed cost savings with the benefits coming from similar areas to last year, including marketing engineering and the full year benefit of the actions we took in 2023.

We expect $1 $3 billion and higher labor costs, along with logistics being a slight headwind year over year, primarily driven by higher finished vehicles shipping costs.

Paul A. Jacobson: And we saw approximately $500 million from lower bright drop and other growth business spend along with the impact of the Voluntary Separation Program across the enterprise. These $1.4 billion of fixed cost reductions were partially offset by $400 million of higher depreciation and amortization, meeting our target to achieve half of the $2 billion program in 2023. We began 2023 with $24 billion of auto cash and marketable securities, generated full-year adjusted auto-free cash flow of $11.7 billion, and returned approximately $12 billion to our shareholders through dividends and share repurchases, including the impact of the $10 billion Accelerated Share Repurchase Program initiated in Q4. Going into 2024, we are well-positioned with roughly $20 billion of auto cash and marketable securities and will appropriately balance our capital allocation priorities with the plan to Let's get into the Q4 results. Total company revenue was $43 billion, consistent year-over-year, despite the impact of the strike.

Speaker Change: Cruise expenses are expected to be around $1 billion lower given the new operational plan Mary mentioned earlier.

Speaker Change: In November we gave an update on our path to profitability with an estimated EBIT margin improvement of more than 60 percentage points and a lower overall EV loss in 24 compared to 23, even when you exclude the impact of the inventory adjustments.

Speaker Change: This will largely be driven by higher E V volumes and fixed cost leverage from both EV and battery cell manufacturing along with the benefit of all of our North America volume being on the Altium platform.

Speaker Change: We are already seeing an improvement in sell cost today, driven by significantly lower raw materials prices and better pricing on sales produced at our first battery JV plant from higher capacity utilization.

Speaker Change: For GM International we expect relative stability in our South America and Middle East operations. However, we anticipate ongoing pressure in China, including the plan to reduce production in Q1 to balanced dealer inventory levels.

The actions will likely result in Q1, China equity income being a slight loss with a return to profitability starting in Q2.

Paul A. Jacobson: However, we did have a number of cost items that we do not expect to reoccur in 2024 that impacted our margin performance in the quarter. We achieved $1.8 billion in EBIT adjusted, 4.1% EBIT adjusted margins, and $1.24 in diluted adjusted EPS. These results were also impacted by the strike, which had a $900 million EBIT-adjusted impact in Q4 and a $1.1 billion impact for the full year, primarily from losing an estimated 95,000 units of production.

Speaker Change: For GM financial we expect EBT adjusted again in the two and a half to $3 billion range with credit performance in used vehicle prices returning to normal throughout the year, along with earning asset growth from retail loan originations and the commercial loan portfolio.

Speaker Change: We are forecasting another year of robust automotive adjusted free cash flow, but we anticipate modest year over year headwinds from 'twenty three working capital benefits that we assume will not repeat and the timing of payments associated with accruals recognized last year for example, warranty tax and higher assumed inventory levels.

Paul A. Jacobson: Additionally, we increased our inventory valuation allowances by $1.1 billion to re-measure battery cell and EV inventory held at year-end. This adjustment was significantly larger in Q4 versus prior quarters, driven by a combination of increasing cell production in preparation for our 2024 EV acceleration and holding more EVs in company inventory. Adjustments for the full year totaled $1.7 billion.

Speaker Change: From a modeling perspective remember that Q1 is our seasonally weakest cash flow quarter of the year.

Speaker Change: We expect our capital spend to be similar to 2023 inclusive of $500 million to $1 billion of inventory investments in our battery jb's.

Speaker Change: Our 2024 effective tax rate is assumed to be in the range of 18% to 20% up from last year, primarily due to the global mix of earnings and lower R&D credits, primarily due to lower crew spend.

Paul A. Jacobson: We expect this to be substantially lower in 2024 as we continue to make progress toward our EBIT margin targets on EBIT. North America delivered Q4 adjusted EBIT of $2 billion, down $1.6 billion year-over-year, driven primarily by the $900 million strike impact and $1 billion of inventory adjustments I just discussed. The performance was also driven by higher pricing and lower fixed costs, which more than offset mix-heads. North America's margin of 8.7% was within our targeted 8 to 10% range for the full year and included a 1.6 percentage point impact from the strike and the inventory adjustment. Part of this performance is from proactively managing our inventory levels, helping to minimize incentives. I'm pleased that we ended the year at 50 days of U.S. inventory, which is at the low end of our 50- to 60-day target range, and incentives that were more than 20% below the industry average. GM International had another solid quarter with Q4 EBIT adjusted of $300 million, which was consistent year over year.

Speaker Change: And our full year EPS guidance assumes a weighted average fully diluted share count of slightly below 1.15 billion shares. This includes the impact of the remaining shares to be purchased through the ASR, which we expect will reduce our fully diluted share count to below $1 1 billion shares once completed.

Speaker Change: The actual share count will depend on several factors that impact the final ASR settlement, including the average share price during execution and excludes the impact of any incremental share repurchases beyond the ASR.

Speaker Change: In closing we know the EV market is not going to grow linearly and we are prepared to flex between ice and EV production, given our unique manufacturing capabilities to balance inventory levels and to build customer demand.

This will help support pricing and our continued incentive discipline.

Speaker Change: While we have faced some challenges in our E. V transition we are actively working to address them and remain excited about our future and look forward to a successful 2024.

Paul A. Jacobson: I want to thank the entire international team for another year of good execution and delivering $1.2 billion of EBIT adjusted. GM Financial also performed well with Q4 EBT adjusted of $700 million, down slightly year-over-year. Full-year results were $3 billion, at the top end of the $2.5 to $3 billion guidance.

Speaker Change: This concludes our opening comments, we'll now move to the Q&A portion of the call.

Speaker Change: Thank you as a reminder to analysts we are asking that you limit your question to one and a brief follow up so that we may get to everyone on the call to ask a question Press Star then one on your telephone keypad to join the queue to withdraw your question Press Star then two our first question from the line comes from each of them have Kelly with Citi.

Paul A. Jacobson: Portfolio credit metrics continue to be strong, in part due to a predominantly prime credit mix, with net charge-offs up slightly due to moderation in credit. GM Financial has consistently been an integral part of the business supporting our customers, supporting our dealers, and paying dividends of $1.8 billion to GM in 2023. Cruise expenses were $800 million in the quarter, up $300 million year over year and similar to the spend level in Q3.

Kelly: Your line is open.

Kelly: Great. Thanks, Good morning, everybody and congratulations Jim.

Just a couple of questions on the outlook for Citi can you share what you're assuming for.

End of year U S dealer inventory day supply and then all the pricing Paul you mentioned, two two and a half perspective can you talk a bit of what you're assuming.

For individual segments there.

Speaker Change: Yeah, Good morning, and thanks for your thanks for your comments and your questions.

Paul A. Jacobson: Let's look ahead to 2024. We expect adjusted EBIT to be in the $12 to $14 billion range. EPS diluted adjusted to be in the $8.50 to $9.50 range, including an estimated $1.45 per share benefit from last year's accelerated share repurchase based on the current share price, which will be partially offset by roughly $0.50 headwind from a higher tax rate and lower interest income on a lower cash balance and adjusted automotive free cash flow in the $8 to $10 billion range for the year.

Paul: First on the on the inventory question.

You know what I would say as you know we're continuing to pursue our targeted range of 50 to 60 days on hand.

Paul: Inventory I think the team has done a really good job of balancing that and I think that's provided some of the ability.

Paul: Our ability to be disciplined with incentives and clearly as I think resulted in a in a competitive advantage for us that we've we've utilized for the last couple of years as we think about that 2% to 2.5%.

Similar to what we've done for the last couple of years I I would call that a planning assumption rather than an expectation of where we see pricing.

Paul A. Jacobson: I want to summarize a few items in 2023 that we don't expect to repeat and will help to contribute to our higher outlook for this year, despite some of the potential macro headwinds. These include the $800 million EBIT adjusted impact from the LG agreements. And as a reminder, this will save us an additional $1,000 per vehicle going forward on our path to EV profitability. $1.1 billion EBIT adjusted impact from the strike and a substantial amount of the $1.7 billion of net realizable value adjustments as we work through the cell inventory, improve EV profitability, and benefit from lower lithium prices. In light of the current macro environment, we anticipate a market similar to 2023 with total U.S. industry volumes of around 16 million units. We expect wholesale volume to grow as we rebound from the impact of the strike and continue our track record of market share gains, primarily from higher EV volumes. However, we do assume mixed headwinds from our ice production, driven by anticipated actions to proactively manage full-size truck inventory levels.

Paul: You know, we we want to make sure that we do that to make sure to ensure that we can hit our target to generate the cash flow that's needed for investment and and drive the free cash flow performance. So as similar to years past. If we don't see that I would expect that we can get some upside into our into the numbers that we've talked about so we haven't gone.

Speaker Change: One through and assigned an expectation to any particular categories. That's just something top sided we do in the planning process I hope that helps.

Speaker Change: That's helpful. Thank you and I have a quick follow up.

Speaker Change: On the second half target on EV positive GP per unit can we just talk about what you were assuming for the broader competitive environment, how much cushion you have on the price mix side.

Be able to hit those targets.

So without getting into into very detailed specifics because obviously you can get a it can get quite complicated what I would say is.

Speaker Change: We feel confident about hitting that variable profit positive target in a in probably the low 200000 units of the range that Mary mentioned.

Paul A. Jacobson: We also assume a two to two and a half percent pricing headwind year over year. But overall, we remain confident in our ability to balance production, inventory levels, and profitability while growing revenues and sustaining our North America margins in the eight to 10 percent range. We are on track to realize the remaining $1 billion of net fixed cost savings with benefits coming from similar areas to last year, including marketing, engineering, and the full year benefit of the actions we took in 2020. We expect $1.3 billion in higher labor costs, along with logistics being a slight headwind year over year, primarily driven by higher finished vehicle shipping costs. Cruise expenses are expected to be around $1 billion lower given the new operational plan Mary mentioned earlier.

Speaker Change: You know that's that's based on a pretty consistent demand profile. So as we've seen the demand for the vehicles that we're producing in the way that customers have received them.

Speaker Change: We can keep that up so.

Speaker Change: To the extent that we see any pricing softness or demand retreat, we might have to revisit.

Speaker Change: Revisit that but you know we we feel we feel very good about the trajectory that we're on right now.

Speaker Change: Perfect Thats all Thats all very helpful. Thank you.

Speaker Change: Thank you. Our next question comes from Rod Lache with Wolfe Research.

Rod Lache: You May go ahead.

Rod Lache: Good morning, Hey, Barry and Paul.

Rod Lache: Wanted to just first ask me like from the outside at least it looks like there's a lot more scrutiny being applied to capital allocation.

Paul A. Jacobson: In November, we gave an update on our path to EV profitability with an estimated EBIT margin improvement of more than 60 percentage points and a lower overall EV loss in 2024 compared to 2023, even when you exclude the impact of the inventory adjustment. This will largely be driven by higher EV volumes and fixed cost leverage from both EV and battery cell manufacturing, along with the benefit of all of our North American volume being on the Ultium platform. We are already seeing an improvement in cell costs today, driven by significantly lower raw materials prices and better pricing on cells produced at our first battery JV plant due to higher capacity utilization. For GM International, we expect relative stability in our South America and Middle East operations.

Rod Lache: I'm thinking about the posture that you're talking about for cruise and bright drop and the adjustments that <unk> spending.

Rod Lache: So my question is just on the surface. It looks like the pendulum has moved a little bit from growth to cash flow or are these kind of temporary changes or are.

Rod Lache: Or are you kind of thinking about adjustments to GM strategy.

Speaker Change: Right Hi, Raj. Thanks for your comments I wouldn't necessarily say change in our strategy I think as we've continued to progress and the E. V transformation, we have found more ways to be a much more efficient with capital and I do want to correct. A statement I made earlier, where I said, we eliminated one thousands.

Speaker Change: Collectible options across our portfolio. It was really 100, although I think I have a new stretch target for the team as we take the initiative global but I you know its initiatives like that are continuing to look for ways to optimize the capital and when you look at our ice portfolio. The investment that we made in the last part of the last decade.

Paul A. Jacobson: However, we anticipate ongoing pressure in China, including the plan to reduce production in Q1 to balance dealer inventory levels. These actions will likely result in Q1 China equity income being a slight loss with a return to profitability starting in Q2. For GM Financial, we expect EBT to be adjusted again in the $2.5 to $3 billion range with credit performance and used vehicle prices returning to normal throughout the year, along with earnings asset growth from retail loan originations and the commercial loan portfolio.

Speaker Change: Really setups sets us up well to have all new products coming off the existing platforms, whether it's full size trucks full size Suvs midsize Suvs et cetera, and so we're looking to continue to be very a focus with capital to make sure it's going to generate the right return and I would also.

Paul A. Jacobson: We are forecasting another year of robust automotive-adjusted free cash flow, but we anticipate modest year-over-year headwinds from 23 working capital benefits that we assume will not repeat and the timing of payments associated with accruals recognized last year, for example, warranty, tax, and higher assumed inventory levels. From a modeling perspective, remember that Q1 is our seasonally weakest cash flow quarter of the year. We expect our capital spend to be similar to 2023, inclusive of $500 million to $1 billion of investments in our battery JVs. Our 2024 effective tax rate is assumed to be in the range of 18% to 20%, up from last year, primarily due to the global mix of earnings and lower R&D credits, primarily due to lower crew. And our full-year EPS guidance assumes a weighted average fully diluted share count of slightly below 1.

Speaker Change: Say, we are prioritizing continuing to return cash to our shareholders as we go through this transformation because we think the strength of our business, especially our ice business allows us to do that so it's not a change in strategy I would say on some of the business you mentioned like bright dropping others as we look at the business I think it was important as we.

Speaker Change: <unk> them to give them some room, but as we got clarity on where the real opportunity for G. M was we could make those business is much more efficient and we're going to continue to do that to work on our cost structure to make every dollar of capital count, but that you know we still see growth opportunity I mean, we had revenue growth of 10% last year. So we're still we still have many initiatives in which to grow.

Speaker Change: So we're just going to do it in a very optimized way.

Speaker Change: Thank you. Our next question comes from Dan Ives with Wedbush. Your line is open.

Yeah. Thanks. So can you just talk about cruise what is who are the targets for this year that we should think about that.

Paul A. Jacobson: This includes the impact of the remaining shares to be purchased through the ASR, which we expect will reduce our fully diluted share count to below 1.1 billion shares once completed. The actual share count will depend on several factors that impact the final ASR settlement, including the average share price during execution, and excludes the impact of any incremental share repurchases beyond the ASR.

That would just give them more confidence that.

We've turned the corner there I mean from a.

Daniel Harlan Ives: And from an investor perspective, and how you're looking at that long term you are committed to crews right. That's the best.

Daniel Harlan Ives: Way to think about that once you get through some of these situations.

Operator: In closing, we know the EV market is not going to grow linearly, and we are prepared to flex between ICE and EV production. Given our unique manufacturing capabilities to balance inventory levels and to build customers, this will help support pricing and our continued incentive. While we have faced some challenges in our EV transition, we are actively working to address them and remain excited about our future. This concludes our opening remarks, and we'll now move to the Q&A portions of the... Thank you. As a reminder to analysts, we are asking that you limit your question to one and provide a brief follow-up so that we may get to everyone on the call. To ask a question, press star and then one on your telephone keypad to join the queue.

Speaker Change: Yeah I appreciate the question Dan.

Speaker Change: We are committed to cruise when we look at the technology the foundational technology is sound.

Dan: We had already demonstrated and validated externally that our crews technologies already safer than a human driver one of the things. We've learned is a you know humans expect technology computers to be much more safe than they you know their expectations and they have for other for other people.

Dan: And with that knowledge, we are already working on what the level of the technology needs to be to meet the consumers' expectations are we think we can we can do that so we are committed.

Dan: And we are working on the detailed plan right now of how we'll go forward. We're also looking at the other big learning was as you rollout technology that is as transformative as this and has incredible benefits to safety you have to do it in a way where you're really working with the regulators at the local state and federal level.

Operator: To withdraw your question, press star then two. Our first question from the line comes from Itay Michaeli with Citi. Your line is open. Great, thanks. Good morning, everybody.

Operator: And congratulations. Just a couple questions on the outlook. First, maybe you can share what you're assuming for end-of-year US dealer inventory day supply and all the pricing plotting. You mentioned two, two and a half percent. Maybe talk a bit of what you're assuming per individual segments there.

Dan: As well as first responders, so as we rollout anywhere we're going to make sure we build the right relationships. They understand the technology they understand what the benefit of the technology and that's what we'll do but we have confidence in the underlying technology and you'll hear more about our plans for crews as we develop the plan in the in the upcoming weeks.

Paul A. Jacobson: Yeah, good morning, Itay, and thanks for your comments and your questions. You know, first on the inventory question, what I would say is that we're continuing to pursue our targeted range of 50 to 60 days on hand of inventory. I think the team has done a really good job of balancing that, and I think that's provided some of the ability to be disciplined with incentives and clearly has, I think, resulted in a competitive advantage for us that we've utilized for the last couple of years. As we think about that 2 to 2.5%, you know, similar to what we've done for the last couple of years, I would call that a planning assumption rather than an expectation of where we see prices.

Thank you. Our next question comes from Joseph Spak with UBS. Your line is open.

Joseph Spak: Thanks, Good morning, everyone.

Maybe just back to.

Joseph Spak: You know the vs. Marion Paul I mean, you talked about the positive variable profit.

Joseph Spak: It sounds like the LC and RV.

Joseph Spak: Charge going lower is a big portion of that but you also mentioned some some other factors. So I was wondering if you could give a little bit more detail there.

Joseph Spak: And then is this something that you will continually give us on a on a quarter by quarter basis sort of track the progress youre, making towards that positive variable profit.

Paul A. Jacobson: You know, we want to make sure that we do that to make sure that we can hit our targets, generate the cash flow that's needed for investment, and drive free cash flow performance. So, as in years past, if we don't see that, I would expect that we can get some upside into the numbers that we've talked about. So, we haven't gone through and assigned an expectation to any particular categories.

Joseph Spak: Hey, Joe its Paul Good morning, Thanks for thanks for the questions.

Paul: You know.

Paul: Probably just to digress.

Paul: Digress for a second on the lower of cost or market adjustment on the on the EV inventories. So couple of things number one theyre not in that's not in any of the metrics that I think are important clearly it is a year over year benefit for us on our journey, but when do you think about the two metrics.

Paul A. Jacobson: That's just something we do in the planning process. I hope that helps. It does help.

Paul A. Jacobson: And as a quick follow-up, on the second half target for EV positive VP per unit, can you talk about what you're assuming for the broader competitive environment and how much cushion you have on the price mix side to still be able to hit those targets? So, without getting into very detailed specifics, because obviously it can get quite complicated, what I would say is, you know, we feel confident about hitting that variable profit positive target in probably the low 200,000 units of the range that Mary mentioned. You know, that's based on a pretty consistent demand profile, so as we've seen the demand for the vehicles that we're producing and the way that customers have received them, we think we can keep that up. So, you know, to the extent that we see any pricing softness or demand retreat, we might have to revisit that, but, you know, we feel very good about the trajectory that we're on now. Terrific. That's all.

Paul: That we're looking at there there isn't there isn't an impact from that so first is variable profit positive. This relates a lot more to sort of EBIT and how we think about that going forward, but variable profit is mainly benefiting from scale and lower material costs going forward. So.

Paul: Not not not a not a contributor to that and then when you think about getting to the mid single digit margin target. In 2025, you know, we we would expect that there isn't really going to be inventory, that's necessarily carrying that and if if there is we'll call that out as we go forward, but it's not not in our <unk>.

Paul: Alkylation, they're not a part of what we think our journey is gonna be so.

Speaker Change: I appreciate the question and not not surprised by it but we're continuing to March along.

Speaker Change: When you think about.

Sorry, the second part of your question was on.

Speaker Change:

Operator: They're helpful. Thank you. Thank you. Our next question comes from Rod Lache with Wolf Research. You may go ahead. Good morning. Hey, Mary and Paul.

Speaker Change: Apologies what was the second part of your question.

Speaker Change: Oh on tracking yeah on on when we'll disclose what we'll continue to talk about our journey and give confidence as far as specific data points I'm not sure that we're gonna do it quarterly.

Operator: I wanted to just first ask, like, from the outside, at least, it looks like there's a lot more scrutiny being applied to capital allocation. I'm thinking about the posture that you're talking about for cruise and bright drop and the adjustments to EV spending. So my question is, just on the surface, it looks like the pendulum has moved a little bit from growth to cash flow. Are these kind of temporary changes?

Speaker Change: But.

We will continue to update on our progress.

Speaker Change: Thanks, and sorry for that hiccup.

Speaker Change: Thank you. Our next question comes from Adam Jonas with Morgan Stanley. Your line is open.

Adam Michael Jonas: Thanks, just one question on one follow up I wanted to follow up on rods question first on on strategy.

Can you confirm what portion of your forward your Capex and R&D.

Mary Teresa Barra: Or are you kind of thinking about adjustments to the GM strategy? Hi Rod, thanks for your comments. I wouldn't necessarily say a change in our strategy. I think as we've continued to progress in the EV transformation, we have found more ways to be much more efficient with capital. And I do want to correct a statement I made earlier where I said we'd eliminated a thousand selectable options across our portfolio. It was really only a hundred, although I think I have a new stretch target for the team as we take the initiative global.

Adam Michael Jonas: Is dedicated to EV.

Adam Michael Jonas: Barry a V.

Speaker Change: <unk> projects the auto two point, though any reason to think that this.

Speaker Change: You might have scope to dial back the vertical integration.

Given the changing market and then my follow up again.

Speaker Change: And again.

In the past, where you've talked about well over half I think you said.

In recent years of your spending was on that I just want to know if that was changing and then and then the follow up is on mask recently said that you can see.

Mary Teresa Barra: But it's initiatives like that of continuing to look for ways to optimize capital. When you look at our ICE portfolio, the investment that we made in the last part of the last decade really sets us up well to have all new products coming off the existing platforms, whether it's full-size trucks, full-size SUVs, mid-size SUVs, etc. And so we're looking to continue to be very focused on capital to make sure it's going to generate the right return. And I would also say we are prioritizing continuing to return cash to our shareholders as we go through this transformation because we think the strength of our business, especially our ICE business, allows us to do that. So it's not a change in strategy.

Speaker Change: Absence of trade barriers that China will default.

Speaker Change: Most of the Western E V. Players curious your reaction to that call that way, whether you would agree.

Speaker Change: Thanks.

Speaker Change: Yeah. Thanks, Adam.

Speaker Change: So from a capital perspective.

Speaker Change: And to build on what I said with Rod and ease the majority of our capital spend is toward E D.

Speaker Change: Remember from an ice perspective, we have the foundation already built the plants and as I mentioned all of the architectures for our you know really strong ice portfolio that capital has already been deployed. So this is really an opportunity for us to just continue to do great vehicles with very optimized capital from an ice portfolio I as mentioned with the traverse the.

Speaker Change: Equinox and and in the full size truck just to name a few are to your point on capital deployed from an infrastructure perspective, you know as the market evolves and as battery technology evolves, we will continue to evaluate.

Mary Teresa Barra: I would say on some of the businesses you mentioned, like Brightrop and others, as we look at the business, I think what's important is we started them to give them some room, but as we got clarity on where the real opportunity for GM was, we could make those businesses much more efficient. And we're going to continue to do that, to work on our cost structure, to make every dollar of capital count. But we still see growth opportunities. I mean, we had revenue growth of 10% last year.

Speaker Change: Our level of vertical integration I think you know with the work we've done on all time and the work we've done on electric Motors and the joint ventures with type one two and three and then for our fourth plant is with Samsung that gives us a different form factor with.

Operator: So we still have many initiatives in which to grow. We're just going to do it in a very optimized way. Thank you. Our next question comes from Dan Ives with Wedbush. Your line is open. Yeah, thanks. So can you just talk about Cruz?

With prismatic and cylindrical cells, I think we're well positioned but as we move forward, we'll evaluate that so I think there's there's options there and as you can see with all the initiatives. We have we are really working to take overall capital down but still get the net number of programs that we need so Adam I hope that helps.

Operator: What are sort of the targets for this year that we should think about? That would just give more confidence that we've turned the corner there. I mean, from an investor perspective, and how you look into that long term, you are committed to crews, right? That's the best way to think about that once you get through some of these situations.

Adam Michael Jonas: Happy to if you have additional questions there and then on <unk> comments about China I think.

Adam Michael Jonas: I don't discount any competitor, we need to make sure. We have beautifully designed vehicles that have the right features the right safety and the right customer experience and we have to do it at a competitive cost our cost base and that's why we're focused so much on our cost base now when you mentioned on.

Mary Teresa Barra: Yeah. Appreciate the question, Dan. We are committed to cruise. When we look at the technology, the foundational technology is sound. You know, we have already demonstrated and validated externally that cruise technology is already safer than a human driver.

Adam Michael Jonas: The Chinese consumers, we do need a level playing field I mean, there comes a point, where if it's not a level playing field between tariff and on.

Adam Michael Jonas: There are barriers are any industry is going to struggle to compete so give us a level playing field and you know I'll I'll put our products and our cost structure that we continue to improve up against any.

Mary Teresa Barra: One of the things we've learned is, you know, humans expect technology computers to be much safer than their expectations and what they have for other people. And with that knowledge, we are already working on what the level of the technology needs to be to meet the consumer's expectations. We think we can do that, so we are committed. And we are working on a detailed plan right now of how we'll go forward. We're also looking – the other big learning was, as you roll out technology that is as transformative as this and has incredible benefits for safety, you have to do it in a way where you're really working with the regulators at the local, state, and federal levels, as well as first responders.

Thanks Mary.

Adam Michael Jonas: Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

John Murphy: Good morning, guys I, just wanted to follow up on the strategy lining item and and Rod.

Jeremy.

John Murphy: Seeing fits and starts in technology.

John Murphy: And it will eventually get there but.

Speaker Change: But at the same time, we are seeing this tectonic shift.

Speaker Change: The competition, particularly coming coming from China as Adam alluded to.

Speaker Change: You you've made.

Speaker Change: Pronouncements and how the business strategy will be set up for for a few years not too long ago, but these shifts have been pretty extreme.

Mary Teresa Barra: So, as we roll out anywhere, we are going to make sure we build the right relationships, they understand the technology, they understand the benefits of the technology, and that's what we'll do. But we have confidence in the underlying technology, and you'll hear more about our plans for Cruise as we develop the plan for the upcoming week. Thank you. The next question comes from Joseph Spak with UBS. Your line is open. Thanks. Good morning, everyone.

More recently, so I'm just curious as you think about strategy in a position of the company.

Haven't been shy from making big changes in the past like exiting exiting Europe. It can we think about the potential for real shifts in strategy to focus where the highest margin higher highest return is sort of in the business truly you know five to 10 years down the line, which might include things like exiting China, which sounds like heresy.

Operator: Maybe just back to, you know, the EVs, Mary and Paul. You talked about the positive variable profit. It sounds like the LC and RV charge going lower is a big portion of that. But you also mentioned some other factors, so I was wondering if you could give a little bit more detail there. And then is this something that you will continually give us on a quarter by quarter basis to sort of track the progress you're making towards that positive variable profit? Hey Joe, it's Paul.

Speaker Change: But it might be the best move to make.

Four five years out maybe rebranding crews and really kind of taking a new sort of approach to where the company will land in five to 10 years.

Speaker Change: It's really protect profitability and cash flow from a position of strength.

Speaker Change: Is that a maybe a position in five to 10 years, where it might be a weaker position.

Speaker Change: Hey, John Hey, Thanks for the question and you know we.

John Murphy: We continue to evaluate the strategy on a regular basis, we have very robust strategy discussions with our board and with the leadership team and you know as you mentioned the world is changing quickly whether whether it's <unk>, whether it's software autonomy et cetera, and we're going to continue to respond to that I do agree with you.

Paul A. Jacobson: Good morning. Thanks for the questions. I'd probably just digress for a second on the lower of cost or market adjustment on the EV inventory. So a couple of things. Number one, that's not in any of the metrics that I think are important.

John Murphy: We're doing that from a position of strength.

Paul A. Jacobson: Clearly, it is a year-over-year benefit for us on our journey, but when you think about the two metrics that we're looking at, there isn't an impact from that. So first, variable profit is positive. You know, this relates a lot more to sort of EBIT and how we think about that going forward. But variable profit is mainly benefiting from scale and lower material costs going forward. So not a contributor to that

John Murphy: And you know really evaluate where we have the opportunity to deploy capital and generate an appropriate return and like we made the decision for China or for excuse me for Europe. When we looked at that you know what we said actually has happened we said it would be a win win win a win for the Opel team a win for them at the time PSA and <unk>.

John Murphy: Win for General Motors, because we participated in the warrants and we did just that so we're not going to shy away from making tough a tough calls or maybe call calls that people wouldn't expect if we think it's the right thing to do for the business to ensure we're here we protect our strengths are in the markets that we have whether it's North America.

Paul A. Jacobson: And then when you think about getting to the mid-single-digit margin target in 2025, you know, we would expect that there isn't really going to be inventory that's necessarily carrying that. And if there is, we'll call that out as we go forward. But it's not in our calculations or not a part of what we think our journey is going to be.

John Murphy: You know I mentioned on the earnings call in the top quartile you know we've been leading that for several years and now we are profitably have taken the most affordable segment and you know we have a strong business and in South America, and many of our international markets, China as Paul mentioned, and there's tremendous changing not only from a technology.

Paul A. Jacobson: So I appreciate the question and am not surprised by it. But we're continuing to march along. When you think about the, sorry, the second part of your question was on, Apologies. What was the second part of your question?

John Murphy: Point of view, but a competitive point of view and so we're evaluating evaluating China. We think there's a place to play it is a tremendous growth opportunity. If we can do that well and that's that's our goal, but nothing nothing is off the table and ensuring that GM has a strong future to generate.

Paul A. Jacobson: Oh, on tracking. Yeah, on when we'll disclose. You know, we'll continue to talk about our journey and give confidence as far as specific data points. Not sure that we're going to do it quarterly yet. But, you know, we'll continue to update on our progress. Thanks. I'm sorry for that.

John Murphy: The right profitability and the right return for our investors.

John Murphy: And if I could sneak one follow up on the plug in hybrid comment of potentially bringing those here to the U S to fill what sort of maybe this interim gap what kind of capacity your volume could you could you hit there.

Operator: Thank you. Our next question comes from Adam Jonas with Morgan Stanley. Your line is open.

John Murphy: Here in the U S. I know the dealers are clamoring from those vehicles.

Speaker Change: Yeah, we are going to be bringing those in at a time, where we need them from a compliance perspective. This year, we're very focused and.

Operator: Thanks. There is just one question. I want one follow-up. I want to follow up on Rod's question first on strategy. Can you confirm what portion of your four-year CapEx and R&D is dedicated to EV, battery, AV projects, Auto 2.0, and any reason to think that this... that you may have scope to dial back the vertical integration given the changing market? And then my follow-up question, and again, because I think in the past, Mary, you've talked about well over half, I think you said in recent years, of your spending was on that, but I just wanted to know if that was changing. And then the follow-up question was: Elon Musk recently said that in the absence of trade barriers, China would demolish most of the Western EV players. Curious about your reaction to that comment, whether you'd agree. Spak.

Speaker Change: As we are able to get the delivery to our dealers that are going to see the strength of the EV portfolio and so I'll have more to share on the the hybrid capacity, we'll adjust the capacity because again, we have the technology we.

Speaker Change: We know the targeted segments that we're going to apply it to so we'll we'll have the ability to flex and do what we need to from a hybrid perspective, but I think for for calendar year 'twenty for.

E V is our focus and we think we've got tremendous growth opportunity as we free up our getting the availability of the products to customers.

Speaker Change: Thank you very much.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Ryan Brinkman with Jpmorgan. Your line is open.

Ryan Brinkman: Good morning, and thanks for taking my question.

Ryan Brinkman: Obviously, the 24 outlook is far stronger than investors expected how much of that.

Mary Teresa Barra: Yeah, thanks, Adam. So, from a capital perspective, and to build on what I said with Rod, the majority of our capital spend is on EV. You know, remember, from an ICE perspective, we have the foundation already built, the plans, and, as I mentioned, all of the architectures for our really strong ICE portfolio have already been deployed. So, this is really an opportunity for us to just continue to do great vehicles with very optimized capital from an ICE portfolio, as mentioned, with the Traverse, the Equinox, and the full-size truck, just to name a few. To your point on capital deployed from an infrastructure perspective, as the market evolves and as battery technology evolves, we will continue to evaluate our level of vertical integration. I think, you know, with the work we've done on Altium and the work we've done on electric motors and the joint ventures, you know, with plant one, two, and three, and then our fourth plant is with Samsung that gives us a different form factor with prismatic and cylindrical cells.

Ryan Brinkman: Higher outlook versus consensus do you think stems from different industry related factors that are a matter of just expectations for volume or pricing in different markets versus how much do you think stems from company specific factors that you would naturally have a better handle on internal to the company such as lower crew spending and the potential for more.

Ryan Brinkman: Structural cost reduction the magnitude of guidance.

You may.

Ryan Brinkman: Be more positive on industry factors, but your pricing comments also seemed pretty in line. So I'm not really sure how.

Are you thinking about like how much of your meeting this great guide in 'twenty four it will come down to factors under your control versus out of your control.

So Ryan Thanks for the question I'll take a shot at that.

Ryan Brinkman: When you when you look at the macro backdrop I think we're approaching it pretty consistently to what we have for the last few years. So we've talked about a 16 million Saar. It's about two to two 5% of our sort of total pricing pressure across the board a lot of it is I would say you know a testament to what we have.

Mary Teresa Barra: I think we're well positioned, but as we move forward, we'll evaluate that. So, I think there are options there, and as you can see, with all the initiatives we have, we are really working to take overall capital down but still get the number of programs that we need. So, Adam, I hope that helps.

<unk> and overcame in 2023 that we don't expect to repeat of course, there will be some things that pop up as there are every year and I think the team has done a good job of of knocking those things down and overcoming some of those challenges going forward so against against the macro macro backdrop that feels a little bit.

Mary Teresa Barra: I would be happy if you have additional questions there. And then on Elon's comments about China, I think, look, you know, I don't discount any competitor. We need to make sure we have beautifully designed vehicles that have the right features, the right safety, and the right customer experience, and we have to do it at a competitive cost. And that's why we're focused so much on our cost base. Now, you know, when you mention Chinese consumers, we do need a level playing field. I mean, there comes a point where if it's not a level playing field between tariff and non-tariff barriers, any industry is going to struggle to compete.

Ryan Brinkman: System with a with some with some conservatism in there on the pricing side of it I think a lot of it is in our ability to execute and you know we have had a lot of challenges as Mary mentioned I think 23 was a big year of learning.

Ryan Brinkman: For us, but as she talked about with the with the work that we're doing on the module Assembly and where we see E V ramp as well as the customer response to the Evs that were producing I think I think this is a year of our executing and a lot of it is in our control.

Mary Teresa Barra: So, give us a level playing field, and, you know, I'll put our products and our cost structure, which we continue to improve, up against any. Thanks, Mary. Thank you. Our next question comes from John Murphy with Bank of America. Your line is open. Good morning, guys.

Speaker Change: Okay, great. Thanks, I just wanted to ask on cruise to starting with whether the guide of $1 billion of lower spending in 24 hours versus the 23 full year of $2 7 billion figure or maybe the <unk> run rate of $3 2 billion and then what is the response been so far I realize there has been a lot of time pass, but from the regulators to the recently.

Operator: Mary, I just wanted to follow up on the strategy line that Adam and Rod have breached here. I mean, you know, we're seeing fits and starts in technology, and, you know, it'll eventually get there. But at the same time, you know, we are seeing this tectonic shift in competition, particularly coming from China, as Adam alluded to. You've made sort of pronouncements about how the business strategy will be set up for a few years, not too long ago. But these shifts have been pretty extreme more recently.

At least comprehensive review previously I think you've guided to potentially significantly less spending on crews maybe on the business update call. But then followed a day or two later at Barclays. I think several hundred million dollars 1 billion. So and of course, you were still waiting for the review at that point or is there anything to read into the billion dollars being higher than <unk>.

Speaker Change: $100 million does that maybe the reception of the review could lead to a more prolonged suspension of commercial operations and then just finally the outlook for the EBIT Boston 24, whatever it is a 1.7 or a two part children, it's greater than the $1 3 billion of cash that can be had at year end right.

Mary Teresa Barra: So I'm just curious, as you think about strategy and the position of the company, you haven't been shy from making big changes in the past, like exiting Europe. Can we think about the potential for real shifts in strategy of focus where the highest margin, the highest return is sort of in the business truly, you know, five to 10 years down the line, which might include things like exiting China, which sounds like heresy but might be the best move to make for five years out, maybe rebranding Cruise and really kind of taking a new sort of approach to where the company will land in five to 10 years. It will Hey John.

Speaker Change: I think slide 26, or so so just sort.

Speaker Change: So just the capital raise skincare curious to me about that.

Speaker Change: So Ryan there's a lot in there, but let me first by saying that response from regulators has been positive. So it will continue to have that outrage and build that relationship and be transparent with them you shouldn't read too much into what we said Ah you know shortly thereafter, we learned at the situation. We went in and did a lot of work and I got a I have to give.

Speaker Change: Give us you know our co president Craig Glidden, and mellow al Xiaomi credit for going in and really staying focused on the technology and making sure we keep the very talented.

Mary Teresa Barra: Hey, thanks for the question. And, you know, we continue to evaluate the strategy on a regular basis. You know, we have very robust strategy discussions with our board and with the leadership team. And, you know, as you mentioned, the world is changing quickly, whether it's EVs, whether it's software, autonomy, etc. And we're going to continue to respond to that. I do agree with you that we are doing that from a position of strength.

Speaker Change: Software engineers that are doing incredible work and have allowed us to already you know clocked 5 million miles of driverless driverless smiles. So it was really just going to look a lot of where the opportunity to cut costs came from a change in strategy to really focus on one city to.

Speaker Change: Trade it as opposed to you remember at one point they were talking about 20 cities. This year and so there are a lot of people who had been recently added more from an operational standpoint that we were able to too hot too.

Mary Teresa Barra: And, you know, we're going to evaluate where we have the opportunity to deploy capital and generate an appropriate return. And, like we made the decision for Europe, when we looked at that, what we said actually happened. We said it would be a win-win-win, a win for the Opal team, a win for, at the time, PSA, and a win for General Motors because we participated in the warrants. And we did just that.

Speaker Change: Exit those employees take but clearly our focus on the technology and the way I look at this is we're going to make sure. We do it right from a regulatory or consumer a customer relationship perspective get the technology, where we think it would be and then once we're informed by <unk>.

Mary Teresa Barra: So we're not going to shy away from making tough calls or maybe calls that people wouldn't expect. If we think it's the right thing to do for the business to ensure we're here, we protect our strength in the markets that we have, whether it's North America. You know, I mentioned on the earnings call that in the top quartile, we've been leading that for several years, and now we have profitably taken the most affordable segment. And, you know, we have a strong business in South America and many of our international markets. China, as Paul mentioned, is tremendous changing, not only from a technology point of view but from a competitive point of view. And so we're evaluating China. We think there's a place for us to play.

Speaker Change: It well into city, then we'll have the opportunity to go quickly and scale from there. So don't read anything into the 1 billion. Other than we went in went and did the work and saw the opportunity.

Very helpful. Thank you.

Speaker Change: Thank you. Our next question comes from Dan Levy with Barclays. Your line is open.

Dan Levy: Oh hi.

Good morning, Thanks for taking the questions.

Dan Levy: Two questions on cash one is you're guiding to eight to 10 billion of free cash.

Dan Levy: And that pro forma gets your cash balance on the balance sheet to something like.

Mary Teresa Barra: It is a tremendous growth opportunity if we can do that well. And that's our goal. But nothing is off the table in ensuring that GM has a strong future to generate the right profitability and the right return for our investors. And if I could sneak one follow-up on the plug-in hybrid comment of potentially bringing those here to the US to fill sort of maybe this interim gap, what kind of capacity or volume could you hit there? You know, here in the US, I know the dealers are clamoring for those vehicles.

Dan Levy: <unk> $28 billion to $30 billion.

Dan Levy: The end of 2024.

Dan Levy: What extent are you willing to.

Dan Levy:

Dan Levy: Put forward another share buyback plan.

Dan Levy: Beyond what you had if they if the target is to have cash balance of 20 billion.

Second question is on cruise on cash are there.

Roughly one $3 billion I think that gives you.

Dan Levy: You know a little less than a year of runway on cash so what's the plan on further funding for cruise. Thank you.

Mary Teresa Barra: Yeah, you know, we are going to be bringing those in at a time when we need them from a compliance perspective. This year, we're very focused, and I think as we are able to get the delivery to our dealers, they're going to see the strength of the EV portfolio. So I'll have more to share on the hybrid capacity.

Speaker Change: So on the further funding on cruise I'll take that and I'll have Paul answer excuse me. The other question you know as we get the detailed plan of how we're going to relaunch crews in the roadmap and then we'll evaluate the overall funding needs and we will determine you know is it internal or externally sourced.

Mary Teresa Barra: We'll adjust the capacity because, again, we have the technology, you know, we know the targeted segments that we're going to apply it to, so we'll have the ability to flex and do what we need to from a hybrid perspective. But I think for calendar year 24, EV is our focus, and we think we've got tremendous growth opportunity as we free up getting the availability of the products to customers. Great, thank you very much.

Paul: And then on your on your question on cash I think you know the simple math is correct. We would obviously see a sizeable increase in our cash balance in our capital allocation stance remains the same which is to invest in the business and we've talked about 10 and a half to <unk> 11 $5 billion of Capex. This year, we have been.

Paul: Streamlining that and making that efficient and our priority to drive free cash flow and.

Operator: Thank you. Our next question comes from Ryan Brinkman with J.P. Morgan. Your line is open. Good morning.

And as we look at the balance sheet I think the balance sheet is in really good shape and there's no no change to our stance of you know call it $18 billion or about $20 billion of cash on hand, So you know.

Operator: Thanks for taking my question. And obviously, the 24 outlook is far stronger than investors expected. Now, how much of that higher outlook versus consensus do you think stems from, you know, different industry actors that are a matter of debate, such as expectations for volume or pricing in different markets versus, you know, how much do you think stems from company-specific factors that you would naturally have a better handle on internal to the company, such as lower crew spending or the potential for more structural cost reduction? The magnitude of guidance leads me to suspect you may be So I'm not really sure.

Paul: Clearly, we've demonstrated a renewed commitment and prioritization of returning cash to shareholders and we will maintain that flexibility going forward.

Just to clarify the 18 $20 billion target or was that a floor.

Speaker Change: That's that's kind of in our Florida Slash targeted range, obviously, we've carried quite a bit more than that over the last few years as we dealt with some of the uncertainty, but as we imagine or as we are as we said in November when we announced the share repurchase with a lot of that uncertainty behind us.

Paul A. Jacobson: You know, how are you thinking about how much of your meeting this great guide in 24 will come down to factors under your control versus out of your control? So, Ryan, thanks for the question. I'll take a shot at that.

Speaker Change: Lower capex spending we felt comfortable operating at that lower balance. So 18 to 20 feels very comfortable as a targeted range.

Speaker Change: Great. Thank you.

Paul A. Jacobson: When you look at the macro backdrop, I think we're approaching it pretty consistently with what we have for the last few years. So, we've talked about a 16 million SAR and about 2 to 2.5 percent of sort of total pricing pressure across the board. A lot of it is, I would say, you know, a testament to what we achieved and overcame in 2023 that we don't expect to repeat. Of course, there will be some things that pop up as there are every year, and I think the team has done a good job of knocking those things down and overcoming some of those challenges going forward.

Speaker Change: Thank you. Our next question comes from Emmanuel Rosner with Deutsche Bank. Your line is open.

Emmanuel Rosner: Thank you very much firstly I was hoping to ask you about the.

Emmanuel Rosner: Skill required to achieve the.

Emmanuel Rosner: Profitability goals.

Emmanuel Rosner: So I think when you you know share those goals back in November.

Emmanuel Rosner: And in particular, the 60 point EBIT margin improvement this year, I think 60% of that.

Tim: Tim from scale.

Speaker Change: I'm curious if the 200 to 200000 units you're planning for this year is that is that enough to get you that gilkey. So are you.

Paul A. Jacobson: So, against a macro backdrop that feels a little bit consistent with some conservatism on the pricing side of it, I think a lot of it is in our ability to execute. And, you know, we have had a lot of challenges, as Mary mentioned. I think 23 was a big year of learning for us, but as she talked about with the work that we're doing on the module assembly and where we see the EV ramp, as well as the customer response to the EVs that we're producing, I think this is a year of our execution, and a lot of it is in our control. Okay, great. I just wanted to ask on Cruise too, you know, starting with whether the guided billion dollars of lower spending in 24s versus the 23 full year 2.7 billion figure or maybe the 4Q run rate of 3.2 billion.

Speaker Change: Counting more on like a lower battery cost and maybe a bit of a shift in terms of some of the savings and then similar question on the mid single digit EBIT margin target for next year I think some of it was going to come from scale, what kind of unit volume you need to get the scale.

Speaker Change: Well, you know to get even stronger.

Speaker Change: So good morning, Emmanuel Thanks for the thanks for the questions you know on.

Speaker Change: 2024 numbers I think they're wholly consistent with the 200000 to 300000 range that we've articulated here and as I mentioned earlier.

Earlier in response to a question around Evs.

Speaker Change: The low 200, thousands is kind of what gets us to the point, where we feel comfortable about getting to variable profit positive from there obviously.

Obviously growth is a is a component, but it's a much smaller component of the walk from two.

Paul A. Jacobson: And then what is the response been so far? I realize there hasn't been a lot of time passed, but from the regulators to the recently released comprehensive review, previously, I think we've guided potentially significantly less spending on Cruise, maybe on the business update call, but then followed a day or two later at Barclays by saying several hundred million; now it's a billion. So, of course, you were still waiting for the review at that point.

Speaker Change: 24 to 25 than it is from 23 to 24.

Speaker Change: But.

Speaker Change: It will require some growth we're not going to.

Speaker Change: Commit to that other than just to say you know kind of that that's where we found and we'll see where customer demand is going forward.

Paul A. Jacobson: Is there anything to read into the billion dollars being higher than several hundred million such that maybe the reception of the review could lead to a more prolonged suspension of commercial operations? And then just finally, you know, the outlook for EBIT Boston 24, whatever it is, 1.7 or 2.2 billion, it's greater than the 1.3 billion of cash that Cruise had at year end, right? On, I think, slide 26 or so.

Speaker Change: The other point, if I didn't make it earlier on the lower battery raw material costs keep in mind that we don't start to see meaningful benefit from that until we get to the middle part of the year because a lot of the cells that we have in inventory were built with higher raw materials costs. So while we're producing cells.

Speaker Change: Today, we're going first in first out on the on the cells. So we have a little bit of a lag before we realize that that lower bought battery raw material cost of about $4000. A vehicle that we articulated we'll also have some and utilization benefits in 2025 since we're not getting the full benefit here in 'twenty four I hope that's helpful.

Mary Teresa Barra: So, just a capital raise. So Ryan, there's a lot in there, but let me first say the response from regulators has been positive. So, and we'll continue to have that outreach and build that relationship and be transparent with them. You shouldn't read too much into what we said, you know, shortly thereafter, we learned of the situation.

Speaker Change: Yeah.

Speaker Change: Yeah very helpful. Thank you.

Speaker Change: One very quick follow up on crews.

Mary Teresa Barra: We went in and did a lot of work, and I have to give our co-presidents, Craig Glidden and Mo El-Shawamy, credit for going in and really staying focused on the technology, making sure we keep the very talented software engineers that are, you know, doing incredible work and have allowed us to already clock 5 million miles of driverless miles. So, it was really just going in, look, a lot of where the opportunity to cut costs came from the change in strategy to really focus on one city to demonstrate it as opposed to, you remember, at one point, they were talking about 20 cities this year. And so, there were a lot of people who had recently been added from an operational standpoint that we were able to, you know, exit those employees and clearly focus on the technology.

Speaker Change: The spending in the $1 billion lower.

Speaker Change: For this year is that too that'd be considered sort of like.

Speaker Change: A new run rate for spending or is it sort of like a temporary situation as a result of some of the policy currently.

Speaker Change: And rollout.

Speaker Change: I mean, you'll I would consider it right now it's our best estimate for this year, obviously as we develop a much more detailed plan that'll inform over the next couple of years, what the spending needs to be some more to come.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you. Our next question comes from Chris Mcnally with Evercore. Your line is open.

Chris Mcnally: Thanks, Tim Great numbers, maybe I just wanted to shift gears and talk maybe advanced Adas in software it really quickly.

Chris Mcnally: Super Cruise you introduced in 2018.

Chris Mcnally: Without too many usage numbers, but I think in the middle of that here you talked about almost 100 million miles cumulatively, even if we double that for time passage. It's not many vehicles you know tens of thousands we also read ultra cruise has now been installed.

Mary Teresa Barra: And the way I look at this is we're going to make sure we do it right from a regulatory, a consumer, and a customer relationship perspective, get the technology where we think it would be. And then, you know, once we're informed by doing it well in a city, then we'll have the opportunity to go quickly and scale from there. So, don't read anything into the billion other than we went and did the work and saw the opportunity. Very helpful.

Chris Mcnally: Just high level isn't this a very slow pace for level, two plus product Tesla has been providing for a decade charging anywhere from six to 12000 for top versions.

Chris Mcnally: I guess the question is isn't this becoming a big missed opportunity for GM, but at this point for additional revenue, even even slide seven I think only shows one of the ice launches the traverse highlighting super cruise. So just a broad update when we could start to see you know what it's a technology probably everyone wants at more severe.

Operator: Our next question comes from Dan Levy with Barclays. Your line is open. Hi, good morning.

Operator: Thanks for taking the questions. I have two questions on cash. One is, you're guiding to $8 to $10 billion of free cash, and that pro forma gets your cash balance on the balance sheet to something like, you know, $28 to $30 billion at the end of 2024. To what extent are you willing to put forward another share buyback plan beyond what you have if the target is to have a cash balance of $20 billion? And the second question is about Cruz on cash.

Chris Mcnally: Mass deployment scale across your fleet.

Speaker Change: Yeah, Chris I. Appreciate the question I think back in the 18 timeframe I think we should have in hindsight put it across the portfolio much more quickly. It's on a number of models I don't have it off the top of my head Ashish, we can provide that but it's on a number of models across the portfolio right now as we launch.

Speaker Change: The traverse this year will be added to the traverse again, we're seeing extremely strong response from customers, where you know I think it's over 80, 85% of customers once they experience the technology I'll say they would never they would not want a car without it or they would strongly prefer it on their vehicle, which you know in my experience as a pretty high interest rate for a single technology.

Paul A. Jacobson: They're at roughly $1.3 billion. I think that gives you, you know, a little less than a year of runway on cash. So what's the plan on further funding for Cruz?

Mary Teresa Barra: So on further funding for CRUISE, I'll take that, and I'll have Paul answer the other question. You know, as we get the detailed plan of how we're going to relaunch CRUISE and the roadmap, then we'll evaluate the overall funding needs, and we'll determine, you know, whether it is internal or externally sourced. And Dan, on your question on cash, I think the simple math is correct.

Speaker Change: So we're committed we're going to continue to develop and we have been along the way, adding more roads and adding more capability, whether it's lane change whether it's trailing so there's a robust plan to continue to improve improved super cruise and we'll stay on that and you know we are seeing that the profitability benefits and the more vehicles.

Speaker Change: To your point, we get it on the better it will be and we're committed to do that and frankly have done quite a bit already and we can we can provide that.

Paul A. Jacobson: We would obviously see a sizable increase in our cash balance. However, our capital allocation stance remains the same, which is to invest in the business, and we've talked about $10.5 to $11.5 billion of CapEx this year. We have been streamlining that and making that efficient and a priority to drive free cash flow. And as we look at the balance sheet, I think the balance sheet is in really good shape, and there's no change to our stance of, you know, call it $18 billion or about $20 billion of cash on hand. So, you know, clearly, we've demonstrated a renewed commitment and prioritization of returning cash to shareholders, and we'll maintain that flexibility going forward. Just to clarify, the $18-20 billion, is that a target or is that a floor?

No that's right.

And just in terms of like the evolution. The speed is it is it a technology bottleneck or was it more just marketing, meaning like you've thought about it as a premium product charges sort of a premium rate compared to other GM add ons or is it just like.

Speaker Change: Like you said, there's a cost to putting it on every every vehicle on you know the argue knee so that could increase but it would obviously be an engineering cost to get it on more vehicles.

Speaker Change: Yeah, No we are committed to get it out in many vehicles as possible and in some cases, we had planned to make it standard the semiconductor shortage.

Speaker Change: Lotus down on that because it was a choice of building the vehicle at all or waiting to build it with Super cruise and so we are very committed to getting across many vehicles are we've dramatically taken the costs down on the technology. So it's a it's a really good value and you know and in my opinion, we're deploying it as quickly as we can and it's it's.

Paul A. Jacobson: That's kind of been our four-slash-targeted range. Obviously, we've carried quite a bit more than that over the last few years as we dealt with some of the uncertainty, but as we said in November when we announced the share repurchase, with a lot of that uncertainty behind us, lower CapEx spending, we felt comfortable operating at that lower balance. So 18 to 20 feels very comfortable as a targeted range.

Speaker Change: Really just with it there is engineering recall required and some sensors required when you add it to <unk>.

Speaker Change: New vehicle, but we're doing that in a very cadence, but as quick as possible fashion.

Paul A. Jacobson: Great, thank you. Thank you. Our next question comes from Emmanuel Rosner with Deutsche Bank. Your line is open.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you. Our last question comes from the line of Tom Narayan with RBC. Your line is open.

Operator: Thank you very much. First of all, I was hoping to ask you about the scale required to achieve the PV profitability goals. So I think when you, you know, share those goals back in November, you know, in particular, the 60 point EBIT margin improvement this year, I think 60% of that, I'm curious if the 200,000 to 200,000 units you're planning for this year are enough to get you that scale piece, or are you counting more on like a lower battery cost and maybe a bit of a shift in terms of some of the savings? And then a I think some of it was going to come from scale. What kind of unit volume do you need to get the scale piece to get you started?

Tom Narayan: Hi, Thanks for taking my question.

Tom Narayan: Wanted to kind of make sure I got all the all the good points here on the bridge from 2023 to 2024, sorry boring question.

Tom Narayan: You have I guess price down two to two 5% 200 million cost savings cruise down 1 billion higher labor one three.

Tom Narayan: Three items, not quantified where market share gains you guys called out in the slide EBIT margin improvement and the third is lower mix. Just curious if we could get a sense of order of magnitude for those three last buckets.

Tom Narayan: Tom.

Tom Narayan: Suggests that we can take that offline.

Tom Narayan: <unk> worked through the any modeling details, but you know at the end of the day clearly you know the commercial market as as we talked about we expect to be relatively stable and and pricing down two to two two to two and a half I'm not going to get into the specifics about how were thinking about market share gains.

Paul A. Jacobson: So, good morning, Emmanuel. Thanks for the questions. You know, on the 2024 numbers, I think they're wholly consistent with the 200,000 to 300,000 range that we've articulated here. And as I mentioned earlier in response to a question about EVs, the low 200,000s is kind of what gets us to the point where we feel comfortable about getting the variable profit positive from there. Obviously, growth is a component, but it's a much smaller component of the walk from 2024 to 2025 than it is from 2023 to 2024. But you know, it'll require some growth.

Tom Narayan: Other than to say fairly consistent about what our what we've been doing for the last for the last few years going forward and then on on Evs.

Tom Narayan: A lot of that where we will continue to talk about as we come to sort of later investor day in subsequent calls going forward.

Tom Narayan: We've given good detail on the on the overall walk on it for on a vehicle program level.

Okay sure and as a quick follow up typically win.

Tom Narayan: If an OEM, let's say.

Paul A. Jacobson: We're not going to commit to that other than just to say, you know, kind of that's where we stand, and we'll see where customer demand is going forward. And on the other point, if I didn't make it earlier on the lower battery raw material costs, keep in mind that we don't start to see meaningful benefits from that until we get to the middle part of the year because a lot of the cells that we have in inventory were built with higher raw material costs. So while we're producing cells today, we're going first in, first out on the cells.

Tom Narayan: Changes production levels. So in this case EV, if you moved to plug in hybrids or what have you. They are.

Tom Narayan: Monies that get paid to suppliers right for that let's say they have to cut production of EV components, just curious if those supplier concessions.

If you were to you know, let's say reduce EV production or shift of plug in hybrids with are those something that you've been visited in the in the 2020 for guidance.

Speaker Change: So Tom I, you know I think our we we've got great relationships with our suppliers and a team that works very very closely with them are they have been I would say very patient with us over the last few years, because we've had a lot of volatility and and in those situations.

Paul A. Jacobson: So we have a little bit of a lag before we realize that. That lower battery raw material cost of about $4,000 per vehicle that we articulated will also have some annualization benefits in 2025 since we're not getting the full benefit here in 2024. I hope that's helpful. Yeah, very helpful. Thank you.

Speaker Change: <unk>, where are we we need to to help we've been willing to do that going forward and we always look at both efficiencies and any challenges in our in our annual budget process and this year is no different.

Mary Teresa Barra: The spending at a billion dollars lower, you know, for this year, can that be considered sort of like a new run rate for spending? Or is it sort of like a temporary situation as a result of some of the pause currently in the testing and rollout? Emmanuel, I would consider it right now; it's our best estimate for this year. Obviously, as we develop a much more detailed plan that will inform us over the next couple years what the spending needs to be, so more to come. Thank you. Thank you. Our next question comes from Chris McNally with Evercore. Your line is open.

Tom Narayan: Okay. Thank you.

Tom Narayan: Thank you I'd now like to turn the call over to Mary Barra for her closing remarks.

Mary Teresa Barra: Thank you very much and thanks, everybody for your questions I'd like to share just a couple of thoughts before we close.

Mary Teresa Barra: Sunday mentally we believe we are well positioned to have a strong year. Thanks to our success in high margin and growing ice segments are expanding E V portfolio, our cost discipline and our continuous improvements to design engineering supply chain manufacturing and marketing process improvements. In addition, we are prioritizing the return of cash.

Operator: Thanks, team. Great numbers. Mary, I just wanted to shift gears and talk maybe advanced data and software really quickly. SuperCruise, which you introduced in 2018, you don't put out too many usage numbers, but I think in the middle of last year, you talked about, you know, almost 100 million miles cumulatively. Even if we double that for time passage, it's not many vehicles, you know, tens of thousands. We also read UltraCruise has now been installed. High level, isn't this a very slow pace for, you know, a level two plus product?

To our shareholders on a consistent basis as we execute the plan.

We know we must execute in every part of the business in 'twenty for not just ice and I can assure you we will.

Mary Teresa Barra: For your continued support and for joining today's call and please stay safe.

Speaker Change: That concludes the conference call for today, Thank you for joining.

Mary Teresa Barra: Tesla's been providing for a decade, charging anywhere from $6,000 to $12,000 for top versions. I guess the question is, isn't this becoming a big missed opportunity for GM at this point for additional revenue? Even slide seven, I think only shows one of the ICE launches, the Traverse, highlighting SuperCruise.

Mary Teresa Barra: So just a broad update on when we can start to see what is probably a technology everyone wants at more sort of mass deployment scale across your fleet. Yeah, Chris, I appreciate the question. You know, I think back on the 18 timeframe, I think we should have, in hindsight, put it across the portfolio much more quickly. It's on a number of models, I don't have it off the top of my head, Ashish, but we can provide that.

Mary Teresa Barra: But it's on a number of models across the portfolio right now, and as we launch the Traverse this year, it will be added to the Traverse. Again, we're seeing extremely strong responses from customers where, you know, I think 80-85% of customers, once they experience the technology, say they would never want a car without it, or they would strongly prefer it on their vehicle, which, you know, in my experience is a pretty high interest rate for a single technology. So we're committed, we're going to continue to develop, and we have been along the way, adding more roads and adding more capability, whether it's lane changing, whether it's trailering. So there's a robust plan to continue to improve and improve Super Cruise. And we'll stay on that.

Mary Teresa Barra: And you know, we are seeing the profitability benefits, and the more vehicles to your point we get it on, the better it will be. And we're committed to doing that, and, frankly, have done quite a bit already. And we can. We can provide that. No, that's right.

Mary Teresa Barra: And just in terms of like, you know, the evolution, the speed, is it, is it a technology bottleneck? Or is it more just marketing, meaning that you think of it as a premium product, and you charge a sort of a premium rate compared to, you know, other GM add-ons? Or is it just like, like you said, there's a cost to putting it on every, every vehicle, the RD&E. So, you know, that could increase, but you know, it would obviously be an engineering cost to get it on more vehicles. Yeah, no; we are committed to getting it on as many vehicles as possible. In some cases, we had planned to make it standard. The semiconductor shortage kind of slowed us down on that because it was a choice of building the vehicle at all or waiting to build it with Super Cruise.

Mary Teresa Barra: So, we are very committed to getting it across many vehicles. We've dramatically taken the cost down on the technology. So, it's really good value and, you know, in my opinion, we're deploying it as quickly as we can, and it's really just with some engineering required and some sensors required when you add it to a new vehicle, but we're doing that in a very slow but as quick as possible fashion. Thanks so much.

Operator: Thank you. Our last question comes from the line of Tom Narayan with RBC. Your line is open.

Operator: Oh, yeah, thanks for taking the question. Just wanted to kind of make sure I got all the good points here on the bridge 2023 to 2024. Sorry, boring question.

Operator: You have, I guess, price down two to two and a half percent, $200 million cost savings, cruise down $1 billion, higher labor $1.3. Three items not quantified were market share gains, which you guys called out in the slide, EV margin improvement, and the third is lower mix. Just curious if we could get a sense of the order of magnitude for those three last buckets. Tom, I'll suggest that we take that offline, work through any modeling details, but at the end of the day, clearly, the commercial market, as we talked about, we expect to be relatively stable and prices down two to two and a half. Not going to get into the specifics about how we're thinking about market share gains other than to say fairly consistent with what we've been doing for the last few years going forward.

Operator: And then on EVs, a lot of that we will continue to talk about as we come to sort of later investor day and subsequent calls going forward. But I think we've given good detail on the overall progress on a vehicle program level. Okay, sure. And as a quick follow-up, typically, when an OEM, let's say, you know, changes production levels, so in this case, EV, you know, if you move to plug-in hybrids, or what have you, there are monies that get paid to suppliers, right, for that, let's say they have to cut production of EV components.

Paul A. Jacobson: Just curious if those supplier concessions, if you were to, you know, let's say, reduce EV production or shift to plug-in hybrids, would, are those something that you've envisioned in the 2024 guidance? So, Tom, I think we've got great relationships with our suppliers and a team that works very, very closely with them. They have been, I would say, very patient with us over the last few years because we've had a lot of volatility. And in those situations where we need to help, we've been willing to do that going forward. We always look at both efficiencies and any challenges in our annual budget process, and this year is no different.

Paul A. Jacobson: OK. Thank you. I'd now like to turn the call over to Mary Barra for her closing remarks. Thank you very much and thank everybody for your questions. I'd like to share just a couple thoughts before we close. Fundamentally, we believe we are well-positioned to have a strong year thanks to our success in high-margin and growing ICE segments, our expanding EV portfolio, our cost discipline, and our continuous improvements in design, engineering, supply chain, manufacturing, and marketing process improvements. In addition, we are prioritizing the return of cash to our shareholders on a consistent basis as we execute the plan. We know we must execute in every part of the business in 24, not just ICE, and I can assure you we will. Thank you for your continued support and for joining today's call, and please stay safe. That concludes the conference call for today. Thank you for joining us.