Q1 2024 General Motors Co Earnings Call

Okay.

Operator: Good morning, and welcome to the General Motors Company first quarter 2024 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, press star than one on your telephone keypad to join the queue. To withdraw your question, press star than two. As a reminder, this conference call is being recorded on Tuesday, April 23, 2024. I would now like to turn the call over to Ashish Kohli, GM's Vice President of Investor Relations.

Speaker Change: Good morning, and welcome to the General Motors Company first quarter 2024 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.

Speaker Change: We are asking analysts to limit their questions to one and a brief follow up to ask a question 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 April 23rd 2024, I would now like to turn the conference over to you.

Speaker Change: Sheesh, Cali, Gm's, Vice President of Investor Relations.

Ashish Kohli: Thanks and good morning, everyone. We appreciate you joining us as we review GM's financial results for the first quarter of 2024. Our conference call materials were issued this morning and are available on GM's Investor Relations website. We are also broadcasting this call via webcast. Joining us today are Mary Barra, GM's Chair and CEO, and Paul Jacobson, GM's Executive Vice President and CFO. Dan Burse, President and CEO of GM Financial, will also be joining us for the Q&A portion of the call.

Cali: Thanks, and good morning, everyone. We appreciate you joining us as we review Gm's financial results for the first quarter of 2024.

Our conference call materials were issued this morning and are available on Gms Investor Relations website.

Cali: We are also broadcasting this call via webcast.

Cali: Joining us today are Mary Barra, Gm's chair, and CEO, and Paul Jacobson, Gm's Executive Vice President and CFO.

Cali: Dan Berger, President and CEO of GM financial will also be joining us for the Q&A portion of the call.

Ashish Kohli: On today's call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause their actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the Safe Harbor Statement 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.

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

Cali: Statements are subject to risks and uncertainties that could cause our actual results to differ materially Heathrow.

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

Cali: Please review the Safe Harbor statement on the first page of our presentation at the content of our call will be governed by this language.

Cali: And with that I'm delighted to turn the call over to Mary.

Mary T. Barra: Thanks Ashish, and good morning everyone. In January, we outlined clear priorities for 2024 that are designed to build on our strengths and learn from the challenges we faced in 2023. I'm very pleased to share that the team is executing well against all of them. Around the world, we are very focused on growth and profitability, which means taking full advantage of our winning product portfolio to grow share without chasing unprofitable business. In North America, the fundamental strengths of Chevrolet, Buick, GMC, and Cadillac truly stand out.

Mary T. Barra: Thanks, Ashish and good morning, everyone. In January we outlined clear priorities for 2024 that are designed to build on our strength and learn from the challenges we faced in 2023.

Mary T. Barra: I'm very pleased to share that the team is executing well against all of them around the world. We are very focused on growth and profitability, which means taking full advantage of our winning product portfolio to grow share without chasing unprofitable business.

Mary T. Barra: In North America, the fundamental strengths of Chevrolet Buick, GMC and Cadillac truly standout the team delivered a 10.6% EBIT margin in the quarter. Thanks to our industry, leading full size pickups. The momentum we're building in midsize pickups. The growth we are seeing in our SUV business profit improvement in our <unk>.

Mary T. Barra: The team delivered a 10.6% EBIT margin in the quarter thanks to our industry-leading full-size pickups, the momentum we're building in midsize pickups, the growth we are seeing in our SUV business, profit improvement in our EV portfolio, and our overall operating discipline. We again grew retail shares and market share in the U.S. during the quarter with incentives that remained well below the industry average, especially in our truck business.

Mary T. Barra: E V portfolio and our overall operating discipline.

Mary T. Barra: We again grew retail shares in market share in the U S. During the quarter with incentives that remained well below the industry average, especially at our truck business.

Mary T. Barra: We grew our combined Chevrolet and GMC full-size pickup sales by 3% year over year and grew our retail market share 1.8 points to 43.8% with much lower incentives than our closest competitors, whose sales were down. In March, we doubled sales of the GMC Canyon year over year, and the Chevrolet Colorado was the fastest growing truck in the midsize pickup segment, thanks to its purity of function, simple elegance in execution, and value. Those are Motor Trends words, not mine.

Mary T. Barra: We grew our combined Chevrolet and GMC full size pickup sales by 3% year over year and grew our retail market share one eight points to 43, 8% with much lower incentives and our closest competitors, whose sales were down.

Mary T. Barra: In March we doubled sales at the GMC Canyon year over year, and the Chevrolet Colorado was the fastest growing truck and the midsize pickup segment. Thanks to its purity of function simple elegance and execution and value those.

Mary T. Barra: Those are motor trends words not mine we.

Mary T. Barra: We also continue to gain market share and grow EBIT with our new small SUVs, including the Chevrolet Trax and the Buick Invista. These vehicles are helping us win new customers, and we will continue to excel at customer retention. During the quarter, F&P Global Mobility announced that GM has now had the highest loyalty of any OEM for nine consecutive years. That's a powerful competitive advantage.

Mary T. Barra: We also continue to gain market share and grow EBIT with our new small suvs, including the Chevrolet Trax and the Buick and desktop.

Mary T. Barra: These vehicles are helping us win new customers and we will continue to excel at customer retention.

Mary T. Barra: During the quarter S&P Global mobility announced that Jim has now had the highest loyalty of any OEM for nine consecutive years, that's a powerful competitive advantage.

Mary T. Barra: In our EV business, we are building momentum in production and profitability. For example, we have increased battery module production by 300% over the last six months. Quality is very good and continuing to improve. And the installation and validation of our new high-speed module assembly lines are on track. We are projecting to double our current capacity by the end of the summer.

Mary T. Barra: And our EV business, we are building momentum in production and profitability.

Mary T. Barra: For example, we have increased battery module production by 300% over the last six months quality is very good and continuing to improve and the installation and validation of our new high speed module Assembly lines is on track.

Mary T. Barra: We are projecting to double our current capacity by the end of the summer.

Mary T. Barra: EV production rose sharply during the quarter, and our dealers translated that into a 21% year-over-year increase in EV retail customer delivery. For example, the Cadillac Lyric outsold all of the EVs from European luxury brands in the first quarter, and since mid-March, we are now delivering Chevrolet Blazer EVs with updated and improved software. All of our product programs are benefiting from the end-to-end improvements we've made in software, including the increased rigor we have instilled in our quality and validation processes.

Mary T. Barra: EV production rose sharply during the quarter and our dealers translated that into a 21% year over year increase in EV retail customer deliveries for example, the Cadillac lyric outsold all of the E. BS from European luxury brands in the first quarter and since mid March we are now delivering Chevrolet blazer Evs with updated it.

Mary T. Barra: Improved software.

Mary T. Barra: All of our product programs are benefiting from the end to end improvements we've made in software, including the increased rigor we have instilled in our quality and validation processes.

Mary T. Barra: More importantly, the talented executives and engineers we've hired from the tech industry are raising the bar for software design and execution, which will help us truly differentiate our customer experience and the suite of software-driven products and services we offer. We're also making progress at CRUISE. The team is back on the road in Phoenix, updating mapping and gathering more road information. This is a critical step for validating our improved self-driving system and building upon the more than 5 million driverless miles we've logged before the pause. We are engaging frequently with regulators and stakeholders and building trust as we regain momentum. Safety will remain front and center, and will guide our progress.

Mary T. Barra: More importantly, the talented executives and engineers, we've hired from the tech industry, our raising the bar for software design and execution, which will help us truly differentiate our customer experience and the suite of software driven products and services we offer.

Mary T. Barra: We're also making progress at cruise the team is back on the road in Phoenix updating mapping gathering more road information. This is a critical step for validating our improved self driving system and building upon the more than 5 million driverless smiles, we blogged before the pause.

Mary T. Barra: We are engaging frequently with regulators and stakeholders and building trust has regained momentum safety will remain front and center and will guide our progress.

Mary T. Barra: I am pleased with our ICE performance, our progress in EV execution and growth, our new software organization's performance, and the steps we're taking to regain momentum at CRU. In addition, I'm very proud of the GM team and all of our stakeholders for really leaning in to keep our momentum going. Their commitment and tenacity helped give us the confidence to raise our full-year 2024 EBIT, EPS, and automotive adjusted free cash flow guidance.

Mary T. Barra: I am pleased with our ice performance, our progress in E b execution and growth.

Mary T. Barra: Our new software organizations performance and the steps, we're taking to regain momentum at cruise.

Mary T. Barra: In addition, I'm very proud of the G M team and all of our stakeholders for really leaning in to keep our momentum going.

Mary T. Barra: Their commitment and tenacity helped give us the confidence to raise our full year 'twenty 'twenty, four EBIT EPS and automotive adjusted free cash flow guidance.

Mary T. Barra: In our ICE business, the redesigned Chevrolet Traverse, GMC Acadia, and Chevrolet Equinox are all launching in high-volume segments starting this quarter. So are the Chevrolet Spin and the S10 in South America, and they have higher margins than the outgoing models. Then, this summer, the stunning new Buick Enclave will arrive. It's the first Enclave to offer SuperCrew.

And our ice business the redesigned Chevrolet traverse GMC Acadia and Chevrolet Equinox are all launching in high volume segments. Starting this quarter. So are the Chevrolet spin and the S 10 in South America, and they have higher margins than the outgoing models.

Mary T. Barra: This summer the stunning new Buick enclave will arrived it's the first enclave to offer Super cruise later in the year, we will make important design and technology upgrades to our best selling GMC, Yukon Chevrolet Tahoe, and Chevrolet suburban full size Suvs.

Mary T. Barra: Later in the year, we will make important design and technology upgrades to our best-selling GMC Yukon, Chevrolet Tahoe, and Chevrolet Suburban full-size SUVs. They include redesigned tech-focused interiors, safety and security features that include a suite of connected cameras, ride and handling improvements, styling enhancements, and more. Mark and our performance team also have the unbelievable Corvette ZR1, and we can't wait to put customers behind the wheel. And we've already begun installing equipment at our Fort Wayne assembly plant to produce our next generation full-size ice pickup.

They include redesign Tech focus interiors safety and security features that include a suite of connected cameras ride and handling improvements styling enhancements and more.

Mary T. Barra: Mark and our performance team also have the unbelievable corvette Z R. One coming and we can't wait to put customers behind the wheel.

Mary T. Barra: And we've already begun installing equipment at our Fort Wayne Assembly plant to produce our next generation full size ice pick ups.

Mary T. Barra: In our EV business, the ultimate sales plan in Spring Hill is shipping sales and scaling production through the year. The Chevrolet Equinox EV will arrive in showrooms this quarter, and we're very excited because it will be the most affordable long-range EV in the market. It will also offer SuperCruise, like all of our Chevrolet, GMC, and Cadillac EVs on the Altium platform. We will then introduce more affordable trim series for the Chevrolet Equinox EV, the Blazer EV, and the Silverado EV in the second half of the year, which will help grow volume and share. Also, in the second half of the year, Cadillac will expand its EV lineup to include the Optique and the Escalade IQ.

Mary T. Barra: And our EV business, the Altium cell plant in spring Hill is shipping cells and scaling production through the year.

Mary T. Barra: The Chevrolet Equinox E V will arrive in showrooms this quarter and we're very excited because it will be the most affordable long range E V in the market.

Mary T. Barra: It will also offer super cruise like all of our Chevrolet GMC and Cadillac E vs on the Altium platform.

Mary T. Barra: We'll then introduce more affordable trim series for the Chevrolet Equinox EV, the blazer EV and the Silverado E. B in the second half of the year, which will help grow volume and share.

Mary T. Barra: Also in the second half of the year Cadillac will expand its E. V lineup to include the uptick and the escalator IQ. This is important because EV adoption and luxury segments is higher and more resilient than in the broader market.

Mary T. Barra: This is important because EV adoption in the luxury segments is higher and more resilient than in the broader market. Two of our most highly anticipated launches are the GMC Sierra EV Denali and the Chevrolet Silverado EV RST. They are best in class in ways that truly matter to truck customers. For example, by optimizing the battery, aerodynamics, and other systems, we were able to increase the range of the RST and the Denali by 10% to an estimated 440 miles, which is about 40 miles better than the median range of ICE vehicles on the road today.

Mary T. Barra: Two of our most highly anticipated launches or the GMC Sierra E V Denali and the Chevrolet Silverado E. B R. S T.

Mary T. Barra: Our best in class in ways that truly matter to truck customers.

Mary T. Barra: Optimizing the battery aerodynamics at other systems, we were able to increase the range of the R. S T and the Denali by 10% to an estimated 440 miles, which is about 40 miles better than the median range of ice vehicles on the road today.

Mary T. Barra: No EV pickup on the road today even comes close to that, and it's possible to go even farther. A few weeks ago, two road testers took the RST on a drive from Las Vegas to Phoenix, and they drove it like customers do, on paved and gravel roads, at freeway speeds, at different temperatures, and different elevations. In the end, they managed to travel 460 miles on a single charge.

Mary T. Barra: No he'd be pick up on the road today, even comes close and it's possible to go even farther a few weeks ago to road testers took the RST on a drive from Las Vegas to Phoenix and they drove it like customers do on paved and gravel roads at freeway speeds at different temperatures and different elevations at the end they managed to travel.

Mary T. Barra: 460 miles on a single charge.

Mary T. Barra: It's the same story for towing. One journalist drove a Silverado EV work truck and three competing battery electric trucks on a 500 mile trip over the Rocky Mountains while towing trailers. It wasn't even a competition.

Mary T. Barra: It's the same story for towing one journalist drove a silverado EV work truck and three competing battery electric trucks on a 500 mile trip over the Rocky mountains, while towing trailers. It wasn't even a competition the silverado it'd be stopped once to charge. While every other truck had to stop four to five times.

Mary T. Barra: The Silverado EV stopped once to charge, while every other truck had to stop four to five times. Chevrolet and GMC are also the only pick-up brands that allow drivers to tow while using Super Cruise, our hands-free driving technology. This is just one of the several features that uniquely differentiates our product. This is exactly the kind of design and engineering functionality that excites people, motivates them, and turns them into customers. It's the same formula that Chevrolet and GMC have followed with ICE trucks, and those results speak for themselves.

Mary T. Barra: Chevrolet and GMC are also the only pick up brands that allow drivers to tow while using super cruise are hands free driving technology. That's just one of the several features that uniquely differentiate our products.

Mary T. Barra: This is exactly the kind of design and engineering functionality that excites people motivates them and turns them into customers. It's the same formula for Chevrolet and GMC have followed with ice trucks and those results speak for themselves.

Mary T. Barra: Based on the feedback we're hearing from customers and dealers, and the early sales momentum we are seeing, we're confident that continuing to scale EV production is the right move. We know that transparency matters in every transformation, so Paul and I will give you regular updates throughout the year, including at our Investor Day we're planning for this fall, as we achieve our EV production, sales, and profitability milestones. All of these great ICE and EV products were made possible by the investments we made to drive transformation and growth.

Mary T. Barra: Based on the feedback we're hearing from customers and dealers that really sales momentum. We are seeing we're confident that continuing to scale EV production is the right move.

Mary T. Barra: No that transparency matters in every transformation, so Paul and I will give you regular updates throughout the year, including at our Investor Day, We're planning for this fall as we achieve our EV production sales and profitability milestones all of these great ice and EV products were made possible by the investments we made to drive transformation and growth.

Mary T. Barra: As a result, our spending was above historic levels for several years. Now that the foundation is largely built and we're starting to see results, our focus has turned back to driving free cash flow through enhanced profitability and capital discipline. Finding ways to spend less for the same results and with an unwavering focus on the customer. You're already seeing some examples of this. Our Winning with Simplicity Discipline is a great example of how we're improving capital efficiency and lowering costs. The next generation Ultium-based Chevrolet Bolt EV is another. It's a profitable and capital-efficient program that will deliver one of the most affordable electric vehicles around when it arrives in late 2025.

Mary T. Barra: As a result, our spending was above historic levels for several years now that the foundation is largely built and we're starting to see results. Our focus has turned back to driving free cash flow through enhanced profitability and capital discipline finding ways to spend less for the same results and with an unwavering focus on the customer.

Mary T. Barra: You're already seeing some examples of this are.

Our winning with simplicity discipline is a great example of how we're improving capital efficiency and lowering costs. The next generation LTE based Chevrolet bolt EV is another it's a profitable and capital efficient program that will deliver one of the most affordable electric vehicles around when it arrives in late 2025.

Mary T. Barra: There will be many more examples as we move forward. With that said, I'd now like to turn the call over to Paul to take you through our results and our new hire guidance for the calendar year. Thank you, Mary.

Mary T. Barra: There will be many more examples as we move forward.

Mary T. Barra: With that said I'd now like to turn the call over to Paul to take you through our results and our new higher guidance for the calendar year.

Paul A. Jacobson: Thank you, Mary, and I appreciate you all joining us this morning. We're off to a good start to the year, and I'd like to thank our team for all their hard work in helping deliver another strong set of financial results. We experienced consistent pricing trends during the quarter below the two to two and a half percent headwind we built into our full-year guide. For Q1, pricing was down only about $200 million year over year, driven by demand for our products and a disciplined go-to-market strategy that prioritizes profitability and margin.

Paul A. Jacobson: Thank you Mary and I appreciate you all joining us this morning.

Paul A. Jacobson: We're off to a good start to the year and I'd like to thank our team for all their hard work in helping deliver another strong set of financial results.

Paul A. Jacobson: We experienced consistent pricing trends during the quarter below the two to two and a half per cent headwind, we built into our full year guidance for Q1 pricing was down only about $200 million year over year, driven by demand for our products in a disciplined go to market strategy that prioritizes profitability and margins and so.

Paul A. Jacobson: And so far in April, we've seen pricing remain relatively consistent. That said, our comparisons get tougher as we lap price increases taken in Q2 of last year. The U.S. retail industry experienced a slight mix shift away from the full-size truck segment during the quarter. However, we increased our volume and share with lower incentives than our competitors, which speaks to our strong truck franchises and our customer loyalty. Retail sales were up 6%, while fleet sales decreased more than 20%, driven by two main factors.

Paul A. Jacobson: So far in April we've seen pricing remained relatively consistent but that said our comparisons get tougher as we lap price increases taken in Q2 of last year. The U S retail industry experienced a slight mix shift away from the full size truck segment. During the quarter. However, we increased our volume and share with lower incentives and our competitors.

Paul A. Jacobson: Which speaks to our strong truck franchises and our customer loyalty.

Retail sales were up 6%, while fleet sales decreased more than 20% driven by two main factors first we encountered some production constraints impacting the timing of fleet deliveries on our commercial van and midsize pickups, we expect to recover most of this volume in the second half of the year second we.

Paul A. Jacobson: First, we encountered some production constraints impacting the timing of fleet deliveries on our commercial van and midsize pickups. We expect to recover most of this volume in the second half of the year. Second, we made the strategic decision to produce more retail full-size SUVs compared to last year to satisfy our strong customer demand. Retail sales of our full-size SUVs have a higher trim mix that earns us more revenue per vehicle.

Paul A. Jacobson: Made the strategic decision to produce more retail full size Suvs compared to last year to satisfy our strong customer demand.

Paul A. Jacobson: Retail sales on a full size Suvs have a higher trim mix that earned us more revenue per vehicle.

Paul A. Jacobson: We are committed to growing our strong and profitable fleet business, but we'll continue to balance fleet and retail customer demands with a focus on profitability. We generated healthy cash flow during the quarter, helping support $600 million of year-to-date open market stock repurchases, retiring another 14 million shares since the beginning of the year. We now have approximately $800 million remaining in our existing share repurchase authorization. In addition, we completed the first tranche of the $10 billion ASR last fall, retiring 4 million shares in Q1.

Paul A. Jacobson: We are committed to growing our strong and profitable fleet business, but we'll continue to balance fleet and retail customer demands with a focus on profitability.

Paul A. Jacobson: We generated healthy cash flow during the quarter, helping support $600 million of year to date open market stock repurchases incremental to the ongoing ASR retiring another 14 million shares since the beginning of the year. We now have approximately $800 million remaining in our existing share repurchase.

Paul A. Jacobson: This authorization in.

Paul A. Jacobson: In addition, we completed the first tranche of the $10 billion ASR last fall retiring 4 million shares in Q1, our fully diluted share count at the end of the quarter was 1.16 billion down 17% from where we were just one year ago.

Paul A. Jacobson: Our fully diluted share count at the end of the quarter was $1.16 billion, down 17% from where we were just one year ago. Given the strong momentum we've seen thus far and our confidence in the 2024 outlook, we are raising full year guidance to EBIT adjusted in the $12.5 to $14.5 billion range. EPS diluted adjusted to the $9 to $10 range and adjusted automotive free cash flow in the $8.5 to $10.5 billion. Now, let's get into the Q1 results.

Paul A. Jacobson: Given the strong momentum we've seen thus far and our confidence in the 'twenty 'twenty four outlook, we are raising full year guidance to EBIT adjusted in the 12 and a half to $14 billion range EPS diluted adjusted to the nine to $10 range.

Paul A. Jacobson: And adjusted automotive free cash flow in the $8 five to $10 5 billion dollar rage.

Paul A. Jacobson: Now, let's get into the Q1 results. We grew total company revenue by 8% to $43 billion driven by higher wholesale volumes in North America.

Paul A. Jacobson: We grew total company revenue by 8% to $43 billion, driven by higher wholesale volumes in North America. Over the last 24 months, we've achieved consistent revenue growth, resulting in a CAGR of more than 15% over that period. We also achieved $3.9 billion in EBIT adjusted, 9.0% EBIT adjusted margins, and $2.62 in EPS diluted adjusted. Even adjusted, it was up year over year and well above consensus driven by our continued strong ice performance, improving EV profitability, and our strategic cost actions, mitigating the effect of higher labor. We achieved adjusted automotive free cash flow of $1.1 billion, up materially versus being flat in Q1 of 2023, driven by North America delivered Q1 EBIT adjusted margins of 10.6%, driving $3.8 billion of EBIT adjusted, up $300 million year over year, primarily from higher wholesale volumes combined with steady pricing and ongoing cost containment.

Paul A. Jacobson: A little as 24 months, we've achieved consistent revenue growth, resulting in a CAGR of more than 15% over that period.

Paul A. Jacobson: We also achieved $3 $9 billion in EBIT, adjusted 9.0% EBIT adjusted margins and $2.62 in EPS diluted adjusted EBIT.

Paul A. Jacobson: EBIT adjusted was up year over year, and well above consensus driven by our continued strong ice performance improving E V profitability and our strategic cost actions mitigating the effect of higher labor costs, we achieved adjusted automotive free cash flow of $1 $1 billion up.

Paul A. Jacobson: Serially versus being flat in Q1 of 2023, driven by improved working capital benefits through inventory management and production timing.

Paul A. Jacobson: North America delivered Q1, EBIT adjusted margins of 10, 6% driving $3.8 billion of EBIT adjusted of $300 million year over year, primarily from higher wholesale volumes combined with steady pricing and ongoing cost containment.

Paul A. Jacobson: During the quarter, we continued to benefit from our fixed cost reduction program, realizing an incremental $300 million from lower marketing and engineering spend. Our fixed cost base is at its lowest since Q1 2022, and we are on track to achieve the full $2 billion net of depreciation and amortization by the end of 2024. However, dealer inventory levels ended the quarter slightly above our 50 to 60 day end of year target at 63 days.

Paul A. Jacobson: During the quarter, we continued to benefit from our fixed cost reduction program, realizing an incremental $300 million from lower marketing and engineering spend.

Paul A. Jacobson: Our fixed cost base. It is at its lowest since Q1, 2022 and we're on track to achieve the full $2 billion net of depreciation and amortization by the end of 'twenty 'twenty four.

Paul A. Jacobson: Dealer inventory levels ended the quarter slightly above our 50 to 60 day end of your target at 63 days. However, we believe we are well positioned from an inventory standpoint, as we head into a seasonally stronger part of the year and incur a few weeks of planned downtime in Q2 on our full size pickups to prepare for few.

Paul A. Jacobson: However, we believe we are well positioned from an inventory standpoint as we head into a seasonally stronger part of the year and incur a few weeks of planned downtime in Q2 on our full-size pickups to prepare for future launches and to install new equipment. GM International Q1 EBIT Adjusted was breakeven, down $350 million year over year. China equity income was a loss of $100 million, down $200 million year over year, as we lowered production to balance dealer inventory levels.

Paul A. Jacobson: Your launches and to install new equipment.

Paul A. Jacobson: Jim International Q1, EBIT adjusted was breakeven down $350 million year over year.

Paul A. Jacobson: Equity income was a loss of $100 million down $200 million year over year, as we lowered production to balance dealer inventory levels.

Paul A. Jacobson: This was slightly better than expected due to a continued focus on cost. Having made progress reducing inventory levels, production is normalizing, and we expect a return to profitability in Q2. Even adjusted for GM international, excluding China, equity income was $100 million, down $150 million year over year driven by lower volume in South America and strategic decisions to protect margin. We anticipate new product launches and further cost efficiencies will help drive profitability improvements beginning in Q2.

Paul A. Jacobson: This was slightly better than expected due to our continued focus on cost efficiencies.

Paul A. Jacobson: Having made progress reducing inventory levels production is normalizing and we expect a return to profitability in Q2.

Paul A. Jacobson: EBIT adjusted in GM International excluding China equity income was $100 million down $150 million year over year, driven by lower volume in South America and strategic decisions to protect margins, we anticipate new product launches and further cost efficiencies will help drive profitability improvements beginning in Q2.

Paul A. Jacobson: GM Financial continues to perform well, with Q1 EBT adjusted of $700 million in line with last year and tracking well within the full year $2.5 to $3 billion guidance. They continued to drive portfolio growth and paid a $450 million dividend to GM during the quarter. Crew expenses were $400 million in the quarter, down from $800 million in Q4-23, reflecting our cost reduction activities and a more focused operational. As Mary mentioned, Cruise is resuming operations in Phoenix, along with testing in simulated environments and on closed courses, while they work to earn trust and build partnerships with regulators and customers. We expect full-year cruise expenses to be around $1.7 billion.

Paul A. Jacobson: GM financial continues to perform well with Q1 EBIT adjusted of $700 million inline with last year and tracking well within the full year of $2.5 billion to $3 billion guidance range.

Paul A. Jacobson: Continued to drive portfolio growth and pay the $450 million dividend the G M. During the quarter.

Paul A. Jacobson: Cruise expenses were $400 million in the quarter down from $800 million in Q4, 23, reflecting our cost reduction activities and a more focused operational plan.

Paul A. Jacobson: As Mary mentioned cruises resuming operations in Phoenix, along with testing and stimulated environments and on closed courses, while they work to earn trust and build partnerships with regulators and customers. We expect full year cruise expenses to be around $1 $7 billion.

Paul A. Jacobson: Let's move now to one of the most important metrics we're focused on, EV profitability. We continue to see sequential and year-over-year improvements in variable profit and EBIT margins as we benefit from scale, material cost, and mix improvement. Since last year, we have significantly reduced cell costs, with a large driver being lower battery raw material costs, especially for lithium. We ramped up our first battery JV plant last year. And as they increased production and made other efficiencies, the cost of cells came down significantly. Cell plant number two in Tennessee is ramping up even faster based on the learnings from plant one and is expected to reach full installed capacity by the end of the year.

Paul A. Jacobson: Let's move now to one of the most important metrics were focused on EV profitability.

Paul A. Jacobson: We continue to see sequential and year over year improvements in variable profit and EBIT margins as we benefit from scale material cost and mix improvements.

Paul A. Jacobson: Since last year, we've significantly reduced sell cost with a large driver being lower battery raw material cost, especially for lithium we.

Paul A. Jacobson: We ramped our first battery JV plant last year and as they increase production and made other efficiencies the cost of sales came down significantly.

Paul A. Jacobson: And so plant number two in Tennessee is ramping even faster based on the learnings from plant one and is expected to reach full installed capacity by the end of the year.

Paul A. Jacobson: Collectively, these factors are helping improve vehicle profitability. For example, we have seen more than $12,000 of year-over-year cost savings in the Lyric alone. As we continue to ramp, we expect to see the benefits from the production tax credit continue to grow and our fixed cost absorption improve meaningfully. We wholesaled 22,000 Ultium-based EVs in Q1, up from less than 2000 in the first quarter of last year, and remain on track to achieve our 200,000 to 300,000 unit production and wholesale volume target for 2020.

Paul A. Jacobson: Collectively these factors are helping improve vehicle profitability. For example, we have seen more than $12000 of year over year cost savings in the lyric alone.

Paul A. Jacobson: As we continue to ramp we expect to see the benefits from the production tax credit continue to grow and our fixed cost absorption to improve meaningfully.

Paul A. Jacobson: We wholesale 22000 old TM based Evs in Q1 up from less than 2000 in the first quarter of last year and remain on track to achieve our 200000 to 300000 unit production and wholesale volume target for 2024.

Paul A. Jacobson: We will share more on EV profitability as we progress through the year. I would also like to touch on EV pricing, which we recently adjusted for the 2024 Blazer EV. This action has been well received by our dealers and customers, and as Mary mentioned, the vehicle is gaining momentum. We assume some pricing pressure for both ICE and EVs in our business plan and guidance for 2024. But we continue to work on finding additional offsets through cost performance and other efficient. Importantly, this pricing action doesn't change our expectation to achieve positive variable profit for our EV portfolio in the second half of the year or our mid single-digit margin target in 2025.

Paul A. Jacobson: We will share more on the EV profitability as we progress through the year.

Paul A. Jacobson: I would also like to touch on EV pricing, which we recently adjusted on the 'twenty 'twenty four blazer EV.

Paul A. Jacobson: This action has been well received by our dealers and customers and as Mary mentioned the vehicle is gaining momentum.

Paul A. Jacobson: We assume some pricing pressure for both ice and Evs and our business plan and guidance for 'twenty 'twenty four but we continue to work on finding additional offset through cost performance and other efficiencies importantly, this pricing action doesn't change our expectation to achieve positive variable profit for our EV portfolio and the <unk>.

Paul A. Jacobson: Second half of the year or our mid single digit margin target in 2025.

Paul A. Jacobson: We remain confident that when consumers see our new EVs and get a chance to drive them, they will appreciate the unique combination of design, performance, range, and value that we offer at multiple price points. And because of our supply chain efforts, customers are well positioned to leverage the $7,500 Clean Energy Consumer Purchase Tax. In closing, I want to reiterate our capital allocation framework, along with our intention to be much more consistent in how we deploy capital.

Paul A. Jacobson: We remain confident that when consumers see our new evs and get a chance to drive them. They will appreciate the unique combination of design performance range and value that we offer at multiple price points and because of our supply chain efforts customers are well positioned to leverage the 7500 dollar clean energy consumer.

Paul A. Jacobson: Purchase tax credits.

Paul A. Jacobson: In closing I want to reiterate our capital allocation framework, along with our intention to be much more consistent in how we deploy capital we are generating strong cash flow, which is funding our transformation and growth opportunities. These efforts include investing in future products transitioning manufacturing capacity to evs.

Paul A. Jacobson: We are generating strong cash flow, which is funding our EV transformation and growth opportunities. These efforts include investing in future products, transitioning manufacturing capacity to EVs, and deploying resources into cutting-edge battery technology. At the same time, you've seen us adapt to the dynamic market, particularly for EVs, and make bold decisions to be more efficient with our capital spend, something we will continue to do moving forward. Our balance sheet remains strong, and on shareholder returns, we executed the ASR last November, and the response has been overwhelmingly positive, with GM stock outperforming its peers and being up nearly 50% since the announcement.

Paul A. Jacobson: And deploying resources into cutting edge battery technology.

Paul A. Jacobson: At the same time, you've seen us adapt to the dynamic market, particularly for Evs and made bold decisions to be more efficient with our capital spend something we will continue to do moving forward.

Paul A. Jacobson: Our balance sheet remains strong and on shareholder returns we executed the ASR last November and the response has been overwhelmingly positive with G M stock outperforming its peers and being up nearly 50% since the announcement.

Paul A. Jacobson: We have seen about a one-turn improvement in our PE multiple since the ASR, but we are still significantly undervalued relative to our historical average, as well as our competitors and other industrial companies. Obviously, we're not satisfied and know that we have a lot of work to do on our valuation and remain committed to improving. As we move forward, we believe the strong cash generated by our ICE portfolio, along with improved execution on our EV strategy, as well as tangible progress on crews, will help generate significant returns for all GM stakeholders. This concludes our opening comments, and we'll now move to the Q&A portion of the meeting.

Paul A. Jacobson: We've seen about a one turn improvement in our p/e multiple since the ASR. When we were still significantly undervalued relative to our historical average as well as our competitors and other industrial companies. Obviously, we're not satisfied and know that we have a lot of work to do on our valuation and remain committed to improving it.

Paul A. Jacobson: As we move forward, we believe the strong cash generated by our ice portfolio, along with improved execution on our EV strategy as well as tangible progress on cruise will help generate significant returns for all G M stakeholders.

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

Operator: Thank you. As a reminder to analysts, we are asking that you limit your questions 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 comes from the line of Joe Spak with UBS. You may proceed.

Speaker Change: Thank you as a reminder, two analyst we are asking that you limit your questions 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 comes from the line of Joe Spak with UBS.

Joseph Robert Spak: You May proceed.

Joseph Robert Spak: Thanks. Good morning, everyone.

Joseph Robert Spak: Hi, Thanks, good morning, everyone.

Paul A. Jacobson: First on the guidance, Paul, I just want to understand the pricing assumption. Is it now just two to two and a half percent negative for the remaining three quarters? And then you mentioned a couple of things about the mix. So you've got higher EV sales, and smaller crossovers. Both of those seem like they should continue through the year. And then I think you also mentioned some potential trim headwinds in pickups. But then on the other hand, you have the EV variable profit turning positive in the second half. So I guess I just want to understand a little bit better how those all intersect and whether we actually see some, maybe, net improvement in mix as we move through the year.

Joseph Robert Spak: First one on the guidance Paul I just wanted to.

Joseph Robert Spak: Understand the pricing assumption is it now just two to two 5% negative for the remaining three quarters and then you mentioned a couple of things on mix. So you've got you know higher EV sales smaller crossovers both of those seem like they should continue through the year and then I think you also mentioned some potential trim.

Joseph Robert Spak: Headwinds in pickups, but then on the other hand, you have you know.

Joseph Robert Spak: The E V variable profit turning positive in the second half. So I guess I just want to understand a little bit better how those how those all intersect and and and should we actually see some maybe net improvement in mix as we move through the year.

Paul A. Jacobson: So good morning, Joe. You're right that, at the end of the day, two to two and a half percent for the rest of the years. So essentially, what we have done with the guidance is taken the outperformance that we saw in Q1 and built it into the full year. So really, not much has changed on the assumption going forward. So when you look at seasonality and you look at trend lines, keep in mind that in the second half of the year, we've got more EV volume coming in.

Speaker Change: Good morning, Joe.

Speaker Change: Youre right that at the end of the day.

Joseph Robert Spak: Two to two and a half per cent for the rest of the years in our assumptions. So essentially what we have done with the guidance has taken the outperformance that we saw in Q1 and built it into the full year. So really not much has changed on the assumption going forward. So when you look at seasonality and you look at trend lines.

Joseph Robert Spak: Keep in mind, you know in the second half of the year, we've got more volume coming in.

Paul A. Jacobson: And also, we've got some of those pricing headwinds that we've built in. So we feel like this is a good move to go ahead and take it from where we are. But we're still sort of guided by the same principles as when we put out our initial guidance for the year going forward. We've talked about that a lot. We've obviously been trending fairly strong, you know; we are lapping some price increases that we took last year.

Joseph Robert Spak: And and also we've got we've got some of those pricing headwinds that we built in so we feel like this was a good good move to go ahead and take it up.

Joseph Robert Spak: From where we are but you know we're still sort of guided by the same principles as when we put out our initial guidance for the year going forward. So you know as far as as far as mix goes you know we.

Joseph Robert Spak: We've talked about that a lot. We've obviously been trending fairly strong you know we are lapping some price increases that we took last year. So as I said the year over year comps get a little bit more difficult.

Paul A. Jacobson: So, as I said, the year over year comps get a little bit more difficult. But, overall, you know, I think the market is holding up fairly well. And as we said before, if, if we see pricing, you know, continuing with this momentum, we expect that we'd be in a position to take up guidance again.

Joseph Robert Spak: But but overall I think the market is holding up fairly well and as we said before if if.

Joseph Robert Spak: If we see pricing continuing with this momentum we expect that we'd be in a position to take up guidance again.

Mary T. Barra: Okay, thank you. As a second question, just on the cruise, with the relaunch, and I understand the manually operated and mapping, but Mary, you emphasize an improved system. So maybe you could just give us a little bit more color on how much of the existing technology stack is really sort of being leveraged and what's been redone. And then just on the financial side. Does the guidance assume any further steps towards that relaunch? And what about a capital need with the cash bounce down to 700 million? Sure.

Speaker Change: Okay. Thank you and as a second question just on crews.

Speaker Change: With the relaunch and I understand the the manually operated in and mapping, but Mary you emphasized and improve system. So maybe you could just give us a little bit more color on on how much of the existing technology stack is really sort of being leveraged in what's been redone and then just on on the financial side.

Speaker Change: Does the guidance assume any further steps towards that relaunch and and what about capital need with the cash balance down to $700 million.

Mary T. Barra: Sure. Well, first, crews, we're very excited that they're back on the roads in Phoenix. As I said, it is manual, but then we'll progress to supervise and then to unsupervise. And the core tech stack, what we've been doing since, you know, we made the decision to pause, is continuing to work on and improve it. So we've actually strengthened the safety of the system by continuing to, you know, make sure we comprehend, I would say, low probability but higher severity type issues. Because what we recognized in October, although I think mainly it was an issue of not having built the right relationship with the regulatory agencies at all levels, as well as the public, and then being transparent.

Mary T. Barra: Sure well first cruise and we're very excited that they are back on the road in Phoenix as he said it is manual, but then we'll progress to supervise and then supervised and and the core Tech stack, what we've been doing since we made the decision to pause is continuing to work on improving it said, we'd actually strengthen the safety.

Jim: This is Jim <unk>.

Jim: I mean to to make.

Jim: Make sure we comprehend I'd say, a low probability, but higher severity type issues because what we recognize in October although I think mainly it was an issue of not having built the right relationship with the regulatory agencies at all levels as.

Jim: As well as the public and then being transparent, but we also realize even though we demonstrated externally validated that the technology was safer than an average human driver we need to do more and so that's what we've been focused on and that's why we're working.

Mary T. Barra: But we also realized, even though we demonstrated and externally validated that the technology was safer than an average human driver, we needed to do more. And so that's what we've been focused on. That's why we're, as we go back to Phoenix, we're, you know, making sure we're up to date but very excited about where we are in the technology and very much believe in it. For what we plan to do this year, getting back on the road and demonstrating, you know, that the model works in one city, as I've said in the past, and then expanding from there.

Jim: Going back to Phoenix were made.

Jim: Making sure we're up to date, but I'm very excited about where we are in the technology and very much believe in it.

Jim: For what we plan to do this year getting back on the road and demonstrating.

Jim: The model works in one city as I've said in the past and then expanding from there. We believe it's comprehended in the budget that we have and then as you look.

Mary T. Barra: We believe it's covered in the budget that we have. And then as you look at how we plan to fund the business, we're exploring quite a few options right now, including potentially taking outside investments as well. And we'll have more to say about that as we move through the year, but I'm very excited to be back on the road. We believe in the technology. We're making it even better. That didn't stop through this whole period since last October.

Jim: And how we plan to fund the business, we're exploring quite a few options right now.

Jim: And including potentially outside taking outside investments as well and so we'll have more to say about that as we move through the year, but I'm very excited to be back on the road. We believe in the technology, we're making it even better that can stop us through this whole period since last October.

Operator: Thank you. Our next question comes from Itay Michaeli with Citi. Your line is open.

Speaker Change: Thanks for the color.

Yes.

Speaker Change: Thank you. Our next question comes from E. China, Kelly with Citi. Your line is open great.

Itay Michaeli: Great, thanks. Good morning, everyone, and congrats. Just two questions for me, maybe first for Paul. Just can you remind us how we should think about the volume mix of your new and refreshed ICE crossovers for the next couple of quarters and how you feel about the prior margin improvement targets that you spoke about last quarter? And then maybe Mary, hopefully, we can kind of go back to the software strategy and maybe talk about some of the goals that we should be expecting for software and the ultimate platform over the next six or 12 months.

Kelly: Great. Thanks, good morning, everyone and congrats.

Kelly: Just two questions for me.

Kelly: Maybe first for Paul just can you remind us on how we should think about the volume mix of your new and refreshed ice crossovers.

Kelly: The next couple of quarters, and how you're feeling about the prior margin improvement targets.

Kelly: You spoke about that than it was last quarter.

Perfect for Mary went to kind of go back to the software strategy and maybe talk about some of the goals that we should be expecting for software and the ultra high platform over the next six to 12 months.

Paul A. Jacobson: Yeah, good morning, Itay. Thanks for the question.

Mary T. Barra: Yes. Good morning, Thanks for the question.

Paul A. Jacobson: You know, on our crossovers, we've talked about the new, the new Chevy tracks and Buick and Vesta, both of which are significantly improved from their prior profitability before the upgrades. And you know, we've seen, particularly the Chevy tracks really take off; sales were up 500% in the quarter. And, you know, it's really performing well for us. So, some of the some of the trends in average transaction prices are muddied by the fact that the volume of those crossovers is going up considerably, but we've still seen strength in our truck pricing and our SUV pricing as well. So we continue to think that that's creative and additive to the portfolio. And it's built into our, you know, strong guidance that we're updating today.

Mary T. Barra: You know on our on our crossover as we've talked about the new the new Chevy traction Buick investor both of which are <unk>.

Mary T. Barra: Significantly improved from their prior profitability.

Mary T. Barra: Before the upgrades and we've seen particularly the Chevy tracks really take off our sales were up 500% in the quarter and.

Mary T. Barra: It's really performing well for us so you know.

Mary T. Barra: Some of the some of the trends in our average transaction prices I think are muddied by the fact that the volume on those crossovers are going up considerably, but we've still seen strength in our truck pricing and our SUV pricing as well. So we continue to think that that's accretive and additive to the to the portfolio and it's built into our.

Mary T. Barra: Strong guidance that we're updating today.

Mary T. Barra: And then as it relates to the software strategy, as we move through the year and beyond, first, you know, as Mike stepped back over the past year, though, he did an incredible job of reevaluating and changing our software development process, as well as our validation process, and brought in an incredibly strong team of, you know, probably more than a dozen people at the senior level to really focus on having the right software strategy as we move forward. So I'm very confident. You know, we paused at the beginning of this year with the Blazer as we saw a limited number of consumers had an issue.

Mary T. Barra: And then as it relates to the software strategy as we move through the year and beyond first as Mike step back over the past year, though he did an incredible job of reevaluating and changing their software development process as well as our validation process and run in an incredibly strong team of prep.

Mary T. Barra: With more than a dozen people at the senior level should really focus on having the right software strategy as we move forward. So I'm very confident we pause at the beginning of this year with the blazer as we saw a limited number of consumers had an issue where we've moved past that now and that's allowed us to strengthen the software up all of our upcoming.

Mary T. Barra: We've moved past that now, and that's allowed us to strengthen the software of all of our upcoming vehicles. And so, well, you know, the goals for the next couple months are to launch with quality on time, and we're on a path to do that. And then, as we go forward, as the new software goes across multiple vehicles, that gives us an opportunity to focus more on growing subscriptions and services. But I'm very pleased with where we are, with the team that we have, and the progress they've made, and it shows in our ability to launch with quality.

Mary T. Barra: Vehicles, and so well the goals for the next couple of months are to launch with quality on time, and we're out to pay out a path to do that and then as we go forward as the new software goes across multiple vehicles and that gives us an opportunity to focus more on growing subscriptions and services, but I'm very.

Mary T. Barra: We're pleased with where we are with the team that we have and the progress they've made and and it's showing in our ability to watch with quality.

Mary T. Barra: I think that's all very helpful. Thank you.

Speaker Change: So I think that's all very helpful. Thank you.

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

Speaker Change: Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

John Joseph Murphy: Good morning, everybody. You know, Mary, I just wanted to ask one strategic question about China. You know, at this point, it's really not, you know, a moneymaker for you. And there's a lot of, obviously, you know, noise on a geopolitical basis and sort of our relationship or the US's relationship with China. I'm just curious, is it time to really start thinking about strategic alternatives over there, such as potentially, you know, closing or selling the business? You know, how do you kind of think about that in the context of sort of the broader portfolio over the next few years?

John Joseph Murphy: Good morning, everybody.

John Joseph Murphy: I just wanted to ask one strategic question.

John Joseph Murphy: On China.

John Joseph Murphy: At this point, it's really not a moneymaker for you and Theres a lot of obviously no noise I'm on a geopolitical basis and sort of our relationship with the U S as relationship with China.

John Joseph Murphy: I'm just curious is it time to really start thinking about strategic alternatives over there to potentially closing or selling the business. You know how do you kind of think about that in the context of sort of the broader portfolio or next few years.

Mary T. Barra: Yeah, just in general, you know, with everything that's happened over the last several years with COVID and then with the supply chain issues around the chip shortage and then just broad supply chain issues, we have worked on and really strengthened the resiliency of our supply chain, and we'll continue to do that. But over the long term, we're committed to China. We believe that it's a market that will see substantial growth over the medium term.

John Joseph Murphy: Yeah, and just in general with everything that's happened over the last several years with with Covid and then with the supplies are the supply chain issues around the chip shortage and then just broad supply chain issues. We have work has really strengthened the resiliency of our supply chain and will continue to do that but over the long term we're committed to China.

John Joseph Murphy: We believe that it's a market that over the medium term will have substantial growth, we're continuing to drive not only our global solutions, but in some cases local solutions.

Mary T. Barra: We're continuing to draw on not only our global solutions but, in some cases, local solutions as we advance our electrification strategy. You know, right now, NEVs account for about 30 percent of GM's total China deliveries from a Q1 perspective, and we're going to build on that through this year because we have an intense NEV launch cadence in Q2. Then moving forward, we have several PHEVs we'll be launching and moving with full EVs as well.

John Joseph Murphy: As we advance our electrification strategy right now any visa counter about 30% of Gm's total China deliveries from a Q1 perspective, and we're going to build on that through this year, because we have an intense any V launch cadence from Q2, then moving forward we have several P heads will be launching.

John Joseph Murphy: And moving with a full evs as well.

Mary T. Barra: So we also have established the Durant Guild, and that allows us to focus on some niche segments in China that are premium and more lifestyle-oriented. For instance, the Taiwan and the Yukon will be available for pre-order later this year. So we think clearly the market has shifted and the landscape has shifted with the capability of the Chinese OEMs, but we still think there's a role and a place for GM to play with luxury premium and, again, as I mentioned, leveraging not only our global solutions but local solutions. So that is our focus, but we've done that while focusing on supply chain resiliency as well.

John Joseph Murphy: We also have established at the Durant Guild and that allows us to focus on some niche segments in China that are premium and more lifestyle oriented and for instance, the China or the U K will be available for preorder. Later this year. So we think clearly the market has shifted in the landscape has shifted from with it.

John Joseph Murphy: The capability of the Chinese Oems, but we still think there's a role and a place for G. M to play with luxury premium and again as I mentioned leveraging.

John Joseph Murphy: Not only our global solutions, but local solutions. So that is our focus but we've done that while focusing on supply chain resiliency as well.

John Joseph Murphy: Okay, and then I just have one quick follow-up on pricing. You know, saying two to two and a half percent is your best estimate right now, but, you know, calling pricing is difficult. So I'd be curious, maybe Paul, if you could give us sort of a high level of how you think about pricing, because there are a lot of cross currents.

Speaker Change: Okay, and then I just have one quick follow up on pricing.

Speaker Change: You are saying two to two 5% I understand is your best estimate right now but.

Speaker Change: Calling pricing is difficult. So I was just curious maybe Paul if you could give us sort of a high level. How you think about pricing because there's a lot of crosscurrents I mean, there's easy price cutting.

Paul A. Jacobson: I mean, there's EV price cutting, but there seems like there's resilience on the ice side. When you look at your cap ute, you're at 100% capacity utilization, which means you're kind of tight on your sort of structural supply. Look at zero to six year old vehicles; they're going to continue to shrink through the next, you know, two years, probably.

Paul A. Jacobson: But there seems like there is resilience on the ice side. When you look at your cap you youre at 100% capacity utilization, which means you're kind of tight on your sort of structural supply because you're at a six year old vehicles are going to continue to shrink through the next two years, probably show like the used vehicle market is going to stay relatively tight. So I mean, I think people are looking at this as dealer inventory.

Paul A. Jacobson: So, you know, the used vehicle market's going to stay relatively tight. So I think people are looking at this dealer inventory and saying, hey, things are getting a little bit too expensive, you know, there's risk on pricing. But when you look at some of the structural aspects of supply, they're reasonably constrained. And it seems like even in a tier two and three supply base, they're constrained, and that, you know, on labor, I mean, I just, it just, it just seems like this resilience will be with us a little bit longer than people are fearing.

Paul A. Jacobson: Hey, things are getting a little bit choppy, there's risk on pricing, but when you look at some of the structural aspects of supply, they're reasonably constrained and it seems like even in the tier two and three supply base they are constrained.

Paul A. Jacobson: On labor.

Paul A. Jacobson: It just it just seems like its resilience, maybe with us a little bit longer than people are are fearing I mean, the Colorado.

Paul A. Jacobson: I mean, the Colorado, Canyon, as well as your vans, you said you were short of some stuff that you're getting to, you know, fleets that you'll, you'll catch up on later in the year. So there's, and there's just all these kind of pockets of shortages that still persist. And it seems like the kind of thing that's going to last for longer than people are fearing. How do you really kind of come up with that estimate of two to two and a half percent? And, you know, where do you think things will kind of land over the next couple of years?

Paul A. Jacobson: Canyon as well as your bands you said you were short on some stuff that you were getting to.

Paul A. Jacobson: So you'll you'll catch up later in the year. So there's.

So all these kind of pockets.

Paul A. Jacobson: <unk> is it still persist and it seems like.

Paul A. Jacobson: Things got a laugh for a longer than people are figuring out how do you really kind of and cocked or come up with that estimate of two to two 5% and you know where do you think things will kind of land over the next couple of years.

Paul A. Jacobson: Yeah, well, look, good morning, John. And, you know, as we've talked about, the two to two and a half percent, I want to be very clear, is not an expectation. That's an assumption that we've put into the guidance and provided for people to run their models from that standpoint. But, as we saw with the first quarter outperformance, we weren't there. And April is actually holding up quite well for us, with ATPs actually trending slightly higher than where they did coming out of the quarter.

Speaker Change: Yeah, well look good morning, John and as we've as we've talked about the two to two 5% I want to be very clear is not an expectation.

The assumption that we've put into the guidance and provided.

Speaker Change: For people to run their models from that standpoint, but as we've seen with the first quarter outperformance, we weren't there and April is actually holding up quite well for us with ATP is actually trending slightly higher than where they did coming out of the quarter. So not really.

Paul A. Jacobson: So not really an expectation as much as we built an assumption and recognized that, you know, there may be some macro headwinds out there. We do know that, you know, our comps get tougher as we lap our price increases that we took in the summer of last year. But, but overall, the commercial environment continues to be resilient. And I think this is a very common theme that we've had now for, you know, more than a year worth of quarters.

Speaker Change: Spectation as much as we built in assumption and recognizing that.

Speaker Change: There may be some macro headwinds out there we do know that you know our comps get tougher.

As we lap our price increases that we took in the summer of last year, but but overall the commercial environment continues to be resilient and I think this is a very common theme that we've had now for.

Speaker Change: More than more than a year worth of quarters.

Paul A. Jacobson: Of course, there's a lot of sort of downward bias, but we're continuing to manage commercially month to month and produce in line with demand. And I think with that balance, it's been very favorable for us on both pricing and margin.

Speaker Change: You know theres, a lot of sort of downward bias, but we're continuing to manage our <unk>.

Speaker Change: <unk> month to month and producing.

Speaker Change: In line with demand and I think with that balance thats been very favorable for us on both pricing and margins.

Paul A. Jacobson: Okay, all right, thank you very much.

Speaker Change: Okay, Alright, thank you very much.

Operator: Thank you. Our next question comes from Mark Delaney with Goldman Sachs. Your line is open.

Speaker Change: Thanks, Joe.

Speaker Change: Thank you. Our next question comes from Mark Delaney with Goldman Sachs. Your line is open.

Mark Delaney: Yes, good morning. Thanks very much for taking the questions. First quarter EBIT was strong and annualizing at about $15.5 billion. I think guidance for the full year on EBIT is now $12.5 to $14.5 billion for the year, so I'm hoping to better understand some of the factors that will temper EBIT over the balance of the year compared to the first quarter run rate.

Mark Delaney: Yes, hi, good morning, Thanks, very much for taking the questions first quarter EBIT was strong and Annualizing at about $15 5 billion I think guidance for the full year on EBIT is now a 12 and a half to $14 5 billion for the year, So I'm, hoping to better understand some of the factors that temporary EBIT over the balance of the year compared to the first quarter run rate.

Paul A. Jacobson: Yeah, good morning, Mark. So, you know, I would say it comes down to a couple of things. One is there's still the assumption in there of the down two to two and a half percent. And as we scale up EVs, and we continue to make progress about getting them to variable profit positive, the margins on those are not as strong as ice, obviously. So we see a little bit of pressure on the back half from that, but overall, we'll remain consistent. And, you know, as I've said, if we don't see that pricing softness, I would expect that there is an opportunity to outperform these numbers. Transcribed by https://otter.ai

Speaker Change: Yeah. Good morning, Mark. So you know I would say it comes down to a couple of things. One is there is still the assumption in there of the down two to two and a half a percent and as we scale up Evs and we continue to make progress about getting them to variable profit positive.

Speaker Change: Margins on those are or are not as strong as as ice. Obviously, so we see a little bit of pressure in the back half from that but but overall will remain consistent and as I've said, if we don't see that pricing softness.

Speaker Change: I would expect that there is an opportunity to outperform these numbers.

Paul A. Jacobson: That's helpful, Paul. Another question on EVs and on the pricing topic. The company spoke to good demand and feedback for its EVs, but the broader market has been quite competitive for EVs in terms of pricing. I'm hoping to better understand if you think GM is going to need to take additional pricing actions this year to reach the $200,000 to $300,000 outlook that you have in North America, or do the demand signals you have from the market suggest you can hit that kind of volume this year with relatively firm pricing going forward? I'm sure. Well, you know, obviously.

Speaker Change: That's helpful. Paul and another question on <unk> and on the pricing topic, because the company spoke to good demand and feedback for Tvs, but the broader market has been quite competitive for E. V. In terms of pricing I'm, hoping to better understand if you think GM is going to need to take additional pricing actions. This year to reach the 200 to 300000 outlook that.

Speaker Change: That you have in North America or does the demand signals you have from the market suggest you can hit that kind of volumes this year with relatively firm pricing going forward. Thanks.

Paul A. Jacobson: Sure. Well, obviously, the early results here as we're ramping up Altium are pretty strong, with retail sales up about 20% year over year, despite the fact that the Bolt, which is sunsetting the prior generation, was down about 60% during the quarter. So retail demand remains strong. We've obviously seen a lot of softness in the fleet, particularly on the rental side for EVs, but we see customers responding. Now, you know, these are admittedly lower volumes as we scale up, but we're building that momentum that I think we need with the products to be able to show consumers what our capabilities are.

Paul A. Jacobson: Sure well you know obviously the the early results here as we're ramping up I'll tee them up pretty strong with retail sales up about 20% year over year. Despite the fact that the bolt which is sunsetting. The prior generation was down about 60% during the quarter. So.

Paul A. Jacobson: Retail demand remains strong we are we've obviously seen a lot of softness in fleet, particularly on the rental side for evs, but but we see customers. Responding now these are an admittedly lower volumes as we scale up but we're building that momentum that I think we need with the products to be able to.

Paul A. Jacobson: Show consumers, what what our capabilities are when you look at the statistics that Mary cited in the script about the range and what's in our earnings.

Paul A. Jacobson: When you look at the statistics that Mary cited in the script about the range and what's in our earnings deck, you see that purpose-built EVs are actually better in terms of performance, range, charging speed, towing capabilities, etc. than many of the other products that are out there on the market.

Paul A. Jacobson: Earnings deck, you see that the purpose built evs are actually better.

Paul A. Jacobson: Better in terms of performance range charging speed towing capabilities et cetera than many of the other products that are out there on the market and I think as consumers continue to see that we'll be well positioned as as EV demands.

Paul A. Jacobson: And I think as consumers continue to see that, we'll be well positioned as EV demands at the retail side continue to rise. So we're obviously going to watch it closely. But the early indications are strong. Thank you. Our next question comes from Dan Ives with Wedbush. Your line is open.

Paul A. Jacobson: The retail side continue to trend. So we're obviously going to watch it closely but the early indications are strong.

Thank you.

Paul A. Jacobson: Thank you. Our next question comes from Dan Ives with Wedbush. Your line is open.

Daniel Harlan Ives: Good things.

Daniel Harlan Ives: And for Mary or does it feel now like the UAW in the rearview mirror the.

Operator: Thank you. Our next question comes from Dan Ives with Wedbush. Your line is open. Yeah, thanks.

Daniel Harlan Ives: The EV strategy now come into for.

Daniel Harlan Ives: But the comedy's just in a strong position, which is less uncertainty I mean could you give me the compare today, even six to nine months ago internally.

Daniel Harlan Ives: No, I think you make a really good point, Dan. We do. I feel much better where we are. As I mentioned, you know, we now have, we're ramping up, and the module issue is behind us.

Speaker Change: No I think you make a really good point and we do I feel much better where we are as I as I mentioned you know we now have a we're ramping up in the module issue is behind us.

Mary T. Barra: Our line, all the additional lines that we were scaling are all on track. So we feel very good about that. Obviously, we're pleased that we were able to get an agreement with the UAW. We continue to work with them on a number of fronts and, you know, build a relationship with the new leadership team, as they were named pretty close to when we started negotiations last year. So I feel that, you know, we're continuing to talk, raise issues with each other, and problem-solve where we have challenges.

Speaker Change: Why all of the additional lines that.

Speaker Change: That we were scaling are all on track. So we feel very good about that obviously, we're pleased that we were able to get an agreement with the UAW. We continue to work with them on a number of friends and built the relationship with the new leadership team as they were named pretty close to when we started negotiations last year. So I feel.

Speaker Change: That's you know, we're continuing to talk raise issues with each other and problem solve where we have challenges I feel much better about that and as Paul said you know we're seeing good progress with our LTM based Tvs because they are purpose built and they do have there's a.

Mary T. Barra: So I feel much better about that. And as Paul said, you know, we're seeing good progress with our LTM-based EVs because they are purpose-built, and they do have customers who aren't making a trade-off. And we also see the charging infrastructure get better every quarter.

Speaker Change: Customers are not making a trade off and we also see the charging infrastructure and get better every quarter. So I feel very good about where we are and I think we've got momentum and believe me we have a very aligned team a cross G. M that is gonna sees all these opportunities I would also add Dan that you know I feel very good as I mentioned earlier about where we are with software.

Mary T. Barra: So I feel very good about where we are, and I think we've got momentum. And believe me, we have a very aligned team across GM that is going to seize all these opportunities. I would also add, Dan, that, you know, I feel very good, as I mentioned earlier, about where we are with software. You know, the work and the talent that is in the company now, and the progress that we've made gives me confidence we're going to be in a good position there as well. So, from last year to now, much better, much more positive.

Speaker Change: You know the work and the talent that is in the company now and the the progress that we've made gives me confidence we're going to be in a good position there as well so from last year to now a much better much more positive.

Mary T. Barra: Thank you. Our next question comes from James Picariello with BPN Paribas. Your line is open.

Speaker Change: Great Congrats.

Speaker Change: Thank you.

Thank you. Our next question comes from James Picariello with B P. N <unk>. Your line is open.

Operator: Hi, good morning, everybody. I'm just thinking about wholesale growth for the full year; global volumes were up almost 4% in the quarter. Can you help to mention the impact of this current quarter's full size pickup downtime? And just what the full what the first half or second half split might look like for the LTM volumes relative to that 200 to 300,000 units targeted?

James Albert Picariello: Hey, good morning, everybody.

Thank you Bill.

James Albert Picariello: Sales growth for the full year global volumes were up almost 4% in the quarter.

James Albert Picariello: Can you help dimension the impact for this current quarter's full size pickup downtime and just what the what the what the first half versus second half split might look like for the European volumes relative to that 200000 units targeted right.

James Albert Picariello: Okay.

James Albert Picariello: Well, let me just comment on the full-size pickups. You know, we have announced that we have some down weeks to start installing equipment so we can have a seamless launch as we get to the next model. And we're just going to stay focused on where the customer demand is at. We feel we've got really strong products that, as Paul mentioned, we're growing market share. We grew share in the first half with strong pricing, so I think that speaks for the strength of our product.

Speaker Change: Well I think let me just comment on until size pickups.

Speaker Change: We have taken.

Speaker Change: Now that we have some down weeks to start installing equipment. So we can have a seamless launch as we get to the next model and we're just going to stay focused on where the customer demand is that we feel we've got really strong products that as Paul mentioned, we're growing share we grew share in the first half with strong with strong pricing. So I think that speaks for the strength of our product.

James Albert Picariello: But we're going to be on customer demand, and we're going to make sure that we don't overbuild because, you know, I think it's important to manage residuals and to make sure that we're managing our inventory. I think that's one of the things that we've done that allows us to continue to be strong with pricing and with our products. And as it relates to overall wholesale growth, I don't know, Paul, if you want to talk about that from an EV perspective. Yeah, so...

Speaker Change: But we're gonna be customer demand and we're going to make sure that we don't overbuild.

Speaker Change: Because you know I think it's important to manage residuals and two to make sure that we're managing our inventory I think that's one of the things that we've done that allows us to continue to be strong with pricing and with our products and as it relates to overall wholesale growth.

Speaker Change: If you want to talk about that from a EBIT perspective, yeah. So.

Mary T. Barra: Yeah, so, on the EV growth, obviously, supply is going to increase throughout the year as we ramp up to the 200,000 to 300,000 units of production that we've talked about. Spring Hill is coming online in Q, came online in Q1, and we're ramping up production pretty steadily, and that's Ultium Cell Plant 2, and as module production kicks in, we see an exit rate that's significantly greater. Now, of course, we're all going to be paced by where the consumer is. From that standpoint, early indications are that the ramp is going well, and we should expect to see that consistently growing throughout the year.

Speaker Change: On the EV growth.

Speaker Change: Obviously demand supply is going to increase throughout the year as we ramp up to the 200 to 300000 units of production that we've talked about.

Speaker Change: Springhill is coming online in Q came online in Q1, and we're ramping up production pretty steadily and that's altium cell plant two and as module production kicks up.

Speaker Change: We see an exit rate that's significantly greater now of course, we're all going to be pace, we're gonna be paced by where the consumer is from that standpoint early indications are that the ramp is going well and we should expect to see that.

Speaker Change: <unk> growing throughout the year.

Paul A. Jacobson: Got it. And then just to hit on the quarter's China JV losses, is the expectation to see profitability the remainder of the year? Or could this take another quarter or two? And then, for GMI consolidated, can you just shed any light on the profitability actions that are taking place? Yeah, sure. So, you know.

Speaker Change: Got it and then just to hit on the quarters, our China JV losses is the expectation to see profitability the remainder of the year or could this take another quarter or two and then.

<unk> consolidated can you just shed any light on the profitability actions that are taking place in South America. Thanks.

Paul A. Jacobson: Yeah, sure. So, you know, with China, I think it's progressing as we articulated at the initial guidance range. We did trend slightly better than we expected, but we foreshadowed the loss in Q1. We do expect that to reverse and be profitable for the rest of the year. And we said results that were similar to slightly down from last year in China. So the rest of the year is, you know, we'll have to manage it.

Speaker Change: Sure So as China, I think it's progressing as we articulated at the initial guidance range, we did trends slightly better than what we expected, but we foreshadowed the loss in Q1, we do expect that to reverse and be profitable for the rest of the year and we said results that were similar to slightly down from from last.

Speaker Change: Year.

Speaker Change: In China, so the rest of the year.

Speaker Change: <unk>.

Speaker Change: We'll have to manage it but.

Paul A. Jacobson: But like I said, Q1 was a little bit ahead of expectations, but generally in line, so we'll be profitable. For the rest of GMI, you know, we had some downtime in South America. In particular, we're watching Argentina fairly closely as we continue to see the reforms that are going on there. But overall, you know, we see that improving from kind of where we were, and we are not overly concerned about that just yet. But that's a market that we're continuing to watch. Thanks.

Speaker Change: Like I said Q1 was a little bit ahead of expectations, but generally in line. So it will be profitable.

Speaker Change: For the rest of GMI, we had some downtime in South America in particular, we're watching Argentina fairly closely as we continue to see the reforms that are going on there, but overall, we see that improving from kind of where we were not.

Speaker Change: Overly concerned about that just yet, but that's that's a market that we're continuing to watch.

Speaker Change: Thanks.

Paul A. Jacobson: Thank you. Our next question comes from Alex Potter with Piper Sandler. You may proceed. Alex, you may need to unmute your line.

Speaker Change: Thank you. Our next question comes from Alex Potter with Piper Sandler You May proceed.

Alex Potter: Alex you may need to Amit your line.

Operator: Yes, we can hear you. We've got you, Alex.

Alex Potter: Yeah, Hi can you hear me.

Alex Potter: Yeah, we're thinking here, we got you Alex Okay very good. So first question on LTE M. You stuck to the 200 to 300000 production guidance, which is good to see but at the same time, you talk about how youre going to use consumer demand is sort of a gating factor is would you say that the 200 to 300 is that something that youre going to stick to sort of come.

Operator: Okay, very good. So first question on Altium, you stuck to the 200 to 300,000 production guidance, which is good to see. But at the same time, you talk about how you're going to use consumer demand as sort of a gating factor. Would you say that the 200 to 300? Is that something that you're going to stick to sort of come hell or high water and then gauge consumer demand from there? Or is it something that you could slow walk? Maybe toward mid-year, toward the second half if it doesn't seem like consumer demand is materializing.

Alex Potter: Hell or high water and then <unk>.

Alex Potter: Gauge consumer demand from there or is it something that you could slow walk maybe towards mid year toward the second half if it doesn't seem like the consumer demand is materializing.

Alexander Eugene Potter: You know, we're never going to build, just build products come hell or high water because the numbers out there. We're always going to be responsive to the customer. But we do believe that we're going to be in that $200,000 to $300,000 range with the number of EVs that we have launching off of Altium. You know, we're seeing strength with Hummer as we're ramping that up. We're seeing strength with Lyric, and Blazer is, you know, just now ramping up. We've got the Equinox coming up, and there are several more.

And you know, we're never going to build just build products come hell or high water because the numbers out there, we're always going to be responsive to the customer, but we do believe that we're gonna be in that 200000 to $300000 range with the number of <unk> that we have launching off of Altium. You know, we're seeing strength with hammer as we're ramping that up we're seeing.

Alex Potter: Strength with lyric and Blazer is just now ramping up we've got the equinox coming are there and there are several more so I think when you look at the fact that these are all going to meet our customers exactly with the performance and functionality that they need we think we're well positioned there. So I would also say, though as you look across our portfolio.

Mary T. Barra: So I think when you look at the fact that these are all going to meet customers exactly, you know, with the performance and functionality that they need, we think we're well positioned there. So I would also say, though, as you look across our portfolio, we are well positioned, whether it's ICE or EV, on the strength of our ICE portfolio. So we're well positioned to respond to the customer. Like I said, we are very focused on making sure that we don't overbuild, that we're able to maintain our price, our margins, and we think we've got the strength.

Alex Potter: We are well positioned whether it's either E V from a AR with the strength of our ice portfolio. So we're well positioned to respond to the customers like I said, we we are very focused on making sure that we don't overbuild that we're been able to maintain our price our margins and we think we've got the strength and.

Mary T. Barra: And, you know, specifically, if you look at Spring Hill, we can build EV or ICE in that plant. So I think we're well positioned. We think we're going to be in that $200,000 to $300,000 range by customer demand, and we'll just continue to adapt.

Alex Potter: Well if you look at spring Hill, we can build EV or ice in that plant. So I think we're well positioned we think we're going to be in that 200 to 300000 range by that customer demand and.

Alex Potter: And we'll just continue to adapt.

Mary T. Barra: Okay, perfect. And the second, we talked a little bit about competition within China; I'm interested in hearing sort of your updated views on competition from the Chinese outside China, what's GM's stance on this, do you think protectionism is necessary? Are you more of a free market sort of philosophy from a company standpoint competing against the Chinese globally, particularly in places like South America? Any comments on China? Thanks. Yeah, I think it's a great question.

Speaker Change: Okay, Perfect and then second we've talked a little bit about competition within China, I'm I'm interested in hearing sort of your updated views on competition from the Chinese outside China, What's I guess GM stance on this do you think protectionism is necessary.

Speaker Change: Or are you more of a free market sort of philosophic.

Speaker Change: Philosophy from a company standpoint, competing against the Chinese globally, particularly in places like South America.

Yeah, and your comments on China.

Speaker Change: Yeah, I think it's a great question and first of all you know I think in general we want to have our best products and if there is a level playing field.

Mary T. Barra: Yeah, I think it's a great question. And first of all, you know, I think, in general, we want to have our best products. And if there's a level playing field, then it's, you know, we want to compete based on products. I think you have to look at where there is a level playing field and what's happening around the world. But, you know, there's a lot that can happen from a regulatory or a, you know, a trade perspective, but we're focused on making sure we have great vehicles at the right price.

Speaker Change: And it's we want to compete based on product I think you have to look at where is there a level playing field and what's happening around the world, but you know there's a lot that can happen from a regulatory or a trade perspective, but we're focused on is making sure.

Speaker Change: We have great vehicles at the right price. So what is going to help a G. M maintained its share around the world and when you look at South America. The Chevy brand is incredibly strong and we're going to continue to focus on having great designs with great great product.

Mary T. Barra: So what is going to help, you know, GM maintain its share around the world? When you look at South America, the Chevy brand is incredibly strong. And we're going to continue to focus on having great designs with a great, great product portfolio with the right features and functions. And we're constantly working on taking costs out of the system. So there's value there as well. And that's the way we're going to compete around the world. But I think the focus has got to be on a level playing field.

Speaker Change: Product portfolio with the right features and functions and we're constantly working on taking cost out of the system. So lets say theres value there as well and that's the way we're going to compete around the world.

Speaker Change: I think the focus has got to be on a level playing field.

Speaker Change: Yeah.

Speaker Change: Great. Thanks.

Operator: Thank you. Our next question comes from Rod Lache with Wolf Research. Your line is open.

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

Operator: Hi, this is Bruno on behalf of Rod. Thanks for taking the question. I'd like to understand the key assumptions you're making in your EV margin outlook for positive contribution margins this year and positive overall margins next year. Based on the hints you've given us, we think you need to improve contribution margins per EV by around 10 to 10 to 15,000 in 2025 compared to 2023. I think if I heard correctly, that's about in line with what you're seeing on the Lyric year over year. But if you could just help us understand the key buckets of lower cost and what's driving that and your underlying assumptions around pricing and costs and things.

Speaker Change: Hi, This is bruno on for Rod Thanks for taking the question.

Bruno: To understand the key assumptions youre, making in your EV margin outlook for positive contribution margins this year and positive overall margins next year.

Bruno: Based on the hints you've given us we think you need to improve contribution margins per EV by like 10 to 10 to 15000 in 2025 compared to 23, I think if I heard correctly, that's about in line with what you're seeing on the lyric year over year, but if you could just help us understand the key buckets of lower cost and what's driving that in your underlying it.

Bruno: <unk> round and pricing.

Bruno: And costs and things.

Paul A. Jacobson: Yeah, good morning, Bruno. Thanks for the question. So if you go back to the presentation that we did back in November, we kind of highlighted the roadmap for 60 points of EBIT improvement in 2024, about 60% of that driven by scale benefits. So if you think about where we are, we've invested a lot in the infrastructure, battery plants and manufacturing facilities, supply chain, etc., to ramp up production. So you know, some of our EBIT losses are really driven by the fact that we need to grow into what we've built. And so that's about 60% of that 60 points of improvement.

Speaker Change: Yeah. Good morning, Bruno Thanks for the question.

Bruno: If you go back to our presentation that we did back in November we kind of highlighted the roadmap for 60 points of EBIT improvement in 2024 was about 60% of that driven by scale benefits. So if you think about where we are we've invested a lot into the infrastructure.

Bruno: Battery plants and manufacturing facilities supply chain et cetera to ramp up production. So you know some of our EBIT losses are really driven by the fact that we need to grow into what we've built and so thats about 60% of that 60 points improvement. The rest is really kind of split evenly between trims and launched.

Paul A. Jacobson: The rest is really kind of split evenly between trims and launches and also material cost reduction. So we've gotten off to a good start as we've seen battery raw materials start to come into the cell costs. This year, we've done a good job of reducing cell costs. And as we said, the Lyric is down $12,000 in cost year over year.

Bruno: <unk> and also material cost reductions so we've gotten off to a good start as we've seen battery raw materials start to come into the.

Bruno: The cell cost this year, we've done a good job of reducing sow costs and as we said the lyric is down $12000 in cost year over year. So that's the type of progress that we expect and then as we get into 2025 scale becomes a.

Paul A. Jacobson: So that's the type of progress that we expect. And then as we get into 2025, scale becomes a lower driver, and we get into more material cost reductions in the vehicles that we're producing, as they get out of their early years, and we start to harness savings in each vehicle line in the second, third year of production, etc. So there's a pretty good roadmap there. Pricing, obviously, we're going to continue to watch and see where the market is. As we talked about, what we did on the Blazer was built into our expectations. So we're not changing off of those targets. And, you know, we're just a quarter in on the Altium ramp, but the early indications are positive.

Bruno: Lower driver and we get into a more.

Bruno: More of material cost reductions and the vehicles that we're producing.

Bruno: They get out of their early years, and we start to harness savings.

Savings and in each vehicle line in the second third year of production et cetera. So.

There is a pretty good roadmap there pricing, obviously, we're going to continue to watch and see where the market is as we've talked about what we did on the blazer was built into our expectations. So we're not we're not changing off of off of those targets.

Bruno: We're just a quarter in on the on the LTM ramp, but the early indications are positive.

Paul A. Jacobson: Okay, thank you. And, and then just stepping back, we wonder if there are multiple paths to the EV losses that are currently being incurred eventually being reversed. Specifically, if the demand or pricing environment for these EVs is softer than expected, how much flexibility do you have to lower costs in the EV business, including as it relates to battery plans? I think your plan is for 160 gigawatt hours, eventually more than 2 million units, which is their flexibility to rationalize that if the demand differs from your expectations.

Speaker Change: Okay. Thank you and and and then just stepping back we wonder if there is.

Speaker Change: Multiple paths to to the EV losses that are currently being incurred eventually reversing.

Speaker Change: Specifically, if the demand or pricing environment for these evs are softer than expected how much flexibility do you have to lower costs in the business, including as it relates to battery plans I think your plans for 160 gigawatt hours eventually over 2 million units.

Speaker Change: Is there flexibility to rationalize that if the demand differs from your expectations. Thanks.

Paul A. Jacobson: Well, you know, I think you've seen us take some

Speaker Change: Well I think you've seen us take.

Paul A. Jacobson: Well, you know, we've seen us take steps before; we had a delay in the Orion plant where we've really kind of taken advantage of some of the slowdown to put improvements into that plant that are going to help us lower the cost that came out of some of the early learnings from production at factory zero and things that we can do going forward. So I think you're going to see us be very nimble, and we're trying to build as much flexibility as we can to navigate from here to significantly higher EV adoption going forward.

Speaker Change: To take steps before you know we had a we had a delay in the Oregon plant, where we've really kind of taken advantage of some of the slowdown to.

Speaker Change: Putting improvements into that plant that are they're going to help us lower the cost that came out of some of the early.

Speaker Change: Learnings from production that factory zero and things that we can do going forward. So I think youre going to see us be very nimble.

Speaker Change: And we're trying to build as much flexibility as we can to navigate from here to significantly higher EV adoption going forward, but when you look at our portfolio across both in ICB, It's probably the best portfolio.

Paul A. Jacobson: But when you look at our portfolio across both in ICV, it's probably the best portfolio in our history, and customers are responding to that. So we're going to meet the customer where they are and continue to endeavor to exceed their expectations and really reward them for that loyalty that they have to us going forward. And I think that that can translate into the EV market as well. But, as Mary said, we're going to continue to be guided by demand for our products and our vehicles. And the early indications are that it's going quite well.

Speaker Change: In our history and our end customers are responding to that so we're going to we're going to meet the customer where they are in and continue to endeavor to exceed their expectations.

Speaker Change: And really reward them for that loyalty that they have to us.

Speaker Change: Going forward and we think that that can translate into the EV market as well, but as Mary said, we're going to continue to be guided by demand for our products in our vehicles and.

The early indications are that it's that is growing quite well.

Paul A. Jacobson: Thank you. Our next question comes from Chris McNally with Evercore. Your line is open.

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

Operator: Thanks so much, team. Just wanted to dive into some of the questions on seasonality, and follow on from some of Mark's questions earlier. Paul, could you talk about the seasonality in wholesales? I think you've talked about the full year being sort of mid-single digits, which would imply somewhere in the low to mid-$800,000 range for the rest of the year. But if you could just help us with just a little bit of the cadence, given some of the downtime you mentioned in Q2,

Chris Mcnally: Thanks, So much team just wanted to dive into some of the questions on on seasonality fall into some some of Mark's questions.

Chris Mcnally: Prior.

Chris Mcnally: Paul could you talk about the seasonality and in wholesale I think you've talked about full year being up sort of mid single digits, which would imply somewhere in the low to mid 800000 range for the rest of the year, but if you could just help us.

Chris Mcnally: With just a little bit of the cadence given some of the downtime you mentioned in Q2.

Chris Mcnally: Yeah, there was probably a little bit of pull forward from Q1 to Q2, particularly with the trucks as we prepare for that downtime and that retooling that's going to happen for a few weeks. But you know, generally, seasonality, we expect to be very similar with Q1 and Q4 being slightly lower than Q2 and Q3. So nothing has dramatically changed, but around the edges, maybe a little bit of a pull forward from Q2 into Q1.

Chris Mcnally: There was probably a little bit of pull forward from Q1 to Q2, particularly with the trucks as we as we prep for that.

Chris Mcnally: <unk> time and that retooling, that's going to happen for a few weeks, but generally seasonality, we expect to be very similar with Q1, and Q4 being slightly lower than Q2 and Q3. So nothing has dramatically changed put around the edges, maybe a little bit of pull forward from from Q2 into Q1. So.

Chris Mcnally: So you know, as we look at the second half, I just, you know, want to caution that, you know, we've got to continue to be guided by the assumption that's in there on pricing, which obviously has a bigger second half impact given the performance that we've already booked in Q1 and, and certainly where April is looking right now. And then, and then with the EV volume ratcheting up in the back half, that's where we see a little bit of front half loading in the guidance that we've provided.

You know as we look at the second half I just want to caution that we've got to continue to.

Chris Mcnally: Be guided by the assumption that's in there on pricing.

Chris Mcnally: Which obviously has a bigger second half impact given the performance that we've already booked in Q1, and certainly where April is looking right now and then and then with the E V volume ratcheting up in the back half, that's where we see a little bit of a front half loading in.

Chris Mcnally: In the guidance that we've that we've provided.

Paul A. Jacobson: Perfect. All makes sense. And then maybe just on the actual production side, should we think of sort of, you know, truck T1 production as maybe at its height in Q1? Do we, you know, do we get back to this level in Q4? Just looking at the overall year and inventory build.

Speaker Change: Perfect all makes sense.

Speaker Change: Then maybe just on the actual production side.

Speaker Change: Should we think of sort of you know.

Truck T. One production is.

Speaker Change: Maybe at a Titan in Q1.

Speaker Change: We do we get back to this level in Q4, just looking at the overall year.

Paul A. Jacobson: You know, I think that, obviously, we're going to continue to watch demand, where it is, and the inventory, while we built in March, we still came out of the quarter with about 63 days of inventory across the system. So some of that was intentional, knowing that we were going to have this downtime. So once we get through that, you know, I think we could see third quarter production trends a little bit higher, but we're going to be guided by where demand is.

Speaker Change: Inventory build.

Speaker Change: You know I think that you know obviously, we're going to continue to watch.

Speaker Change: Demand, where it is you know the inventory while we built in March where still we came out of the quarter or about 63 days of inventory across.

Speaker Change: Across the system. So some of that was intentional knowing that we were going to have this downtime. So once we get through that.

Speaker Change: I think we could see third quarter production trend, a little bit higher, but we're gonna be guided by where demand sits.

Paul A. Jacobson: Okay, great. Thanks so much, team.

Speaker Change: Yes.

Speaker Change: Okay, great. Thanks, so much.

Operator: Thank you. Thank you.

Speaker Change: Thank you. Thank you.

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

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

Ryan Brinkman: Good morning. Thanks for all the detail on your planned upcoming BEV launches in the U.S. It does seem likely you will gain share there with the number and attractiveness of the offerings. I'm curious if you have a similarly aggressive EV rollout strategy planned for China, in part because it seems your share in China has declined amidst the industry transition there to EVs. I heard you citing earlier, you know, the increased competitiveness of the domestic Chinese automakers as another contributing factor, and there may be other factors, but would a blitz of new EVs be sufficient, do you think, at this stage to stabilize the share trend in China?

Ryan Brinkman: Thanks for all the detail on your planned upcoming Dev launches in the U S. It does seem likely you will gain share there with the number and attractiveness of the offerings I'm curious if you have a similarly aggressive rollout strategy plan for China, including because it seems your share in China has declined amidst the industry transition to Evs I heard you say.

Ryan Brinkman: Earlier.

Ryan Brinkman: Increased competitiveness of the domestic Chinese automakers is another contributing factor and then may be still other factors, but would a blitz of new ebs be sufficient do you think at this stage to stabilize the share trend in China do you have such a blitz planned over the next one to two years and would that be a pathway to improved financial performance.

Ryan Brinkman: Do you have such a blitz planned over the next one to two years? And would that be a pathway to improved financial performance, or, you know, given some of the recent pricing trends, maybe more of an investment with the payoff some years further out?

Ryan Brinkman: Or given some of the recent pricing trends represent maybe more of an investment with the pay off some years further out.

Mary T. Barra: Yeah, I think we do have some strong NEVs coming in China this year. We're repositioning the Buick Velite. We've got the Cadillac Optique launch coming. You'll see that at the Beijing Auto Show.

Speaker Change: Yeah, I think we do have I think some strong ltvs coming in China. This year were repositioning the Buick elite, we've got the Cadillac Optique launch coming you'll see that at the Beijing Auto show and we also have P have entries in the Buick GLA and the equinox and then for <unk>.

Mary T. Barra: And we also have PHEV entries in the Buick GL8 in the Equinox. And then for our ICE vehicles, we do also have, like, for instance, a lead with the GL8, and there'll be more upgrades coming there as well. So, and then on SGM, we're also, we have a new LEV, excuse me, new NEV launch as well. So, I think we're going to be better positioned, and that's just going to continue as we move through this year into next year.

Speaker Change: Vehicles, we do also have I'm sorry.

Speaker Change: Like for instance, a lead with the GLA and they'll be on more upgrades coming there as well so and then on SDN, where I'll say, we have a new excuse me new nev launches as well so.

Speaker Change: So I think we're gonna be better positioned and that's just going to continue as you move through this year into next year and that's why I think we can play in that market as a plug in hybrids hybrids and ice vehicles as well as Evs and then as I mentioned with that did you rank guild and in each segment. So I think there.

Mary T. Barra: And that's why I think GM can play in the NEV market, both plug-in hybrids, hybrids, and ICE vehicles, as well as electric vehicles. And then, as I mentioned, with the Durant Guild in the niche segment. So, I think there's a place for GM to play in gross share.

Speaker Change: As a place for GM to play and grow share.

Mary T. Barra: Okay, great. Thanks. And, you know, with all these questions about the new vehicle operations in China, maybe just highlight some of the attractiveness, if it is, you know, that you can draw from the installed base of vehicles there, you know, the OnStar, the financing, sales service, GM, GoodWrench, etc. How do you feel about that element of the Chinese business? Well, I can't you

Speaker Change: Okay, great. Thanks, and you know with all these questions about the new vehicle operations in China, maybe just highlight some of the attractiveness if.

If it is that you can draw from the installed base of vehicles. There you know the onstar the financing sales service, Jim good rent et cetera, how do you feel about that element of the China business.

Mary T. Barra: Well, you mentioned all of the things that come together to allow us to be successful in the market, but I would say one of the other things is last year we also established in China a dedicated software and digital business organization, and that is going to allow us to continue to improve and compete on a software basis and also on a services basis, along with what we have from a GMF perspective, financing, as well as OnStar. So we'll continue to build on that.

Speaker Change: Well you mentioned all of the things that come together to allow us to be successful in market, but I would say one of the other things is last year. We also established in China dedicated software and digital business organization and that is going to allow us to continue to improve and compete a software basis and also on a services basis along with.

Speaker Change: What we have from a <unk> perspective financing as well as onstar. So we'll continue to build that.

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

Speaker Change: Very helpful. Thank you.

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

Gautam Narayan: Yeah, good morning. Thanks for taking the time to ask the question. Paul, just to follow up on that comment on the EV margin. So 60% of the 60 basis point improvements coming from scale benefits. So, you know, if the bevs were kind of closer, let's say to the 200,000 versus the 300,000, is that a net negative or positive to overall margins? Presumably, you know, BEVs come at lower margins, but if you're selling a few of them, then there's a negative impact from less scale benefit. So you're just trying to understand that, like, how do we think about that volume number impact on the company's margins?

Gautam Narayan: Hi, Yes, good morning, and thanks for taking the question.

Gautam Narayan: Paul just a follow up on that comment on the EV margin. So.

Gautam Narayan: 60% of the 60 basis point improvements coming from scale benefits.

Gautam Narayan: So if the if the haves, we're kind of closer to let's say to the 200000 versus the 300000 is that a net negative or positive to overall margins presumably.

Gautam Narayan: That's come at lower margins, but if you're selling fewer of them than there is a negative impact from less scale benefit.

Gautam Narayan: So you're just trying to understand that like how do we think about that volume number impact too.

Paul A. Jacobson: Yeah, good morning, Tom. What I would say is that, obviously, based on just where we are on the journey, scale matters quite a bit when you build the infrastructure that we have. So certainly in the short run, lower volume would have a negative effect on that, on that trajectory. But, you know, I think what we're looking at is, you know, kind of break even on the variable profit side around $200,000.

Gautam Narayan: The company's margins.

Speaker Change: Good morning, Tom.

Gautam Narayan: I would say is that.

Speaker Change: Obviously based on just where we are in the are.

Speaker Change: In the journeys scale matters quite a bit when you built the infrastructure that we have so.

Speaker Change: Certainly in the short run.

Speaker Change: Lower volume would have a negative effect on that.

Speaker Change: On that trajectory, but you know I think what we're looking at as you know.

Speaker Change: Kind of a breakeven on the variable profit side around low 200000 so.

Paul A. Jacobson: So we still, we still are tracking to be able to get that goal. But I look at that as more of a little bit of timing of when we grow into what we built. And I think from a strategic perspective, you know, growing capacity slightly ahead of adoption to make sure that we can pace and meter ourselves on this journey. Remember, we're playing a 10, 15-year plus game from that standpoint.

Speaker Change: We still we still are tracking to be able to get that goal, but I look at that as more of a little bit of timing of when we grow into what we built and I think from a strategic perspective.

Speaker Change: Growing capacity slightly ahead of adoption to make sure that we can pace of meter ourselves on this journey remember, we're playing a 10 to 15 year plus game.

Paul A. Jacobson: So you know, we built the flexibility in to be able to respond to ebbs and flows. And we're at a phase right now where we've got to grow into that scale we've built. But those are all really, really sound investments. And we feel good about where that's going to go in the short to intermediate term. And then we're going to continue to watch that going forward.

Speaker Change: From that standpoint, so we built the flexibility and to be able to restock respond to ebbs and flows and we're out of phase right now where we've got to grow into that scale. We felt that those are all really really sound investments and we feel good about where that's going to go in the short to intermediate term and then we're going to continue to.

Speaker Change: Watch that going forward.

Paul A. Jacobson: Thanks, and a quick follow up on the battery ROS. Obviously, we've seen lithium down by something like 80% or so since the peaks. Just curious how your contracts work.

Speaker Change: Thanks.

Speaker Change: Quick follow up on the battery raws, obviously, we've seen lithium down like something like 80% or since the peaks just curious how your contracts work when have we seen the best of that reduction or is there is kind of a lag where you see that is there more benefits to come given the lag in your raw battery raw mat.

Paul A. Jacobson: When have we seen the best of that reduction? Or is there kind of a lag where you see the benefits? Are there more benefits to come given the lag in your battery raw mat contracts? So what I would say

Paul A. Jacobson: Thanks. So what I would say is, you know, there's still some goodness to come in 24. So while we saw battery costs come down, remember, we exited the year with a pretty sizable inventory of cells as we ramped up our module production. So as a result of that, there's still some historical cost in there from last year. But that'll split pretty much, I think, by the time we get to mid summer.

Speaker Change: Contracts.

Speaker Change: So what I would say is there.

Speaker Change: There are still there's still some goodness to come in in 'twenty four so while we saw battery costs come down remember, we exited the year with a pretty sizable inventory itself as we ramp up our module production. So as a result of that there is still some historical cost in there from last year, but that'll that'll.

Speaker Change: Pretty much I think by the time, we get to mid summer.

Paul A. Jacobson: And in the second half of the year, we'll see cells that are much closer to current prices. And then, as you look at the kind of vertical integration and investment steps that we have made, most of that capacity is in 2026 and beyond. There isn't anything that we've done that I would say we regret because we locked in higher prices, etc. Everything that we've done has been done with a portfolio approach to make sure that we get value for our investment, either through floors and caps or discounts to market, etc. So we haven't done anything that would have locked in sort of historically high prices, and that should be a benefit for us as we roll forward into 2026 and beyond.

Speaker Change: And in the second half of the year, we'll will see cells that have much closer to current prices and then as you look at the.

Kind of vertical integration and investment steps that we made most of that capacity is in 2026 and beyond.

Speaker Change: There isn't anything that we've done that I would say, we regret because we locked in higher prices etcetera everything that we've done has been done with a portfolio approach to make sure that we get value for our investment either through floors and caps or discounts to market et cetera. So.

Speaker Change: We haven't done anything that.

Speaker Change: It would have locked in sort of historically high prices and that should be a benefit for us as we roll forward into 2026 and beyond.

Mary T. Barra: Thank you. I'd now like to turn the call over to Mary Barra for her closing comments.

Speaker Change: Great. Thank you so much.

Speaker Change: Thank you I'd now like to turn the call over to Mary Barra with her closing comments.

Operator: Thank you, and thank you everyone for your questions. As we've talked today, we are making extremely good progress across the board. We're driving revenue growth. We have great margins, and our free cash flow is strong, and that's enabling us to reinvest in the business and our employees. So we plan to efficiently invest between $10.5 and $11.5 billion in capital this year to leverage the strength of not only our ICE business but also grow our EV business profitably.

Mary T. Barra: Thank you and thanks, everyone for your question as we talk today, we are making extremely good progress across the board, we're driving revenue growth. We've got a great margins our free cash flow was strong and that's enabling us to reinvest in the business and our employees. So we plan to efficiently invest between 10, and a half and 11 and a half.

Mary T. Barra: Filling in capital this year that leverage the strength of not only our ice fitness, but also grow our business profitably and we're also advancing our software defined vehicle capability. So I feel very good about the key areas of focus and how we're doing there. In addition, we've set aside more than $160 million in profit sharing for the first quarter to recognize the contributions.

Operator: And we're also advancing our software-defined vehicle capability, so I feel very good about the key areas of focus and how we're doing there. In addition, we've set aside more than $160 million in profit sharing for the first quarter to recognize the contributions of the manufacturing team members in the U.S., which were significant both in terms of production volumes and quality. And our shareholders are also benefiting from the progress, too, thanks to our improved execution, a higher dividend, and the value-enhancing benefits of the ASR we launched in November.

Mary T. Barra: The manufacturing team members in the U S, which were significant both in terms of production volumes and quality and our shareholders are also benefiting from the progress too thanks to our improved execution, a higher dividend and the value enhancing benefits of the ASR. We launched in November we are on track to reduce our shares outstanding to fewer than $1 billion.

Operator: We are on track to reduce our shares outstanding to fewer than a billion, so I can say to everyone with confidence and conviction that our team is very much on point. We're focused, and we're going to do everything in our power to keep this momentum going. Twenty twenty four could be a very strong year for GM.

Mary T. Barra: So I can say to everyone with confidence and conviction that our team is very much on point, we're focused and we're going to do everything in our power to keep this momentum going 2024 can be a very strong year for G. M. So thank you all for your time.

Mary T. Barra: So, thank you all for your time.

Operator: That concludes the conference for today. Thank you for joining me. You may disconnect.

Speaker Change: That concludes the conference for today. Thank you for joining you may disconnect.