Q2 2025 General Motors Co Earnings Call

Good morning and welcome to the General Motors Company. Second quarter, 2025 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 1 in a brief follow-up. To ask a question, press star, then 1 on your telephone keypad to join the queue.

Reminder, this conference call is being recorded Tuesday, July 22nd 2025, I would now like to turn the call over to Ashish kohi GM's vice president of investor relations.

Speaker Change: Thanks Amanda, and good morning everyone. We appreciate you joining us as we review GM's Financial results for the second quarter of 2025 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 Susan Sheffield president and CEO of GM. Financial will also be joining us for the Q&A portion of the call.

Speaker Change: On today's call management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause actual results to different material, 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.

Speaker Change: And with that, I'm delighted to turn the call over to Mary.

Mary: Thank you. Is she and good morning everyone?

Mary: Today, we reported another quarter of earnings that highlights the core strengths of General Motors.

Mary: They include the appeal of our vehicles, customer loyalty to Our Brands, the growing value of Technologies like OnStar and super Crews, as well as the creativity and resiliency of our Global team. I am grateful for everyone's contributions, our employees, our dealers, and our suppliers in the US and around the world. We have demonstrated consistent execution of our production and go to market strategies. We do have opportunities from a quality perspective at both the supplier and the GM level, which Paul will talk more about in his remarks. But we are fundamentally very strong and resilient

Mary: As we discussed today, we have delivered strong, underlying operating performance. And we are positioning the business for a profitable long-term future as we adapt to new trade and tax policies and a rapidly evolving Tech landscape. Our clear priorities are to grow our already expansive us, manufacturing footprint and domestic supply chain further. Strengthen our international business and continue to innovate in batteries, software, and autonomous technology.

Mary: in China, we have been working closely with our JB partner to improve Sales, Inventory management costs, and profitability

Mary: The performance of our new energy. Vehicles has been especially strong. And in Q2, we reported our second consecutive quarter of year-over-year sales growth,

Mary: We were the only foreign OEM to gain share and were reported positive Equity income in the US. The industry saw a spike in demand during the quarter due to tariff related sales. Pull ahead a special in April and May

Mary: then in June, and July demand returned to levels that are in line with our full year, outlook of 16 million units throughout the first and second quarters GM outperformed, the market in total Fleet and Retail market share year-over-year. We also gained total Fleet and Retail market share sequentially from q1 to Q2 despite increased incentives from our competitors. We delivered all of this with inventories at the end of June that were down year-over-year by almost 10%.

Mary: Our incentives remained. Well, below industry, average for both ice and EVs and our pricing has been relatively consistent.

I'm particularly pleased that the crossover portfolio we highlighted at our last investor day has been delivering record results. These 10 all-new or redesigned crossovers took huge leaps forward in design and Technology resulting in strong, demand and revenue growth while reducing complexity contributed to Stronger profitability. The Chevrolet Equinox alone gave

Nearly 6 points of retail market share year-over-year in the industry's largest segment. Thanks to the popularity of both the ice and EV models.

We are growing in EVS because we have a strategic portfolio of vehicles that people love for their design performance range and value.

Stations are typically no more than 150 miles apart, so it's easy to take long-distance trips. Knowing you'll have access to Reliable, fast, Chargers, and convenient Services when you need them in addition. The first of iona's charging stations, which can deliver up to 400 kilowatts are now in service in North Carolina, Texas, Pennsylvania, Ohio, Kansas, Arizona, and Missouri. By the end of the year, our customers will have access to more than 65,000 public fast. Charging Bays across the country that will grow to more than 80,000 by the end of next year. And a 100,000, by the end of 2027 a more than 50% Improvement in just 3 years.

The growth of our ice and Eve business is also fueling the expansion of our highly acclaimed, super Cruise technology, which in turn is helping guide, the development of our personal autonomous vehicles, we're making steady progress growing super Crews. The technology is now offered on 23 models and we continue to add new capabilities. We're on track to have more than 600,000 customers. By year, end each of whom has paid Upfront for 3 years of service, with 70% of new Cadillacs delivered equipped with super Crews. Additionally, we have changed the way we approach the market for our

Mary: OnStar products, and we now price our vehicles to include a period of basic OnStar Services as a result. Our OnStar subscriber, totals are increasing at record rates and we now have even more ways to engage directly with our customers throughout the life of the vehicle to drive our industry-leading loyalty even higher. As of today, we have booked 4 billion dollars of deferred revenue from Super Cruise OnStar and other software services that we will recognize over time. Our projected super Cruise, Revenue will be more than 200 million dollars in 2025 and is expected to more than double in 2026.

Mary: As we continue to scale, we anticipate growing at a robust double digit Kerr. Through the end of the decade, we have also introduced a new and improved. My GM Rewards customer loyalty program and credit card portfolio. That gives our members access to more savings opportunities on GM products and services and exclusive access to member-only experiences like Trackside access at racing events and Off the Grid EV excursions. We invested in these programs because our loyalty program members are very valuable, they buy vehicles with higher, msrps, and visit dealers for service at nearly twice, the rate of non-members,

Mary: To build on our leadership positions in ice and increasingly in EV and develop new sources of competitive advantage in AV software and services, we continue to strengthen our team with experienced Executives and Tech innovators. Like Sterling Anderson Sterling, who was the co-founder, and chief product officer for autonomous Trucking Company, Aurora is now GM's Chief product officer.

We are also embracing AI across the Enterprise, which is why we recruited Google and Cisco, veteran, Barack terasi to lead our efforts under Apple veteran. Dave, Richardson, who leads software and services engineering Barack is building a world-class team of Applied AI experts and researchers as we redefine how intelligence Powers vehicle performance, customer experience and operational excellence at GM.

Mary: I believe everything we're doing strategically and proactively along with closer alignment of emissions rules with consumer demand will further differentiate us from our competitors increase, our resiliency and drive overall profitability. For example, the 4 billion dollars of new investment in our us assembly plans will add 300,000 units of us capacity for high margin. Light duty, pickups full-size, SUVs and crossovers to help us greatly reduce our tariff. Exposure satisfy, unmet customer demand and capture upside opportunities. As we launch new models,

Capacity begins coming online in just 18 months after which we project building more than 2 million vehicles in the US, each year, as we scale at Orion assembly in Michigan. This includes production of the Cadillac Escalade followed by the launch of our next Generation, full-size light duty, pickups.

Mary: Despite slower EV industry growth. We believe the long-term future is profitable, electric vehicle production, and this continues to be our North Star as we adjust to changing demand, we will prioritize our customers Brands and a flexible manufacturing footprint, as well as leveraging battery Investments and other profit Improvement. Plans the battery strategy. We are executing is Central to our efforts to make EVS profitable and an even better choice for our customers domestically developed and produce cells are also necessary for a resilient and secure American oriented supply chain. Our joint venture, sell plan, in Indiana, for example, will produce Prismatic cells to help lower pack and total vehicle cost foundation. Work is almost done and more than 50% of the steel structure has been erected.

We have also confirmed that ultium cells Spring Hill and Tennessee will begin producing lfp cells developed by our Korean partner lges. In addition, to high, nickel pouch cells, starting in late 2027, the new lithium magnice rich or LMR chemistry that we are developing with lges, will be another game-changer because of its unique, balance of energy, density, charging capability and cost efficiency driven by its reduced nickel and Cobalt content in large truck packs. We believe the potential savings from LMR and baby even greater than using lfp at today's metal prices.

Mary: Our expertise in leading cell chemistries. And formats is also creating new business opportunities. Today GM's, Second Life, Eevee batteries are being repurposed by Redwood materials in addition. We're finalizing, an agreement with redwood to supply. Battery modules, to Redwood energy, their new energy storage business, which has been formed to meet surging power demand for AI data centers, and other applications importantly. All of the cells are jv's build have and will continue to qualify for the advanced technology, manufacturing tax credits and we're grateful for the continued support of the administration and Congress as we invest in American Battery Innovation and job creation.

Mary: Our well positioned to succeed and an ice Market that has now a longer Runway. We will continue to drive improved profitability for ice and focus on EV profitability Improvement, to generate ongoing, strong free, cash flow in addition. We'll continue to drive American innovation in batteries Ave and software to further differentiate GM. Thank you. And I'd now like to turn the call over to Paul who will share more details about the quarter.

Paul: Thanks, Mary, and good morning everyone. Appreciate you taking the time to join us.

Paul: The team continues to execute well on our discipline strategy, which leverages our leading product portfolio and emphasizes prudent Inventory management to support stable pricing while delivering consistent performance.

Paul: Our agility and responsiveness to evolving consumer preferences and Regulatory demands remain key strengths that set us apart. For the first half. Total company, Revenue was a record, 91 billion driven by strong demand, stable vehicle pricing, and continued growth at GM Financial. North America. Revenue was also a first half record at nearly 77 billion dollars up. Slightly year-over-year. We maintain production levels in line with our full year plan. As early quarter sales acceleration, normalized, this measured approach combined with strong sales at outpace. The industry reduced us dealer inventory to 526,000 units down nearly 10% year-over-year and almost 12% compared to the end of 2024.

Paul: Ibid adjusted was 3 billion dollars. For the quarter inclusive of a net, tariff impact of approximately 1.1 billion dollars with minimal mitigation offsets.

As we've previously mentioned mitigation efforts will take time to yield results limiting their effect on the second quarter. However we're still tracking the offset at least 30% of the 4 to 5 billion full year. 2025 tariff impact through strategic actions, such as manufacturing adjustments, targeted cost initiatives and consistent pricing

Paul: Looking at our sales performance GM's US market share reached 17.3% in the first half of the Year marking a consistent upward Trend, and a 1.2 percentage Point increase year-over-year. More than double the gain of our closest competitor.

As Mary mentioned, continued growth across a number of SUV, segments was a key driver with the Chevrolet Equinox. Standing out as its total sales, Rose more than 20%, compared to the same period last year. Our share gains came on the back of strong product, not aggressive pricing, indeed, in the first half of the Year, our us incentives, as a percentage of average transaction price were more than 2 percentage points. Below the industry, average highlighting the product portfolio, our discipline production strategy and our sustained pricing power.

We remain focused on striking the right balance between investing in the business, maintaining a strong balance sheet, and returning Capital to shareholders during the second quarter. We announced nearly 900 million for the Tanana propulsion. Plant to support our next Generation V8 engine along with a 4 billion. Dollar investment in our us manufacturing footprint. These strategic investments will expand capacity support. Next Generation full-size SUV and pickup production and enhance flexibility to shift between ice and EVS based on market demand.

Paul: Importantly, not all of this nearly 5 billion dollar investment is incremental to our prior Capital plans. A portion is being offset through cost efficiencies internal reallocations and by aligning the timing of Investments with product updates.

Paul: Our annual Capital spending Outlook remains unchanged at 10 to 11 billion dollars for 2025 with a modest increase to 10 to 12 billion dollars, projected for 2026 and 27.

this includes key investments in our battery joint ventures such as ultium cells production of LMR and lfp chemistry, as well as our partnership with Samsung SDI

With regard to our balance sheet, we issued 2 billion dollars of debt during the quarter. The proceeds are will be used for General Corporate purposes, including a 1.8 billion Term Loan to Altium cells. LLC to support the voluntary early repayment of their US Department of energy loan, as well as refinancing a portion of the 1.25 billion note maturing in October.

Paul: Our balance sheet remains strong, which gives us ample flexibility to navigate the current environment. While continuing to invest in key future projects and return Capital to our shareholders,

Paul: Speaking of shareholder returns, we completed the 2 billion dollar ASR during the quarter retiring in additional 10 million shares, which brought the total shares retired, under this program to 43 million on a diluted basis. This resulted in 971 million shares at the end of the second quarter representing a 4% reduction, since the end of 2024 and a 15% decrease compared to the end of Q2 last year,

Supported by our strong, cash flows with increased visibility around tariffs, in the broader business environment. We resumed open market repurchases, in early July,

Paul: Let me now, walk through the second quarter Financial results in more detail.

Paul: Total company EPS diluted, adjusted was $253 cents. And ebit. Adjusted was 3 billion dollars down 1.4 billion dollars year-over-year. This decline was primarily driven by a net tariff impact of 1.1 billion dollars in the quarter. We benefited from lower fixed costs improved mix and foreign currency impacts, which largely offset the effect of lower volume. EV inventory, adjustments, and higher warranty, related charges adjusted Automotive. Free cash flow was 2.8 billion dollars, down 2.5 billion year-over-year. The decline was primarily driven by tariff payments as well, as headwinds from working capital and lower dealer inventory levels.

In North America, we delivered ibid adjusted of 2.4 billion dollars and ebit adjusted margins of 6.1%.

Paul: Excluding the impact of tariffs, our margin would have been approximately 9%, which underscores, the fundamental strength of our business on a comparative basis. This keeps us well, within our pre-tertiary,

Paul: in addition to the impact of tariffs warranty expenses have also been obscuring, our strong performance, including a $300 million increase in the second quarter compared to last year, the main factors behind the higher warranty expenses, relate to l87 issues and higher warranty claims from software issues on some of our early, EV launches,

Paul: Let me be clear. We are not happy with our warranty Trend and are facing these challenges head-on with the top priority, always being our customers. We've provided extended warranties in some instances and taken other proactive steps to support those affected. Including shifting some supply of our components to our after Sales Group to decrease repair times.

Paul: To address the root causes we are pursuing multiple paths.

Paul: We are working to improve supplier quality across the board and our engaging more on critical component operations than ever before, to ensure they consistently meet our high standards.

Spending on a per vehicle basis for software. Related issues is down. Roughly 25% year-over-year. When comparing most recently, built vehicles, to last year's models. Our expanded use of over-the-air updates, lower number of incidents per vehicle and increased robustness in. Our infotainment system updates are all contributing to this Improvement.

Diagnostics in developing new, prognostic tools to identify issues. Sooner develop repair procedures, faster and minimize unnecessary repairs.

Paul: Complexity reductions enabled. By winning with Simplicity initiatives are also supporting improved launch quality as seen on our recent Tahoe and Yukon launches.

As we look to the second half of the year, we expect overall warranty costs to stabilize and for the full year. We now expect warranty to be a year-over-year headwind. We remain fully committed to continuously raising our quality standards and delivering stronger results for our both. Our customers and our business,

North America pricing was a $200 million headwind in Q2 compared to last year, we continue to benefit from robust retail pricing, particularly with our new vehicle launches. However, we experienced a year-over-year headwind in Fleet pricing primarily due to increased competition, resulting in pricing moderation. We expect the headwind from Fleet, pricing to continue into the second half of the year.

Paul: GM International delivered, second quarter ibid, adjusted of 200 million and increase of 150 million, year-over-year driven by improved profitability from our China Equity income. We expect this strong performance to continue into the second half of the Year. Our China team is executing well and launching competitive Nev products that are fueling our market share gains and delivering positive Equity income.

Outside of China, our operations in South America and the Middle East continue to deliver consistent results.

Paul: GM Financial delivered EBT, adjusted of 700 million and is on track to deliver. Within the full year, EBT adjusted range of 2.5 to 3 billion.

Paul: The team continues to grow the portfolio, while paying a 350 million dividend to GM during the quarter.

Credit performance and used vehicle. Prices, remain healthy reflecting relatively stable, underlying consumer demand and market conditions.

Paul: Now, turning to the forward Outlook, our guidance, in most of our underlying assumptions remain unchanged at ibid adjusted in the 10 to 12.5 billion dollar range, EPS diluted adjusted in the 8.25 cents to $10 per share range and adjusted Automotive. Free cash flow in the 7.5 to 10 billion dollar range.

Paul: To help with your modeling. Let me first provide some thoughts on the first half to second half comparison.

Paul: Ebit adjusted for the first half of the Year totaled 6.5 billion dollars at the midpoint of our full year guidance. This suggests that second half results will be about 1.75 billion dollars lower. There are 3 key factors causing this Dynamic. The first is an additional quarter of net tariff impact in the second half, which accounts for around 1 billion dollars of this Gap. The second is that we expect North America wholesale volumes to be down a low single digit percentage reflecting,

Typical seasonality from fewer production days in the July shutdown. The last is increased spending related to preparations for the launch of our next Generation. Full-size trucks, which are scheduled to begin rolling out as model year 2027 Vehicles. Including also ramping Investments at Orion assembly to increase capacity in the US,

Paul: Now let's move to a year-over-year perspective for the full year. We continue to plan for a full year. Total us SAR of around 16 million units. This implies a second halves are in the low to mid 15. Million range pricing remains stable in the second quarter as well as so far. In July, our guidance assumes this continues throughout the second half of the Year, our full year. North American pricing, assumption is unchanged at a year-over-year increase of 0.5 to 1%.

Paul: Turning to Terrace the environment remains Dynamic the second quarter. Net impact of 1.1 billion dollars was slightly lower than we had expected due to the timing of certain indirect tariff costs.

Paul: As a result, we will likely see third quarter net tariff costs higher than in the second quarter.

Paul: For the full year. While there have been some puts and takes. Since we gave our initial guidance, our gross tariff impact remains unchanged at 4 to 5 billion dollars this year as we continue to produce and import vehicles from Canada, Mexico and Korea to avoid interruptions for our customers and dealers over time, we remain confident that our total terrific expense

Paul: Will come down as bilateral trade deals emerge and our sourcing and production adjustments are implemented.

Paul: As mentioned earlier, we are making solid progress on our mitigation efforts and remain on track to offset at least 30% of this impact with roughly 1/3 coming from each of our key actions. Manufacturing adjustments. Targeted cost initiatives and consistent pricing.

Paul: By the administration. While we are still seeking further clarification on certain aspects. We anticipate these changes to have a minimal impact on our 2025 results.

Our recent investments in US manufacturing, give us the capabilities to flexibly produce an ice and Evie mix based on changing customer demand.

Paul: We also anticipate that a more rational EV Market along with the need to balance regulatory requirements against reduced EV incentives. Positions us. Well for sustained profitability in the years ahead.

I want to be clear that our EV journey is about giving consumers choice. And over the last few years, a steady number of consumers are choosing electric vehicles. We offer a compelling EV portfolio and see significant growth potential particularly in coastal markets where we remain under penetrated.

Paul: Now that we have a robust portfolio of EVS on the road, our investment Focus has turned to driving down costs and improving profitability.

Mary shared examples of how new battery chemistries and form factors are driving cost efficiencies. However, we are also working to improve efficiency by making our vehicles. Lighter and more aerodynamic, enabling us to achieve greater range with smaller batteries.

we are also standardizing key components such as electric motors, across models to drive scale and reduce complexity

Paul: While we anticipate headwinds to Evie profitability from lower volume due to the recent removal of government incentives. We remain focused on controlling what we can.

Paul: These efforts are essential to improving our EV profitability and are critical to supporting the company's long-term success.

In closing everything. We've achieved in the first half of the Year, reflects the commitment and hard work of the entire GM team by staying focused on our key priorities and investing in our future. We are well, positioned to navigate a dynamic environment and deliver strong returns for our shareholders. Thank you. And we'll now move to the Q&A portion of the call.

Paul: Thank you, as a reminder, to analysts, we are asking that you limit your questions to 1 and a brief follow-up. So that we may get to everyone on the call to ask a question, press star, then 1 on your telephone keypad to join the queue to withdraw, your question press star, then to

Speaker Change: Our first question comes from the line of Michael Ward with research. Your line is open.

Michael Ward: Thanks, good morning everyone. Um,

Paul. I wonder if you could walk through the accounting for the the 600 million you called out on the Delta with the, uh, the EVS

Michael Ward: Hey, good morning, Mike. So, uh, I think you're referring to the, the lower of cost or Market adjustment. Exactly. Yeah, yeah. So, um, uh, as a reminder, um, you know, with the, uh, uh, uh, sell inventory that we have, uh, we are required to, uh, Mark any, uh, potential losses, uh, on that inventory, uh, and take it, uh, to the inventory that reflects finished goods, Etc. And as we work towards, uh, evict profitability, uh, over time, that'll that'll start to come down. But as we are seeing adjustments in the market, uh, as we are looking at expectations on on pricing as well as production and demand. Um, we made an adjustment to that reflecting. Um, what we think is future, uh, pressure on EV sales in uh uh going forward related to that inventory. That number will, uh, we expect, uh, ultimately get better as inventory comes down and we see more stability and pricing, but, uh, think about it as more of timing, uh, from

Michael Ward: Standpoint and uh, you know, we expect that it'll get better over time.

Speaker Change: Okay. And just as it relates to tariffs um you're taking as the world sits today and you're talking about the input 4 to 5 billion then with mitigation

Speaker Change: What would be the best case scenario? We get a settlement with, uh, US Canada. Mexico, Korea, what would the impact look like over the right now, like, for this year, if the world changed tomorrow and it went back the other way and then what do you have strategically that helps you from a performance standpoint? As you as you go forward with your the the 4 billion investment.

Speaker Change: Yeah.

What's going to happen though. Uh, is we've always said we, uh, feel, we'll be able to offset 30%, uh, a lot of that will come in later this year, as well as. Um, we'll continue to make improvements, uh, across the board as we get into next year, and 18 months from now, the capacity, the 4 billion dollars that we talked about that capacity will come online and then that will have another step function Improvement. Uh, and in some cases, the capacity we're adding is also for unmet demand. So it's a win-win from that perspective. So, um, you know, we're we're on a, a, I think a positive, um, trajectory, as we look into, uh, later this year into next year and clearly into 27, uh, will be substantially better. And, you know, to your original question when we see what the final, um, Agreements are between these key countries for us. Um, you know, then we'll be able to size that as well.

Speaker Change: So you're prepared for the worst case scenario. So there, there's potential for some upside, the way we look at it.

Speaker Change: I think that's a fair comment. I think that's a fair comment. Um I don't want to predict um what we're cases, right, but I think with what we know today, I think um that that's what we've that's what we've used. So I think there's potential

Speaker Change: Yeah, I don't think anybody can predict what's going to happen so thank you very much.

Michael Ward: Thank you. Thanks. Mike.

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

Hi, good morning. Thanks for taking the questions, um, want to start first with the question on, uh, on pricing and appreciate the commentary. That the reason the, uh, price in the North America. Ebit Bridge was negative on fleet, but we did see pretty solid third-party data. So retail was tracking up decently based on a third-party data. Retail is the vast majority of your sales, maybe you could just double, click on the Dynamics there. And, you know, as far as the second half goes, how do we reconcile these Assumption of pricing, sort of held where it is versus the notion that as others run out of pre-term and inventory is now more expensive, Others, May now need to raise prices,

Speaker Change: Hey, good morning Dan. Um, thanks for that. And, uh, you know, not not surprised by the question, you know, I think a couple of things number 1, uh, as we talked about, uh, Fleet it's, it's largely a, a comp issue too. Because remember what we're lapping is Fleet deals that were done under significantly tighter inventory than even where we are, uh, today at at our tight level. So, you know, we think that's, that's some normalization. I mean, we're still comfortable, uh, with our uh, pricing Assumption of, you know, up a half to to 1% for the year. Uh, going forward. We have

Speaker Change: The, the strength in the first quarter, we have tougher comps really through the middle of the year. But as we launch our model year, 26, uh, vehicles with, you know, our our sort of regular uh uh pricing uh, strategy that we've uh encountered, uh, we we still see that, um, working, uh, quite well. So I think there's a little bit of noise in the quarter here, uh, that uh, um, we will work through but nothing has changed about the full year. You know what, there's a, there's a lot of talk about that out there about what people are going to do, what they're not going to do is, as we've said before, we're pursuing our own sort of commercial path. 1 that is really centered around the discipline and the demand for our products, and that's worked really well for us so. So despite having lower incentives, uh, significantly lower incentives than the industry, average, uh, we're still picking up share. So, you know, I think to the extent that, um, you know, we see pricing change, we're going to continue to look at it. Um, you know, according to uh, where we see the demand for our products, which remains strong, and I expect will into the future.

Speaker Change: Okay, great, thank you. That's helpful. Um, second question is just about the EV strategy going forward and appreciate the commentary about. So you want to give consumers choice but now that uh, the tax credit is on its way out and there's changes in the regulatory schemes. I, I know we've seen a a broad line of across price points, but the, the profitability has been challenged and I think these changes indicate profitability is probably going to get a little trickier. So,

Speaker Change: Especially given your your losing some of the scale benefits, which was supposed to drive profit. So how do we look at, you know, the, the, the the depth or the breadth of your EV lineup, going forward and the price points at which you're offering Vehicles when it seems like it's just going to be much tougher to get profitability at the more, uh, lower price point that we just the higher price points and that's the strategy.

Speaker Change: And the 7500 tax credit, uh, and and some of the other portions of that there still was demand for EVS and we think as charging grows and, uh, that's 1 of the things we highlighted because we are continuing very Capital efficiently through Partnerships to, uh, make sure we continue to expand the EV charging Network. I also think there's an opportunity for EVS for those that have a 2-car family that have a garage that they can charge. Um, you know, it makes a lot of sense to have that 1 of those 2 Vehicles, being EB. So I think as we get through this period and we we go through with the potential pull ahead and before the September 1st uh, where the consumer tax credit goes away. Then we get to fourth quarter, we'll probably see a little result of that, uh, pull ahead. We get into 26. So I think we'll start to understand what real EV demand is. Well, we have been saying, is the what we're investing going forward, is largely focused on, uh, improving our EV profitability. The announcements we've made from a battery perspective.

Speaker Change: Uh, with LMR and lfp. Um, some of the, uh, work that we're doing, uh, as we move forward to have a lighter architecture, is more aerodynamic that allow us to use a smaller battery. So we're very focused, um, in this period of time to drive, um, not just get to variable profit profitability but get to profitability and then, you know, to continue to improve. So we have, you know, appropriate and strong margins from our EVS, as well. And then we're very well positioned to the market, uh, for

Later, in this decade into next decade, and we truly offer consumer's choice. So, we think we've got the foundation with the EV platform that we have that allows us to go, you know, from a very small vehicle all the way up to a Super Truck like the Hummer. Uh, we think that's an advantage for us. We think there is going to be an EV Market that will grow over time. Albeit it'll start lower and potentially grow more slowly but we're well positioned to uh do that. And you know right now we're seeing growth in both ice and Evie from a share perspective. With, as Paul mentioned, very disciplined incentives.

Speaker Change: And there's a clear path to growth to get the profitability on the affordable EES.

Dan Levy: I'm sorry. I didn't hear the beginning of your question, Dan there. There's a there's a clear path to get the profitability on the affordable EES.

Dan Levy: Well, you know, that, that is what we're working on from, from all aspects and definitely The Battery Technology changes. And, you know, as we grow with affordable, which is in the heart of the market that gets us to scale benefits as well. So uh, we are focused on each and every vehicle getting to profitability and we're not going to stop until they do.

Great. Thank you.

Thank you. Our next question comes from Ryan Brinkman with JP Morgan. Your line is open.

Ryan Brinkman: Great. Thanks for taking my question. Uh, I wanted to ask on the impact of tariffs on your earnings power as we move Beyond this year. Know earlier, you'd called out 4 to 5 billion of tariff impact over the course of 223425. So annualizing to maybe 5.3 to 6.7 billion with the goal of mitigating, at least, 30% of the impact this year. But that was before the various investments in US manufacturing announced during the quarter. How should we think about these footprint? Actions impacting net tariff costs going forward? You know what degree of uh, tariff cost mitigation beyond the 30% Target for this year. Do you think you might be able to accomplish after these Investments come online in 18, months' time?

Speaker Change: Yeah, good morning Ryan. I'll uh, I'll take that 1. Thanks for the question. You know. We have, uh, we we highlighted that of the 4 to 5 billion dollars about 2 billion dollars of, it is Korea and as Mary mentioned in, in, in their comments and and, uh, recent questions that, uh, you know, obviously the trade deals with Mexico, Canada and Korea are going to be important. We're not speculating on what those are going to look like, uh, going forward. But, you know, there is a, uh, there. There's a possibility and and a likelihood if you will that, uh, that ultimately, uh, tariff rate gets set at a lower level, which would ultimately bring that impact down as far as, uh, the other aspects of the tariffs, you know, we talked about the 4 billion dollars, uh, which will bring us when, uh, all that is implemented to producing a

Speaker Change: Mitigate a substantial part of this. Um, you know, we're we're obviously looking for, uh, things to normalize around. Um, uh, these trade deals that we'll get done, uh, and we we we expect that'll happen, but, you know, it's it's too soon to extrapolate that as a run rate into the future.

Speaker Change: Very helpful. Thank you.

Joe Speck: Thank you. Our next question, comes from Joe Speck with UBS, your line is open.

Joe Speck: Thanks, good morning, um, Paul just um, maybe turning back to some of the Tariff comments and I understand, um, you know, it it a lot has changed, but you did mention uh, that you expected the biggest headwind to be in the second quarter. And now it seems like the third quarter. So, um, maybe you could just sort of help us understand what you know, large buckets, what sort of changed within that, it seems like in the slide, you're missing in direct tariffs which is maybe Commodities and uh, or maybe there's something with the mitigation efforts just any any color you have their

Paul: Uh, yeah. Thanks Joe. Um, you you, you got it? It's, it's really on a lot of the indirect um, uh, items that, you know, we were, when we came out with the overall tariff guidance, uh, we we were, uh, estimating the timing on when some of that would hit. Um, so you know, I would expect that we would have more expense um uh potentially in the third quarter, but we're still tracking on that 4 to 5. Uh, despite all the changes that we've seen going forward. So

Paul: You know, it might be slightly higher uh in the third quarter and that's that's kind of what we're thinking right now. On the cash side, we actually expect that uh that cash impact um you know, potentially to be lower. Um we're still you know, didn't get the full benefit of the MSRP offset just because of the timing. Um, so that'll materialized in the second half of the year, um, on the cash side, but from an expense side, just think slightly higher in 3Q, but still on track for the 4 to 5 billion for the year.

Speaker Change: okay, and then and then just turning back to

Speaker Change: EVs and, and, and you know, regulatory policy but maybe from, um, a little bit of a different angle, you know, I know in in your case, you disclose

Speaker Change: A last year. You expense a billion dollars for credits. Um,

Speaker Change: I was wondering if you could let us, it doesn't sound like you expect, much sort of change to this year but I was wondering if you could let us know.

How much you are counting on that expense to be this year and is it fair to assume you have a potent? If we're comparing 26 to 24, you have a potential 1 billion dollar Tailwind from credits.

Yeah, Joe it gets. It gets really complicated, really fast, as you might imagine was the different regulatory schemes, but what what's in there is Cafe ghg, state regulations Etc. Um, so what we know today is, you know, the, the, the cafe penalties under the 1, big, beautiful Bill. Uh we're we're zeroed out.

So, we did have some, uh, balance sheet, uh, purchased credits that, uh, were there this year, but we also have some uh, uh, expenses that we had that already booked. That's going to basically be a wash for us. So I don't expect any material adjustments from Cafe. Uh, ghd obviously has not been fully answered, uh, uh, we, we, we have comments from the administration and, you know, in the 1 b, 1, big, beautiful Bill. Uh, you know, there are changes to Future compliance, but we're still working through that across the board. So I think 25 is a little bit of a transition year, as we as we understand, what the future landscape is going to be, uh, and what, uh, how that's going to affect. Um, the uh, uh, the credits and the liabilities that are on the balance sheet this year. But going forward, we do expect to be a uh, uh more, uh um, uh, I guess a lower expense rate for compliance in the future, right? I just, I would add to that. Also gives us the opportunity, uh, to sell, um, EV Vehicles part 2.

Speaker Change: Excuse me, ice vehicles for longer uh and under or appreciate the profitability of those Vehicles while we're you know, month by month quarter by quarter or year by year, improving our EV profitability. So I think it's a huge opportunity.

Speaker Change: Thank you.

Joe Speck: Thanks Joe.

Thank you. Our next question comes from E time. Mck Kelly with TD. Cowen, your line is open.

Mck Kelly: Uh, great. Thank you. Good morning everyone.

Mck Kelly: Um, just first, um, on the guidance just given, you know, still the wide range. Uh, second half of the year, you know, 3 and a half to 6 billion. I'm just curious, you know, with some of the factors that that could materialize that could cause you to be at the low versus high, end of that range and whether you have a current bias within the range currently,

Mck Kelly: The reason to not change is obviously there's there's still things working out. Uh, we don't want a lot of volatility in our guidance, uh, from that standpoint. But uh, you know, as we as we look at the landscape, some of the things that uh, uh, that could help us are, you know, getting, uh, some of the offsets as we've talked about, potentially over performing on that. Um, some of the challenges are, you know, higher tariff rates for longer. But, uh, but overall, you know, we're, we're, we're aiming for the midpoint and that's, that's the way we. Uh, we, we try to shoot straight uh, across the guidance and so, as the year progresses, you know, we'll have an opportunity to tighten that range as we know more.

Speaker Change: Right that's helpful. Maybe just as a follow up, just with with wholesale volume declining on seasonality. And and you've gained some some nice market share. Uh, your inventory is in good shape. Going into second half of the Year, any thoughts on where, you know us dealer inventory could end uh the year roughly

Speaker Change: Well, I mean, we we we remain committed to our 50 to 60 day Target, um uh at the at the end of the year, uh, you know, that obviously fluctuates with changes in demand. But uh, clearly the the vehicle count, uh, as we highlighted in our comments was down, um, pretty significantly year-over-year. Um, you know, we we have, uh, responded. I think the right way, uh, with some component availability into our customer care. And after Sales Group, uh, to address some of the more, uh, specific uh, warranty issues to make sure customers are getting their vehicles back faster.

Speaker Change: Um that was a very calculated uh measure that uh impacted our Wholesales uh to be honest. Uh and something that you know, I think ultimately we can uh we can improve in the second half of the year uh that will have an ability to potentially uh improve our Wholesales, but nothing has changed from that Target of wanting to get to that 50 to 60 day Target ranking.

Speaker Change: Terrific. That's all very helpful. Thank you.

Thank you.

Adam Jonas: Our next question comes from Adam Jonas with Morgan Stanley, your line is open.

Speaker Change: Uh, thanks everybody and Mary about 15 or 20 years ago.

GM was leading the industry in humanoid robot development uh working together with NASA.

Speaker Change: On robonaut 1 and then robonaut 2 deploying, an upper body humanoid on the International Space Station in 2011.

Speaker Change: Fast forward to today, and most of your key competitors have a humanoid program.

Speaker Change: And many myself included think that this Market's 10 times larger than cars at least. So when can investors learn more about GM's robotics chops and your in-house and your in-house? Um, robot facilities, Mary has an engineer. I'm sure you must be super excited about the opportunity to show investors where GM can dominate here, and and Mary. I I actually think that this is good for the UAW because we need American human muscle to develop build and service these robots. So

Um, when are we going to learn more?

Speaker Change: Uh, well, Adam, thanks. I actually, um, didn't work directly on that project, but it was in the area. I was responsible for so I know the NASA partnership. You're talking about very well, you know, also, we have a very long and Rich history, um, with, uh gmf, um, uh, excuse me, uh, GM robotics, GM fun up, sorry. Uh, and we still have a very, very strong partnership. So we have a, a core capability in the company, for sure. Um, there's also Partnerships that were, uh, looking at and strategic relationships that we have. Uh, but as we look at automation overall, you know, our first look as we want to not only lead, um, from a, uh, from what happens, from a robotics perspective. Because remember a lot of things that we leverage robotics for are areas where there's safety challenges. Um, to do the work. Uh, if there's Ergo challenges, we have a very robust or ergonomics program in this company to make sure people don't get hurt doing their jobs and then just difficult,

Speaker Change: Or very, uh, you know, dirty tasks that, you know, frankly, No 1 to do and I don't blame them. And so there's a lot to do there. There's also work to do, um, to get rid of a lot of the indirect, uh, but we've also done a lot of work, uh, from a, uh, winning with Simplicity perspective. And we've talked about that for the last few years. But first has been focused on what was I'll say, some of the low-hanging fruit to simplify how we go to market from a triple perspective.

Way back when when uh, assembly lines and all the equipment in a plant, was controlled by wires and relays. We did training programs partnering with the low. Uh, the local community colleges to train our Workforce to be able to, uh, leverage how we run automation today. Um, you know, from a computer perspective, we have an active training program that we right now where we're training more and more electricians, and technicians. Uh, as we have more complexity in our plants and so we're going to continue to do that something. I'm very proud of and I do agree, there's huge opportunity for our Workforce as we look to what technology has to offer to improve the jobs. But overall we're focused on what's going to drive manufacturing optimization. Um across all elements.

Speaker Change: That's great. Mary, that sounds like, stay tuned and bless you for, uh, investing in in those important areas in our country just as a follow-up. Um, on EV profitability, I want to return to that Tesla is still seen as a benchmark in Western EVS, uh, by many, maybe you're now the new Benchmark, um, or the new emerging Benchmark. But in Western EVS, they're still the big, the big dog.

Speaker Change: But if you remove Zev credits, which is probably appropriate and downstream retail their loss making, I mean they're worse than Renault their margins are worse than stellantis. Um, they would, they would really love to have your GMI margins as so. So add this to elon's, it seems to be also exiting the Auto industry, clearly pulling Capital out of the business and doubling down on AI and a, a time in Rabat taxes. So how does GM?

Speaker Change: Expect to be profitable with EVS, when players like Tesla.

are are apparently cannot I was just wondering what you'd highlight is your your differentiation in terms of how you configure the vehicles or your scale or

Speaker Change: Something about, you know, working with the working, with the, the Koreans, and your and your in-house work something when you Benchmark, Tesla, why are they lost making? And you feel that you can be profitable, thanks.

Speaker Change: Well, I think, you know, 1 of the things, I'm very proud of that. I'm not going to comment on Tesla because they're there's a lot there. And I as you know, I don't usually comment on competitors but I think when I looked specifically at General Motors 1 of the reasons our EVS are doing so well, from a customer perspective is they're true to Our Brands, whether it's Chevrolet, whether it's Cadillac, whether it's GMC, Hummer, and, and GMC, uh, also beautifully designed vehicles that have the range and the performance that customers are looking for. Whether you're talking about a truck or all of the the, um, Technology and Safety. We, you know, we put into an equinox. We're, that's what we're known for. And and the Beautiful design with also efficiency, as Paul said, in his opening remarks, we still believe we have tremendous opportunity to as as we did. Our first EV platform to, to make, uh, changes to that, to, uh, drive more efficiency from a, from a weight perspective, from a simplification perspective, the same is true for batteries and we're investing in future technologies that are going to allow us.

To take significant cost out and then we will get scale and 1 of the things. I'm really excited about with how we grow have been growing. Our share a quarter after quarter is the support that we have from our dealers who now really understand EVS, they understand what the customer is looking for. Like I said, I think we can improve that scale when we think about 2, 2 family, um, 2 car families. Uh that have a an opportunity to have 1 of those vehicles in the garage B ev even before the, the charging infrastructure is there. So it's going to be it's going to be beautifully designed products with uh brands people truck. Trust remember, we have the highest loyalty. It's going to be having the right technology on the vehicle, getting that scale and then the engineering Solutions. So I'm very, um, very bullish on where we're going to be on EVS, is we continue to move forward in the next couple of years and and Adam, I'll just I'll just add too. I think the other asset that we have is, you know, a lot is made about Tesla's Simplicity and and, and their scale.

Adam Jonas: And clearly, you know, within a couple of narrow segments, uh, they do have that and they realize some good advantages and hats off to them. It also leaves them, Overexposed to, you know, a uh a demand set that has been highly volatile. When you look at what we've done in Spring Hill and what we've announced that we're going to do in Fairfax we're increasingly building flexibility into our operation into our manufacturing plants that as we go through this period of transition. However long, it might be where where customers are adopting

Speaker Change: Thanks Paul. Thanks Mary.

Thanks Adam.

Speaker Change: Thank you. Our next question comes from Tom Narayan with RBC Capital markets. Your line is open.

Speaker Change: Hey, thanks for taking the question, ma'am. I wanted to a little do a little more, maybe drilling down on the, on the Korea. Operation, you guys have. I know it's a, a substantial part of the, the Tariff amount obviously. Um, I know we we all hope for a resolution there. Um, but you know, the the cost Dynamics there are are better. I believe, than if you were to produce those vehicles, in the US, just curious in, in like a worst case scenario situation, where we're at this, the current status quo and that continues prospectively. Um, how do you think about the Korean business? Is, is the better economics? Their sufficient that you could continue but working, um, with the same kind of production, same capacity, or would you make changes there and then have a follow-up? Thanks.

Speaker Change: Yeah, uh, Tom it, you know.

You really have to?

Speaker Change: This levels out, I mean we've had uh, the operation in Korea for a very, very long time. It's a very efficient operation that we're very um, proud of. But we've got to evaluate uh, when we have some, um, certainty with what the Tariff will be. So I'm not going to speculate um, obviously we've talked about it with the different choices that we have, uh, but I'm not going to speculate right now until we know, uh, where the, the agreement between Korea and

Speaker Change: The United States lands. Um, but it it's a, it's a operation we've had for a long time. That's very efficient and high quality. Again, as I mentioned, um, you know, right now the vehicles that we produce, their they're in high demand, and they still are a contribution margin positive. So I think we're in a, a, um, we're in the right place where we are right now until we get more certainty, and then we'll have more to say about it.

Speaker Change: Got it. And then, as you think about, you know, outside the US, you know, China looks like it was maybe a surprise positively, um, uh, your performance there. Um, despite all the negativity we hear in the Press with the domestic there. Um, but then the flip side in Europe, you're hearing a lot of and a negativity from large, oems this week, with all the competition there. How do you think about these 2 markets for GM? Is, you know, is it is it better just to kind of hunker down and and stay, you know, more focused in the US where you guys are so dominant or do you see opportunities especially with the EV side? You know, battery costs coming down in the future presents. A great opportunity for you guys to to kind of expand further in those 2 markets like

Speaker Change: Well, I think from a China perspective now that, you know, we announced the restructuring last year and it's on track very proud of the fact that the team has is gaining share. I think we're the only, uh, foreign OEM or foreign Brands to be able to, to gain, share positive Equity income and I think there's an opportunity. You know, there's with what we know today from the geopolitical situation on the relation

Speaker Change: Ship between the 2 companies countries. I think there's an opportunity for Cadillac and Buick um uh, to be strong there. You know, Buick has a rich history there and the brand means something to, uh, the Chinese consumer and Cadillac is viewed as um, as you know, luxury and and a great choice. I mean, 1 of the vehicles we have, there is the gl8, uh, which is a bit of a very, very, um, successful product. And now that we have it out from a new energy vehicle, um, perspective, uh, it's doing quite well. So, I think with what we know today, we can have a smaller but strong business that can grow in China. Uh, and I think that's something that we're going to be continuing to focus on. I'm really proud of the team there and then from a Europe perspective I think there's a lot of changes that are happening in Europe right now. From a regulatory perspective from what's Happening um you know, from a from a competition perspective especially from the Chinese. I think over time that will settle out. We're, you know, we think we have an opportunity in that market.

Very proud of the fact that uh, the lyric was named uh, German luxury car of the year last year. First American uh brand ever. Uh, received that honor. So I think we have, um, especially our EVS that can do very well in the European market, but I think there's some stabilization that has to happen of what are the what is the policy um, situation across Europe that will inform the next step we take and then you didn't mention South America and I think we have huge opportunity from

Speaker Change: The South America perspective, we have very strong Brands there, a very strong uh dealer bass. And I think there's opportunity there as well as well as in the Middle East.

Speaker Change: Thank you.

Speaker Change: Thank you. Our last question will come from the line of Emmanuel, Rosner. With wolf research. Your line is open.

Speaker Change: The share buyback program. So it's good to see uh, GM back uh, in the markets buying uh some on the open market. Can you give us any sense of um, you know, how much you're hoping or planning to buy in the in in the second half. I believe you still have 4 billion dollars plus maybe on the on the authorization. So is the goal to complete that this year, or would it be an amount less than that?

Speaker Change: Um, so a manual. Good morning. Thanks for. Uh, thanks for the question. Um, first of all, we never left the market as, you know, the, the we were covering with the uh, uh, accelerated share repurchase in the second quarter, so that's been consistent while. We paused open market repurchases. Uh, we, we have said that we're back now, uh, and we began repurchasing, uh, in early July. Um, no comments specifically on how much we're going to do, we obviously wouldn't wouldn't Telegraph that, but uh, you're right. We had as of the end of the quarter, 4.3 billion dollars remaining on that authorization. Uh, and as uh, as we've said, we're sticking with our free cash flow guide and uh um, you would expect that seasonally, there's going to be uh, more cash generation in the second half versus what we did. Uh, according to that guy. Um, when you look at the midpoint, so, uh, I'll just leave it at that. But uh, you know, we we are going to maintain that consistent application of our uh Capital allocation policy.

Speaker Change: Okay, great. Um, and then second topic, I was hoping to ask you a follow-up about this, uh, you know, a follow up on your EV strategy as a result of, um, some of these, um, you know, um, us regulation changes. Um, I I appreciate all the effort that you highlighted towards, um, flexible manufacturing and the ability to really respond to Consumer demand. Is there any also also an opportunity or appetite at GM to uh, try and reduce the overall Capital intensity, um, of the business. Um, obviously your capex remains very, very, you know, stable and steady just curious if with this, uh, you know, lower EV Market predicted, as well as essentially easier rules to follow. Um, if there is any appetite there to actually just say, well, maybe down the line at some point, we don't need to spend as much on the go forward basis as a overall company.

Speaker Change: Um, well Emmanuel, I think, you know, from a capital perspective, you know, feel very comfortable with, with, where we are at the 10 to 11 and then we've announced that, you know, with the, uh, footprint changes that we, we, we'll go to 10 to 12 over the next couple of years, but still, um, very much, uh, in line with affordability and, and, and balance Capital allocation. And then, you know, Capital levels that on an inflation adjusted basis are similar to what we did in 2018, uh, with much better cash flow performance. So when you look at uh, EVS that I wouldn't say that we're going to be spending sign.

Significantly less. What I would say is the composition of the investment is changing where we have been, uh, out expanding the portfolio. And and making sure that we can meet customers. Where they are our capital is now focused on where can we, uh, structurally and architecturally improve the costs and the performance. A lot of announcements that we've made on the Battery Technology. Uh, and the teams are hard at work at, UH, at looking at other things such as uh, arrow and and materials. So, you know, I think there's a path there and, and 1 that we feel very comfortable with

Great.

Speaker Change: Thanks for the caller.

Speaker Change: Manual.

Speaker Change: Thank you. And

Speaker Change: Borrow for her closing.

Speaker Change: Thank you. And I want to thank everybody for your attention and for your questions, we really do appreciate the dialogue, but I hope you step back and see that we are, well, positioned for the future. We have a lot of momentum with customers as we adapt to the changing markets, trade and tax policy. And we are demonstrating leadership and Ice Eevee software Ave and other important Technologies for the future of Mobility. This underscores my belief that GM will emerge from this transition period, even stronger, Financial financially and with clear momentum and that we will be uniquely differentiated from our, our competitors with the strength of our ice business, the strength of our e EV business and the progress that I know. We're going to be making from a technology perspective. So, thanks everybody. I hope you have a great day and be safe.

Speaker Change: Thank you, that concludes today's conference, thank you for participating, you may disconnect at this time.