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.

[Operator Instructions] As a reminder, this conference call is being recorded Tuesday, April 23rd, 2024. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations..

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 Berce, President and CEO of GM Financial will also be joining us for the Q&A portion of the call. On today's call, management will make forward-looking statements about our expectations.

These statements are subject to risks and uncertainties that could cause our 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..

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. 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.

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 midsized 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 US during the quarter with incentives that remained well below the industry average, especially in our truck business.

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 MotorTrend's words, not mine. We also continue to gain market share and grow EBIT with our new small SUVs, including the Chevrolet Trax and the Buick Envista.

These vehicles are helping us win new customers, and we will continue to excel at customer retention. During the quarter, S&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. 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 is on track. We are projecting to double our current capacity by the end of the summer.

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 LYRIQ 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.

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, 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. 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 Cruise.

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.

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 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.

They include redesigned, tech-focused interiors, safety and security features that include a suite of connected cameras, riding handling improvements, styling enhancements and more. Mark and our performance team also have the unbelievable Corvette ZR1 coming 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 pickups. In our EV business, the Ultium Cell plant 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 Super Cruise like all of our Chevrolet GMC and Cadillac EVs on the Ultium 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 OPTIQ and the Escalade IQ.

This is important because EV adoption in 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.

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. No EV pickup on the road today even comes close and it's possible to go even further.

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. At the end, they managed to travel 460 miles on a single charge. 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 EV stopped once to charge, while every other truck had to stop four to five times.

Chevrolet and GMC are also the only pickup brands that allow drivers to tow while using Super Cruise, our hands-free driving technology. That's just one of the several features that uniquely differentiates our products. 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 filed with ICE trucks, and those results speak for themselves. Based on the feedback we're hearing from customers and dealers, 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.

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. 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 higher guidance for the calendar year..

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 2% to 2.5% 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 and a disciplined go-to-market strategy that prioritizes profitability and margins. 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 US 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. 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 on our full-size SUVs have a higher trim mix that earned us more revenue per vehicle.

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 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 authorization.

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.

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 billion to $14.5 billion range, EPS diluted adjusted to the $9 to $10 range and adjusted automotive free cash flow in the $8.5 billion to $10.5 billion range. 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. 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.

EBIT adjusted 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 costs.

We achieved adjusted automotive free cash flow of $1.1 billion, up materially versus being flat in Q1 of 2023 driven by improved working capital benefits through inventory management and production timing.

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.

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.

Dealer inventory levels ended the quarter slightly above our 50 to 60 day end-of-year 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 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. This was slightly better-than-expected due to a continued focus on cost efficiencies. Having made progress reducing inventory levels, production is normalizing, and we expect to return to profitability in Q2.

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.

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 billion to $3 billion guidance range. They continue to drive portfolio growth and paid a $450 million dividend to GM during the quarter.

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.

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.

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 improvements.

Since last year, we have significantly reduced cell costs with a large driver being lower battery raw material costs, especially for lithium. We ramped our first battery JV plant last year, and as they increased production and made other efficiencies, the cost of cells came down significantly.

And cell 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. 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 LYRIQ 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 to improve meaningfully.

We wholesaled 22,000 Ultium-based EVs in Q1, up from less than 2,000 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 2024. 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 on 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 assumed 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 efficiencies.

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.

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 credit.

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 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 made 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.

We have seen about a one turn improvement in our P/E 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 it.

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

Thank you. [Operator Instructions] Our first question comes from the line of Joe Spak with UBS. You may proceed..

Thanks. Good morning, everyone..

Good morning..

First on the guidance, Paul, I just want to understand the pricing assumption. Is it now just 2% to 2.5% negative for the remaining three quarters? And then you mentioned a couple of things on mix. So you've got 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 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 should we actually see some maybe net improvement in mix as we move through the year?.

Good morning, Joe. You're right that at the end of the day, 2% to 2.5% for the rest of the year is in our assumptions. 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, in the second half of the year, we've got more EV volume coming in. 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 up 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. So as far as mix goes, we've talked about that a lot. We've obviously been trending fairly strong. 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.

But overall, I think the market is holding up fairly well. And as we said before, if we see pricing continuing with this momentum, we expect that we'd be in a position to take up guidance again..

Okay. Thank you. As a second question just on Cruise, with the re-launch, I understand the manually operated and mapping. But Mary you emphasized 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 re-launch? And what about capital need with the cash bounce down to $700 million?.

Sure. Well, first, Cruise, we're very excited that they're back on the roads in Phoenix. As we said, it is manual, but then we'll progress to supervised and then to unsupervised. And the core tech stack, what we've been doing since we made the decision to pause is continuing to work and improving it.

So we've actually strengthened the safety of the system by continuing to make sure we comprehend, I would say, a 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, but we also realized even though we demonstrated and 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. That's why we're -- as we're going back to Phoenix, we're 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 of getting back on the road and demonstrating that 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 at how we plan to fund the business, we're exploring quite a few options right now, 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 didn't stop through this whole period since last October..

Thanks for the color..

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

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 that the next couple of quarters and how you're thinking about the prior margin improvement targets that you spoke about, I think, it was last quarter? And then maybe for Mary hopefully you 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 Ultifi platform over the next six to 12 months?.

Yeah. Good morning, Itay. Thanks for the question. On our crossovers, we've talked about the new Chevy Trax and Buick Envista, both of which are significantly improved from their prior profitability of the -- before the upgrades. And we've seen, particularly the Chevy Trax, really take off.

Sales were up 500% in the quarter, and it's really performing well for us. So some of the trends in 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 portfolio and it's built into our strong guidance that we're updating today..

And then as it relates to the software strategy as we move through the year and beyond, first, as Mike stepped back over the past year, though, he did an incredible job of re-evaluating and changing our software development process as well as our validation process and brought in an incredibly strong team of 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. We paused at the beginning 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 of all of our upcoming vehicles.

And so the goals for the next couple of 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 then 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's showing in our ability to launch with quality..

Perfect. That's all very helpful. Thank you..

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

Good morning, everybody. Mary, I just wanted to ask one strategic question on China. At this point, it's really not a moneymaker for you. And there's a lot of, obviously, noise on a geopolitical basis and sort of our relationship or the US relationship with China.

I'm just curious, is it time to really start thinking about strategic alternatives over there to potentially closing or selling the business? How do you kind of think about that in the context of sort of the broader portfolio over the next few years?.

Yes. Just in general, 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 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, over the medium term, will have substantial growth. We're continuing to draw on not only our global solutions, but in some cases, local solutions as we advance our electrification strategy. Right now, NEVs account for 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 NEV launch cadence. From Q2 then moving forward, we have several PHEVs we'll be launching and moving with full EVs as well. 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.

And for instance, the Tahoe and the Yukon will be available for pre-order later this year. So we think, clearly, that market has shifted and the landscape has shifted from -- with the capability of the Chinese OEMs. But we still think there's a role in 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..

Okay. And then I just have one quick follow-up on pricing. Saying 2% to 2.5%, I understand is your best estimate right now. But calling pricing is difficult. So I'm 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 cross currents.

I mean there's EV price cutting, but there seems like there is resilience on the ICE side. When you look at your cap, 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 two years probably.

So like the used vehicle market is going to stay relatively tight. So I mean I think people are looking at this dealer inventory and saying, hey, things are getting a little bit toppy. 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 2 and 3 supply base, they're constrained and on labor. I mean I just -- it just seems like its resilience may be with us a little bit longer than people are fearing.

I mean the Colorado Canyon as well as your vans you said you were short on some stuff that you're getting to fleets that you'll catch up 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 things going to last for longer than people are fearing.

How do you really kind of concoct or come up with that estimate of 2% to 2.5%? And where do you think things will kind of land over the next couple of years?.

Yes. Well, look, good morning, John. As we've talked about, the 2% to 2.5%, 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've seen 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. So not really an expectation as much as we've built an assumption in recognizing that there may be some macro headwinds out there.

We do know that our comps get tougher as we lap our price increases that we took in the summer of last year. But overall, the commercial environment continues to be resilient.

And I think this is a very common theme that we've had now for more than a year worth of quarters of -- there's a lot of sort of downward bias, but we're continuing to manage commercially month-to-month and producing in line with demand. And I think with that balance, it's been very favorable for us on both pricing and margins..

Okay. All right. Thank you very much..

Thanks, John..

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

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 billion to $14.5 billion for the year.

So I'm hoping to better understand some of the factors that temper EBIT over the balance of the year compared to the first quarter run rate..

Yes. Good morning, Mark. So I would say it comes down to a couple of things. One is there's still the assumption in there of the down 2% to 2.5%. 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 in the back half from that. But overall we'll remain consistent. And as I've said, if we don't see that pricing softness, I would expect that there's an opportunity to outperform these numbers..

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 EV in terms of pricing.

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 did the demand signals you have from the market suggests you can hit that kind of volumes this year with relatively firm pricing going forward? Thanks..

Sure. Well, obviously, the early results here as we're ramping up Ultium 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 remained strong.

We've obviously seen a lot of softness in fleet, particularly on the rental side for EVs, but we see customers responding. Now these are on 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.

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 the purpose-built EVs are actually 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 EV demands at the retail side continue to trend. So we're obviously going to watch it closely, but the early indications are strong..

Thank you..

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

Yes, thanks.

So does it -- and for Mary and Paul, does it feel like now like the UAW in the rearview mirror, why the EV strategy now coming to fruit that the company is just in a strong position, which is less uncertainty? I mean could you just maybe compare today even six to nine months ago internally?.

No, I think you make a really good point, Dan. We do -- I feel much better of where we are, as I mentioned. We now have -- we're ramping up and the module issue is behind us. 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 UAW.

We continue to work with them on a number of fronts and build the relationship with the new leadership team as they were named pretty close to when we started negotiations last year. So I feel that we're continuing to talk, raise issues with each other and problem solve where we have challenges. So I feel much better about that.

And as Paul said, we're seeing good progress with our Ultium-based EVs because they are purpose-built and they do have -- there's -- customer's not making a trade-off. And we also see the charging infrastructure 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 across GM that is going to seize all these opportunities. I would also add, Dan, that I feel very good, as I mentioned earlier, about where we are with software.

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..

Great. Congrats..

Thank you..

Thank you. Our next question comes from James Picariello with BNP Paribas. Your line is open..

Hi. Good morning, everybody. Just thinking about wholesale growth for the full year. Global volumes were up almost 4% in the quarter.

Can you help dimension the impact for this current quarter's full-size pickup downtime? And just what the full -- what the first half versus second half split might look like for the Ultium volumes relative to that 200,000 to 300,000 units targeted? Thanks..

Well I can -- let me just comment on full-size pickups. We have taken -- 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 share. We grew share in the first half with strong pricing. So I think that speaks for the strength of our product.

But we're going to be customer demand, and we're going to make sure that we don't overbuild because 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..

Yes. 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 -- came online in Q1 and we're ramping up production pretty steadily and that's Ultium Cell plant too.

And as module production kicks up, we see an exit rate that's significantly greater. Now of course, we're all going to be paced -- we're 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..

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 in South America? Thanks..

Yes, sure. So as China -- I think it's progressing as we articulated at the initial guidance range. We did trend 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 last year in China.

So the rest of the year is we'll have to manage it. 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, 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 and not overly concerned about that just yet, but that's a market that we're continuing to watch..

Thanks..

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

Yes. Hi.

Can you hear me?.

We can hear you now..

Yes..

We got you, Alex..

Okay. Very good. So first question on Ultium. You talked to the 200,000 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 200,000 to 300,000, 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 towards midyear toward the second half if it doesn't seem like the consumer demand is materializing?.

We're never going to build -- just build products come hell or high water because the number is 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 Ultium.

We're seeing strength with HUMMER as we're ramping that up. We're seeing strength with LYRIQ and Blazer is just now ramping up. We've got the Equinox coming and there's several more.

So I think when you look at the fact that these are all going to meet 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, we are well positioned, whether it's ICE or EV from a -- with 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. And 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 the 200,000 to 300,000 range by customer demand, and we'll just continue to adapt..

Okay. Perfect. And then 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, I guess, 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? Yeah, any comments on China. Thanks..

Yes. I think it's a great question. And first of all, I think in general, we want to have our best products. And if there's a level playing field, then it's -- we want to compete based on products. I think you have to look at where is there a level playing field, and what's happening around the world.

But there's a lot that can happen from a regulatory or a trade perspective, but we're focused on is making sure we have great vehicles at the right price, so what is going to help 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 great product portfolio with the right features and functions, and we're constantly working on taking cost out of the system. So it's a -- 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..

Great. Thanks..

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

Hi. This is Bruno on for 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 like 10,000 to 15,000 in 2025 compared to '23. I think if I heard correctly, that's about in line with what you're seeing on the LYRIQ 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. Thanks..

Yes. Good morning, Bruno. Thanks for the question. So if you go back to a presentation that we did back in November, we kind of highlighted the road map for 60 points of EBIT improvement in 2024 with about 60% of that driven by scale benefits.

So if you think about where we are, we've invested a lot into the infrastructure, battery plants and manufacturing facilities, supply chain, et cetera, to ramp up production. So 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 improvement.

The rest is really kind of split evenly between trims and launches 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 cell costs this year. We've done a good job of reducing cell costs. And as we said, the LYRIQ is down $12,000 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 lower driver, and we get into more of 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, et cetera.

So there's a pretty good road map 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 we're just a quarter in on the Ultium ramp, but the early indications are positive..

Okay. Thank you. And then just stepping back, we wonder if there's multiple paths to the EV losses that are currently being incurred eventually reversing.

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 plans for 160 gigawatt hours eventually over 2 million units.

Is there flexibility to rationalize that if the demand differs from your expectations? Thanks..

Well, I think you'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. But when you look at our portfolio across both an ICE, EV, 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 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 and our vehicles.

And the early indications are that it's going quite well..

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

Thanks so much team. Just wanted to dive into some of the questions on seasonality following on to some of Mark's questions prior. Paul, could you talk about the seasonality 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-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..

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

But around the edges, maybe a little bit of pull forward from Q2 into Q1.

So as we look at the second half, I just want to caution that 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 certainly where April is looking right now.

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..

Perfect. All makes sense.

And then maybe just on the actual production side, should we think of sort of truck T1 production as maybe at a tight end in Q1? Do we get back to this level in Q4, just looking at the overall yield and inventory build?.

I think that, obviously, we're going to continue to watch demand where it is. The inventory, while we built in March, we're still -- we came out of the quarter 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, I think we could see third quarter production trend a little bit higher, but we're going to be guided by where demand sits..

Okay. Great. Thanks so much team..

Thank you..

Thank you..

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

Good morning. Thanks for all the detail on your planned upcoming BEV launches in the US. 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, including because it seems your share in China has declined amidst the industry transition there to EVs. I heard you citing earlier the increased competitiveness of the domestic Chinese automakers as another contributing factor. And there may be still other factors.

But would a blitz of new EVs 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 or given some of the recent pricing trends represent maybe more of an investment with the payoff some years further out?.

Yes. I think we do have, I think, some strong NEVs coming in China this year. We're repositioning the Buick Velite. We've got the Cadillac OPTIQ launch coming. You'll see that at the Beijing Auto Show. And we also have PHEV entries in the Buick GL8 and 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 -- excuse me new NEV launches 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. And that's why I think we can play in the NEV market both plug-in hybrids, hybrids and ICE vehicles as well as EVs. And then, as I mentioned, with the Durant Guild in the niche segment.

So I think there's a place for GM to play and grow share..

Okay. Great. Thanks.

And with all these questions about the new vehicle operations in China, maybe just highlight some of the attractiveness if it is that you can draw from the installed base of vehicles there, the OnStar, the financing, sales service, GM Goodwrench and sort of how do you feel about that element of the China business?.

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 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 that..

Very helpful. Thank you..

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

Yes, good morning. Thanks for taking the question. Paul, just a follow-up on that comment on the EV margin. So 60% of the 60 basis point improvement is coming from scale benefits.

So if 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 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 just trying to understand that like how do we think about that volume number impact to the company's margins..

Yes. Good morning, Tom. What I would say is that, obviously, based on just where we are in the journey, scale matters quite a bit when you built the infrastructure that we have. So certainly, in the short run, lower volume would have a negative effect on that trajectory.

But I think what we're looking at is kind of breakeven on the variable profit side around low 200,000. So 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've built.

And I think from a strategic perspective, 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. So we've 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..

Thanks. And a 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 the -- is there more benefits to come given the lag in your battery raw mat contracts? Thanks..

So what I would say is 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 ramp up our module production. So as a result of that, there's still some historical costs in there from last year.

But that will flip pretty much, I think, by the time we get to mid-summer. And in the second half of the year, we'll see cells that have much closer to current prices. And then as you look at kind of vertical integration and investment steps that we 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 et cetera. 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 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..

Great. Thank you so much..

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

Thank you, and thanks, everyone, for your question. As we've talked today, we are making extremely good progress across the board. We're driving revenue growth. We've got great margins, 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 billion 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. 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 US, 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. 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 GM. So thank you all for your time..

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