General Motors Company (GM) — Q4 2024 Earnings Call Transcript

Thanks, Amanda, and good morning, everyone. We appreciate you joining us as we review GM's financial results for the fourth quarter and calendar year 2024. Conference call materials were issued this morning and are available on GM's Investor Relations website. We are also broadcasting this call via webcast. Joining us today are Mary Barra, GM's Chair and CEO, and Paul Jacobson, GM's Executive Vice President and CFO. Dan Burse, President and CEO of GM Financial will also be joining us for the Q&A portion. 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. I'd like to begin by thanking our employees, dealers, and suppliers for helping us deliver another outstanding year. A year ago on this call, I said that we were optimistic about 2024 given the choice we would offer customers, including industry-leading full-size pickups, new and redesigned SUVs, and an expanding portfolio of EVs. And I stressed that we will be focused on execution and profitability. I'm proud to say that our full year revenue grew by 9% last year. We were #1 in the U.S. in retail, fleet, and total sales. We grew our market share, and we distanced ourselves from the industry's pricing incentives and inventory pressures. In our growing EV business, we produced and wholesaled 189,000 vehicles in North America. We doubled our market share over the course of the year as we scaled production, and our portfolio became variable profit positive in the fourth quarter. This combination of compelling vehicles and high volume in growing segments, strong execution, and discipline led to record EBIT-adjusted, record adjusted automotive free cash flow, and record EPS-diluted-adjusted. At the same time, we continue to allocate capital consistently and in a balanced manner. We invested to drive the business forward and we improved our balance sheet. Our employees and owners are all sharing in our success. I'm pleased to share that our global salaried team earned strong performance bonuses and our U.S. hourly employees once again earned the industry's highest profit sharing, totaling more than $640 million. That's a record payout of up to $14,500 per person equal to more than two months of extra pay for the average UAW-represented team member. Investors in GM also earned a 50% total return and we ended the year with fewer than 1 billion shares outstanding, a goal we reached ahead of plan. Throughout the year, we also addressed challenges with resolve. In China, we have been working with our joint venture partners to drive better performance in the market by right-sizing the businesses, launching new products, reducing dealer inventory, and building to demand. We are making good progress and reported positive equity income for the fourth quarter before restructuring costs. To improve year-over-year results and make SGM sustainably profitable, they will be implementing a wide range of restructuring initiatives this year that include reducing capacity to operate within utilization levels of about 80% or better. We are in the process of finalizing details with our partner. Importantly, we believe SGM has the resources to complete its restructuring without additional capital from GM. As you know, we also stopped funding robotaxi development at Cruise. We have a proposed restructuring plan that will refocus our autonomous driving strategy on personal vehicles. We expect to see a run rate savings of about $1 billion on an annualized basis by ending robotaxi development, and we look forward to acquiring the small number of Cruise shares we don't own and finalizing the restructuring plan later this quarter. The momentum we have in both ICE vehicles and EVs will drive our results once again in 2025. For example, the redesigned Chevrolet and GMC full-size SUVs that we launched late last year are supporting even stronger average transaction prices than the outgoing models, thanks to their refined exteriors, all-new interiors, and new models like our GMC Yukon AT4 Ultimate. We also have a full year of our new compact and midsize ICE SUVs, which include some of our highest volume nameplates like the Chevrolet Equinox, Chevrolet Traverse, and GMC Acadia. They are great examples of our strategy to pair bold designs to drive higher transaction prices with discipline and capital efficiency to drive better profitability. As Mark shared at Investor Day, we're seeing EBIT improvements in the 10 percentage point range on some of these vehicles. Cadillac is also very well positioned. Last year, Cadillac had its best full year sales since 2016, thanks to the ongoing success of the Escalade with its refined exterior and stunning new interior, our high-performance V-Series and Blackwing models, and the LYRIQ, which is now the country's best-selling midsized luxury electric SUV, according to S&P Global Mobility. This year, we expect the Escalade IQ, OPTIQ, and VISTIQ to further grow GM's share of the luxury EV market. EV adoption has been higher in luxury segments. We are being guided by the customer and will continue to be. And these new Cadillacs stand out with their beautiful designs, advanced technology, and customer-focused innovation. Here are just a few examples. The OPTIQ, which is scaling now, and the seven-passenger VISTIQ, which launches in the spring, will be the first Cadillacs to offer AKG audio systems with Dolby Atmos that reveal more depth, detail, and clarity in our customers' favorite music. All Cadillac EVs now come equipped with vehicle-to-home capability, allowing them to power a home during outages using a GM Energy PowerShift Charger and our vehicle-to-home equipment package. And with the VISTIQ, Cadillac will be the first GM brand to roll out a new advanced driver-assistance system feature that builds on adaptive cruise control and lane centering. The new feature allows an attentive driver to engage the system and travel on millions of miles of roads with a light hand on the wheel. Then, there's the Cadillac Escalade IQ. With its presence, range, performance, comfort, and technology, it's really in a class of its own. One of our New York area Cadillac dealers, who has decades of experience with other luxury franchises, says it's the most impressive vehicle he has ever driven. Customers are noticing. Since production began late last year, we've sold more than 1,500 Escalade IQs. 2025 will also be a year of rapid growth for Super Cruise across all of our brands. Our customer-focused strategy with Super Cruise is to continuously refine and expand its capabilities to make it indispensable. This is how we are setting the stage for recurring high-margin revenue streams from subscriptions. Since we launched Super Cruise, we have added hundreds of thousands of miles of new roads to its network and introduced features like automatic lane change and hands-free towing. This has helped make about 60% of our roughly 360,000 Super Cruise customers regular users. This year, we expect our Super Cruise equipped fleet to roughly double in size. Subscription revenue is becoming an increasingly important part of the Super Cruise opportunity, now that our first customers have completed their three-year trial. Last year, we saw subscription attach rates of about 20% off a base of roughly 18,000 vehicles. This year, an additional 33,000 vehicles will end their trial period, and we target to more than double subscription revenue. Within five years, we expect to approach about $2 billion in total annual revenue from Super Cruise. These are just a few of the many exciting opportunities ahead of us, and we look forward to sharing more details with you as we go forward. Before I turn the call over to Paul, I'd like to mention the projects we're pursuing with Hyundai. As Hyundai has shared, our teams are moving quickly to finalize the first of several product and purchasing agreements that are designed to help us move faster, lower costs, and become more capital-efficient. The collaborations will be global in nature, targeting specific segments and areas of the business, and we'll be sharing more details very soon. I would also like to address the uncertainty around public policy, trade, and regulation. It remains to be seen how things will evolve. So, our 2025 guidance, Paul will share in his remarks, does not take into account future policy changes. We have been both proactive with Congress and the administration, and in our conversations, we have stressed the importance of a strong manufacturing sector and American leadership in advanced technologies. It's clear that we share a lot of common ground, and we have appreciated the dialogue. We believe the President wants to use policy and regulations in ways that will strengthen, not harm, domestic manufacturers like GM. We look forward to continuing to work with the President and his team as they consider how to strike the right balance on these important issues. With respect to possible tariffs, we are working across our supply chain, logistics network, and assembly plants so that we are prepared to mitigate near-term impacts. Many of these actions are no-cost or low-cost. What we won't do is spend large amounts of capital without clarity. Whatever happens on these fronts, we have a very broad and deep portfolio of ICE vehicles and EVs that are both growing market share, and we'll be agile and execute as efficiently as possible. With that, I'd like to invite Paul to walk you through our results and 2025 financial guidance, and then we'll move to Q&A. Thank you.

Thank you, Mary. And I appreciate you all joining us this morning as we summarize another year of strong financial results for GM. Our full year EBIT-adjusted of $14.9 billion was at the high end of the range we guided to in October, driven by a particularly strong November and December. This resulted in $10.60 of EPS-diluted-adjusted, up 38% year-over-year and partially aided by a significantly lower share count as we continued to return excess capital to shareholders. We increased our full year revenue by 9% to $187 billion, with a 6% rise in wholesale volumes and average transaction prices above $50,000. Throughout the year, our incentives as a percentage of average transaction price steadily improved, starting the first quarter nearly 1 percentage point below the industry average and ending the year at the lowest incentive levels in the industry and more than 3 points below average. Our strategy of disciplined pricing and incentives continues to separate us from most of our peers. And at the same time, we are growing market share. Our U.S. market share for the full year was up 30 basis points to 16.5%, and we ended the year on a positive note at 17.5% in the fourth quarter, the highest since the fourth quarter of 2018, excluding the impacts of the pandemic in 2020. Our performance was fueled by strong EV growth and a refreshed ICE portfolio. ICE dealer inventory ended at 53 days at the low end of our 50 to 60 day year-end target, driven by strong sales and appropriately balancing our production to demand. We are also making significant progress on EVs. In 2024, we wholesaled 189,000 EVs and delivered more than 146,000 units. Recall at the end of the third quarter, we had around 100 days of EV dealer inventory so that customers would have the opportunity to see and experience our products. This strategy paid off, and we successfully reduced this to 70 days by year-end as our EV deliveries rose. As Mary highlighted, a big focus of the company has been improving EV profitability. We achieved variable profit positive on our EVs in the fourth quarter through continued manufacturing scale and efficiencies from higher production, improved material cost, including lower cell cost from scale and performance, and the expansion of our EV portfolio with the launch of the Cadillac Escalade IQ and Sierra EV. There's more work to achieve our goal of a positive EBIT margin, but we believe we're making good progress. For instance, the Equinox EV has seen a $1,000 improvement in variable profit since its launch in just the second quarter of last year. Next, I'd like to discuss capital allocation. We continue to balance three key elements: investing in our business, maintaining a strong balance sheet, and returning excess capital to our shareholders. First, we believe that the amount of capital we are investing back into the business is appropriate to efficiently support long-term profitable growth. Our forecasted capital spend in 2025, including battery joint venture investments, remained similar year-over-year at $10 billion to $11 billion. Second, we paid off $750 million of senior notes in the fourth ahead of their maturity in 2025. We have another $1.75 billion maturing later this year. We will assess refinancing opportunities or debt extinguishment as we progress throughout the year. Third, we returned a substantial amount of capital to our shareholders during 2024. We generated full year adjusted automotive free cash flow of $14 billion and returned nearly 55% of this free cash flow or approximately $7.6 billion. In the fourth quarter, we completed the accelerated share repurchase, retiring an additional 25 million shares. We also repurchased 87 million shares in the open market during the quarter at an average price of $53.84 a share. This resulted in us ending the year with an outstanding share count of 995 million, achieving our goal from early last year to reduce our share count below 1 billion shares earlier than scheduled. On a diluted basis, this represents 1.02 billion shares, a decrease of 28% since the end of 2022 and a decrease of 12% compared to the end of 2023. Moving forward, we expect to continue returning excess capital to our shareholders and further reducing the share count. Getting into the fourth quarter results, total company revenue was $48 billion, up 11% year-over-year, driven by higher wholesales and consistent pricing. We achieved $2.5 billion in EBIT-adjusted, 5.3% EBIT-adjusted margins, and $1.92 in EPS-diluted-adjusted. We completed the net $2 billion fixed cost reduction program. Compared to the end of 2022, we realized $900 million in lower marketing spend and $700 million in lower automotive engineering costs. The remainder was realized through rationalization across some of our earlier stage initiatives, which were partially offset by higher depreciation and amortization. A quick update on our EV inventory valuation allowances. We ended the year with a balance of $1.4 billion, which includes a small reduction in the fourth quarter. We expect further reductions as we move through 2025, but the pace and magnitude will be dependent on EV demand. We achieved adjusted automotive free cash flow of $1.8 billion during the fourth quarter, up $500 million year-over-year, primarily driven by EBIT performance. North America delivered fourth quarter EBIT-adjusted of $2.3 billion, up $300 million year-over-year. We benefited from the absence of 2023's fourth quarter strike in inventory adjustments. Additionally, the fixed cost program contributed to offsetting higher labor and warranty costs. While we remain disciplined on pricing, we faced a slight headwind from full-size truck incentives. I want to take a moment to emphasize the strong full year North American margin of 9.2%, well within our targeted 8% to 10% range. We are executing well on our product launches along with being disciplined on costs, pricing, and inventory levels. Our broad and refreshed product portfolio is a key factor driving these strong results. In the fourth quarter, we achieved a margin of 5.8%. This included certain discrete items, including breach of warranty and legal reserves, which roughly impacted margin by 1.3 percentage points. I'd now like to discuss the continued higher warranty costs, which include the initial product warranty accrual, recall campaigns, and breach of warranty exposure. Despite our success, we know we have an opportunity to improve our results by aggressively targeting our warranty expense. The first priority is always our customers, focusing on parts availability. At the same time, the team is actively working to tackle the root cause of issues as they arise. Our commitment starts with the initial quality of our products, an area where we are a leader in the industry. We've achieved a significant reduction in claims with a decrease in the U.S. of over 30% since 2018. However, this benefit has been more than offset by a 100% increase in the cost of repair, driven by both parts and labor inflation over the same period. Rest assured, we remain committed to finding ways to mitigate inflationary pressures and navigate the strict regulatory and legal landscape. We are optimistic that our intense focus on driving down repair costs and improving quality will reduce our warranty costs over time. GM International delivered fourth quarter EBIT-adjusted of $200 million, driven by strong execution and tight cost controls in South America and the Middle East, along with positive China equity income of $17 million excluding the restructuring charge. The team in China has done a great job of reducing inventory, with SGM's inventories down over 60% from the end of 2023. They have implemented effective cost reductions and have been focusing on enhancing product competitiveness, which helped fourth quarter sales increase 40% sequentially versus the third quarter. We recorded a $4.1 billion special item in our auto China equity income. Approximately half of this related to an impairment, while the rest is connected to various restructuring actions we have taken so far in China. It's important to note that these charges are not expected to require any capital from GM as the joint venture has sufficient cash to cover these costs. We believe these actions, along with a comprehensive product launch plan in 2025 that ensures at least one NEV option per product program, will help us achieve our target of the China business returning to profitability in 2025. GM Financial also had a strong year of profitability and capital returned to GM. Fourth quarter EBT-adjusted was consistent year-over-year at $700 million. Higher net financing revenue offset lower lease termination gains and higher provision expense, driven by increased loan origination volume. GM Financial's full year EBT-adjusted was $3.0 billion, at the top of their guidance range, and they paid dividends of $1.8 billion to GM. Cruise expenses, excluding the special items for the restructuring charge, were $400 million in the quarter, down from $800 million in 2023. As Mary said, we believe our refocused autonomous driving strategy will lead to efficiencies and $1 billion annual run rate savings in our investment relative to the $1.7 billion we spent on Cruise in 2024. These decisions led to a $500 million restructuring charge in the fourth quarter, which was classified as a special item with approximately two-thirds being cash-based. Additionally, later this year, we plan to include the expenditures for the Cruise employees in our North America segment. This will impact our North America margin by around 50 basis points this year. However, we still expect to remain within our 8% to 10% range. It will also increase our auto fixed costs and reduce our adjusted automotive cash flow as the cash used by Cruise was excluded previously. Moving to our 2025 guidance, we expect EBIT-adjusted in the $13.7 billion to $15.7 billion range, EPS-diluted-adjusted to be in the $11 to $12 per share range, and adjusted automotive free cash flow in the $11 billion to $13 billion range. It's important to note that our guidance does not account for the impact of future policy changes by the new administration, including tariffs, tax reform, or other regulation changes. We do anticipate some headwinds in both volume and mix, stemming from a modest decline in ICE wholesale volume in North America as we appropriately balance dealer inventory levels. However, this will be partially offset by higher EV volume. We're optimistic in our robust product portfolio and our ability to drive market share expansion through strong ICE sales, complemented by a strategically diverse lineup of EVs. Additionally, we are planning for a similar U.S. industry year-over-year to 2024. In terms of pricing, we're assuming a decline in North America of 1% to 1.5% year-over-year to capture potentially higher incentives or a moderation in average transaction prices. While we are not seeing this at the moment, we believe it's a prudent way to plan our budget as we have in years past. Offsetting these headwinds, we anticipate EV profitability improvements at the low end of our $2 billion to $4 billion EBIT year-over-year target. This improvement is based on wholesales of around 300,000 units and is predicted to come from scale, fixed cost absorption, and a continued focus on cell and vehicle cost reductions. Regarding Cruise, our guidance includes around $500 million of the $1 billion annual savings we previously discussed. This is based on our assumption that Cruise employees will be fully integrated into GM by mid-year. We anticipate other costs outside of Cruise and the EV profitability improvements to be favorable. This is mainly due to variable costs such as commodities and logistics, which are expected to more than offset headwinds from depreciation and amortization and higher labor costs. For GM International, we expect a tailwind from restructuring the China business and are targeting profitable equity income for the full year. GM International outside of China should be similar to what was delivered in 2024. For GM Financial, we expect EBT-adjusted to be in the $2.5 billion to $3 billion range, reflecting the targeted return for the credit risk profile and asset mix in a largely stable economic environment. We expect an increase in earning assets, driven by both loan and lease portfolios. We are forecasting another year of robust adjusted automotive free cash flow. However, we anticipate year-over-year headwinds in the range of $1 billion to $3 billion from the non-repeat of working capital benefits realized in 2024, primarily from dealer inventory restocking, the timing of payments for previously accrued liabilities, notably warranty and the inclusion of Cruise spending. Capital spending is expected to be similar year-over-year and in the $10 billion to $11 billion range, including battery joint venture investments. We continue to strategically spend on our ICE portfolio and build flexibility into our manufacturing capabilities to maintain agility to adapt to consumer preferences between ICE and EV powertrains. Our full year EPS guidance assumes a weighted average diluted share count of approximately 1 billion shares, which excludes the impact of any future open market purchases. In closing, I want to express my sincere gratitude to every GM team member. Their hard work and dedication have been pivotal in driving our strong financial performance in 2024. Our relentless focus on execution, discipline, and adaptability has enabled us to successfully navigate a dynamic and challenging landscape, and we believe these key success factors are going to continue to support our efforts towards another promising year in 2025. This concludes our opening comments, and we'll now move to the Q&A portion of the call.

Hi, good morning. Thank you for taking the questions. Wanted to start with a question on the guidance and specifically if we could double-click on the volume assumptions. I know you're talking about headwinds, but I'm wondering if we could maybe get a sense of the magnitude. The third-party data forecasters have your North America production down 9% for 2025. I know a lot of that is just non-repeat of inventory build. Maybe you can just give us a sense of what type of SAAR and share assumptions you have? And then maybe if you can just comment specifically on the share? It was really strong in the fourth quarter. Is there any sustainability to that?

Hey, Dan, thanks for the question. You were getting a little garbled at the end, I think bad cell connection, but I think you were asking about SAAR assumptions for '25 and then the share uplift that we saw at the back half of the year, particularly in the fourth quarter, how sustainable is that. So, we're looking at 2025 on a SAAR basis to be fairly similar to 2024. I think there is some speculation out there that we saw a big pull ahead in demand in the month of December, whether that was EV-driven or just consumer-driven ahead of inauguration. I think one of the things is we're adopting a little bit of a wait and see on that. January has been really noisy, as Mary had mentioned in comments this morning about both the weather, the fires in California, etc. So, it's tough to glean whether there was a big pull-forward. So, we've kind of projected demand to be pretty similar to last year. On the share side, I think really proud of the team. They have done a tremendous job. And as we've said for a few years, as we have been able to ramp up EVs, we saw the opportunity to grow share in EVs and ICE, and that was not mutually exclusive. And I think the team has been doing that. We are at a share level that we haven't seen, if you exclude COVID since 2018. I think that's tremendous results. I think the team is not going to stop there, but we're going to continue to work towards that. Going forward, I think we were projecting an opportunity or some pretty big ICE impacts from not having as much restocking. I think we're going to kind of wait and see to where demand is. We obviously do have an opportunity to build a little bit of inventory within the 50 to 60 day window that we've outlined at year-end as a result of that demand surge that we saw in 4Q, but we're going to kind of watch that. But other than that, I think a pretty similar environment in '25 than what we experienced in '24.

Great. Thank you. As a follow-up, a bit of a policy question. I know you're waiting to see how everything plays out, but President Trump has said he's reversing the EV mandate. I think we all expect some reversal in the tax credits, perhaps some change in EPA. In this environment, can you give us a sense of how you're thinking about resource allocation toward EVs? How much overhead spend can you pull back on? Just how the strategy shifts amid a potential change in EV policy?

Well, I think you've seen us over the last few years be very mindful of what consumer demand is for EVs and make decisions like we did with Orion and like the third plant that we're in the process of selling our share to LG. So, we're going to continue to make decisions like that to be appropriate with our capital. As we look at how EVs are going to grow, we never expect it would be a straight line. We're also going to deploy capital appropriately to our ICE portfolio. I think we have the strongest portfolio General Motors has had in decades. Maybe I'm a little biased there, but I think we're seeing that with the response in the market as well. So, we're going to continue to be very efficient as we deploy capital to both ICE and EV, again, guided by the consumer demand.

Thank you very much. Good morning. My first question is about the margin exit rate in 2024. Given that there won't be significant LC and RV charges like last year, and considering the impact of the strike and robust average transaction prices in the quarter, some investors might have anticipated a higher margin exit rate. You mentioned about 130 basis points of one-time items. Can you provide further insight into the quarterly performance? Additionally, what would the path look like to reach 8% to 10% in 2025?

Yeah. Good morning, Emmanuel. Not surprised about this question. We did say in the remarks that there were two specific issues really around warranty and policy. One was a legal settlement on the oil consumption case, which we recorded in the fourth quarter. That'll be in our 10-K. And then the second is, we've continued to see some breach of warranty pressure as we talked about in the regulatory and legal environment. We're trying to get a little bit ahead of that just based on the trends that we see. Those two items in and of themselves were a little bit more than 1 point as we talked about. That kind of puts us in line with normal seasonality. I'd also point out, remember that we had, I think we disclosed, about $300 million in Q3 that was a pull-forward of vehicles that were expected to deliver in the fourth quarter. That benefited September in Q3 at the expense of Q4. And then lastly, normal seasonality, we've got 11 fewer production days, just generally based on the holiday schedule. Remember, we lost a couple of days at Arlington because of the floods in North Carolina and the tragedy that impacted that community and a supplier that we had there. So, I'm not overly worked up about it. I think when you look at some of those one-off events, I think we're pretty good. The one thing I do want to say, because I know we've received some inbound questions, EV mix wasn't really a meaningful factor in that 4Q. It does have a downward impact, but it was really outweighed significantly by those pressures that I just highlighted. So that hopefully gives a little bit more confidence in the construct going forward for 2025.

I appreciate this color. Second question is around capital allocation. So, it was good to hear you restate the capital allocation policy and it seems like based on the guided CapEx and sort of like other actions, it would leave again some considerable amount of capital to return to shareholders. I think you're probably through most of your existing authorizations for buybacks. So, what would be the next step here?

Thank you for the question, Emmanuel. We are very proud of the strong free cash flow we generated in 2024, and we anticipate another year of robust free cash flow. We will continue to adhere to our capital allocation policy. We will collaborate with the board on the next steps and will provide updates as we progress. You can expect us to follow the capital allocation framework as we have this year, or rather, as we did in 2024.

Thank you. Good morning. I have a quick question about the quarter and a broader one as well. In the first quarter, the pricing data for GM North America suggested that things were quite robust, improving throughout the quarter, and incentives were low, but there was still a slight year-over-year challenge. Was there any incentive accrual or similar factor in the quarter that impacted this? Additionally, regarding pricing, does the 1% to 1.5% projection for 2025 include the EV portfolio? Do you anticipate any pricing pressure on EVs?

Thank you for your question, Joe. There is some variability in the year-over-year interaction regarding the inventory accrual for incentives. However, I believe what you mentioned is accurate. It was a robust year for pricing overall, and demand remained strong in the fourth quarter. We anticipate that pricing will continue to be strong moving forward. Regarding the 1% to 1.5% figure, you'll see it's slightly lower than the reductions we made in previous years. This suggests we expect a bit more stability as our competitors have reduced their excess inventory. Therefore, we foresee a year with greater stability. The 1% to 1.5% is simply our planning assumption; it does not strictly represent our expectations. It's how we approach our business strategy and planning for the future, allowing us to adapt if needed. January showed promising pricing trends, with average transaction prices slightly increasing while incentives decreased somewhat. However, there is considerable variability, so we are proceeding cautiously until we have clearer data from the market, as January was quite turbulent.

Okay. And just going back to policy, and I know you're not going to do anything without prudence here. You're going to take some careful evaluation and have profitability and capital efficiency in mind. I just was wondering if you could spend a minute talking about the flexibility you have in your footprint. We know about the ICE-EV flexibility, because you showed us that in Tennessee, but I'm curious a little bit more about just shifting mix of production between plants, especially on the full-size vehicles, which are produced across North America, if there are any sort of near-term actions on tariffs, etc.?

Yeah, Joe, it's a good question. And we've been studying multiple scenarios, but from a Mexico perspective, we do build trucks in Mexico and in Canada and in the United States. And so, we have the capacity in the United States to ship some of that. We also sell trucks globally, and so we can look at where the international markets are being sourced from. So, there's plays that we can do on that perspective to minimize the impact if there are tariffs either on Canada or Mexico. We're encouraged that President Sheinbaum of Mexico has indicated that they are working and having conversations to take the steps necessary that the Trump administration is looking for specifically around immigration and some other things to avoid the tariffs, but we're doing the planning and have several levers that we can pull.

Good morning, everybody. And sorry to stay on the mundane topic of policy, but just trying to understand the baseline of where you're starting, where you're assuming policy doesn't change. I mean, Trump, through the Unleash America Energy executive order, essentially canceled CARB's waiver, so they can't execute on the ACC2. Was your understanding that you do not have to comply with CARB's ACC2 and get to 35% of your volume as EVs in California and the other states? And just what is your interpretation there and how are you going to operate going forward? Because obviously that ratchets up to 45% next year and then 100% by 2035.

Yeah, our message to President Trump and the administration is that as EV requirements are changed, we've got to make sure that the stringency is as well. Frankly, even in today's environment before anything changes, what's happening from a car perspective across multiple states is just not where the customer is at. And we've been engaging at the state level, our dealers have been engaging at the state level. And so, there's a tremendous amount of work going on in that. As it relates to what specifically has happened through executive order, I think there's still some more policy work that needs to be done, so we can comply and make sure we're not in a penalty situation, which we're watching carefully. But don't disagree with you that I think there's directional change coming. It's just it's not completely done yet, but we're watching and providing our input at the state level and the federal level.

But your understanding, Mary, is right now that the 35% requirement that would have been put in place is actually not in place at the moment, right, because of that executive order? Is that how you guys are operating? I just want to make sure I understand that.

Actually, no, because I think there is legislative or legal changes or policy by different organizations that has to align with that. We're very clear on the direction, but I don't think we can as an auto manufacturer right now can assume that that is gone at this precise moment.

Yeah, very uncertain. Just one last one, Mary, quickly on the AV commitment. Obviously, there's a lot of costs that are being poured across from Cruise into the company. So, you're getting some good savings, but you're still spending a lot of money on ADAS and Level 3 to ultimately Level 4 and 5 autonomy. Are you still having internal commitments to developing Level 4 and 5 on your own and sort of a build, or is there the potential that you think you might need to go out and buy just given the way that you're going after this at the moment?

Well, John, it's a great question. And I think even with what we saw yesterday, there is so much happening from an artificial intelligence perspective of how we move forward. We do and have built the capability inside General Motors. Obviously, our plan that we're working to execute with Cruise would strengthen that, much of what we can do. There may be strategic partners that we also work with on aspects of this. And so, we want to be leaders in Level 4 autonomy, and we think we're going to continue to evaluate the landscape to do that as capital efficiently as possible, but still maintain a leadership position and also the strong relationship with the customer because we think that this is game-changing for our industry.

I wanted to follow up on Murph's questions about autonomy. You mentioned having 360,000 vehicles equipped with Super Cruise on the road, with plans to double that by 2025. You also talked about shifting to an end-to-end approach for training your extensive datasets. Can you explain how this transition to an end-to-end model might impact your spending and your approach to compute costs? You hinted at collaborating with strategic partners, which is interesting. Could you provide more detail on what this could mean for your financials or how you plan to allocate capital in the next 12 to 24 months? Additionally, I assume most of the 360,000 units are internal combustion engine vehicles. Could you discuss the implications, if any, of gathering data from non-software-defined ICE vehicles compared to your new electric vehicle architecture for training purposes? Thank you.

Thanks, Adam. In response to the last question, we are gathering information while adhering to all policy guidelines and rules at General Motors to ensure we handle customer data appropriately. We can anonymize this data to improve both performance and safety. We are proud of our Super Cruise safety record and unique features like towing that competitors do not offer. We will continue to enhance these aspects. I mentioned upcoming improvements in driver-assist technology this year, and we believe we can accelerate progress towards achieving Level 3 and beyond for Super Cruise by effectively utilizing the talent we have at Cruise. Regarding our forecast for the next 12 to 18 months, we anticipate savings of $1 billion annually by not pursuing robotaxi, which aligns with our planned operating budget for compute expenditures. We will continue to assess this situation, especially considering the rapid changes in this space. We aim to be more efficient with our spending while remaining committed to autonomy, as it significantly enhances the customer experience and positively impacts our business margins.

Thanks, Mary. Just as a follow-up on China. Despite the recent challenges that you've addressed very proactively, GM does have decades of experience in the market and you have many billions of invested capital, lots of people and capacity still in place, and IP with your joint venture partners. President Trump has been open to foreign firms participating in the U.S. as long as they make products in America, if I'm paraphrasing accurately. Do you see scope for GM to help your existing or even new Chinese partners kind of gain access to the U.S. using your existing onshore capacity and distribution capability? I want to see how you'd approach that, maybe it's not so relevant in the next six or 12 months, but longer-term, just given your decades of experience in that market and the relationships that you've built there. Thanks.

Yeah. Adam, what I've always said broadly on trade across the board is give us a level playing field and let us compete and win based on the strength of our products, technology, design, loyalty, etc. I think what's happening right now with the overcapacity in China and what's happening around the globe and the subsidies that are current, we're not any close to a level playing field. So, I also think we have the opportunity. As we mentioned last year, we grew both ICE and EV share. And so, I think we're doing a good job of leveraging our capacity that we have in North America. That's where we're going to stay focused, because I think that's what's right for the long term of the industry. I think we all have to get focused on not only where is the vehicle final assembly, where is the supply chain coming from for all of the parts, including battery raw materials, but also where is the IP developed, because understanding where that research and development is done. As I mentioned earlier today in some of my media spots, it's very important from an auto technology, not only for manufacturing this country from an economic security perspective, but a lot of the technology as it relates to national security. So, I think you have to factor all those issues in, but right now, I'm focused on leveraging the capacity that we have with General Motors and our opportunities to grow.

Thank you, team. Paul, you've clarified that the guidance for policy, especially regarding electric vehicles, remains unchanged. Could you explain whether the production target is still set at 300,000 units or if the wholesale figure is 300,000 units? What specific factors contribute to the lower end of the range at this point? I'm referring to the $2 billion versus $4 billion scenario, assuming there are no policy changes.

Thank you, Chris. To discuss our path to profitability, we previously mentioned in November 2023 that achieving scale would be critical in the short- to medium-term, followed by improvements in battery and vehicle costs. Since that update, and especially throughout 2024, we projected producing between 200,000 and 300,000 units, ultimately coming in slightly under 200,000. However, we did achieve a positive variable profit, and while the growth and realization of scale benefits are occurring more slowly than anticipated, we believe that reaching 300,000 units is a promising trajectory, particularly as we've gained market share in the EV space and our vehicle mix has improved with models like the Escalade IQ. We still expect to deliver on the lower end of our projected savings improvement of $2 billion to $4 billion, despite volumes being below our earlier expectations. Moving forward, we will keep an eye on developments regarding consumer tax credits and the Inflation Reduction Act, as there are many variable factors at play. I want to emphasize that whether it involves the Inflation Reduction Act or tariffs, we have a variety of strategies in place to adapt to or foresee these changes. Some of these strategies are low-cost and allow for flexibility, while others are larger transactions, such as the deal with LGES for Ultium Site 3. The reason we are keeping our guidance as is is due to the many policy variations, and we did not want to take a stance in our forecasts. Rest assured, we have plans ready and are actively engaging with the administration and Congress to advocate for sustaining American jobs and innovation, and I believe we play a positive role in that effort.

Super clear. And then, just as a follow-up is on the composition of '25 wholesale growth. So, it sounds like you're guiding wholesale slight down, obviously, EV wholesale up 100,000. You think of a specific number, but you mentioned ICE down. But one of the things I'm trying to reconcile is the wholesale growth last year was plus 10%, sort of production at mid-single-digit, sales was plus 4%. Was some of that wholesale growth actually EV inventory in channel, so that is one of the issues on the mix in Q4? Just anything you can add around the wholesale growth above production in the second half of the year? Thanks.

Last year, we finished with approximately 49 days of inventory. We experienced a significant inventory build. To maintain our target of 50 to 60 days, we started the third quarter with about 67 days but managed to work through that thanks to the demand in the fourth quarter. Our current expectations are that wholesales may slightly decrease since we didn't have the chance to build up as we intended. However, there is still some potential for building inventory that isn't reflected in our current numbers. We're being careful about this until we better understand the demand and market conditions as we approach 2025. Ideally, I would have preferred a clearer month in January for decision-making, but the retail environment has been quite unpredictable due to various factors like the weather and recent events. Thus, it's too early to determine that build. If we observe the consistent demand we anticipate, I see the possibility of increasing some of that ICE wholesale volume.

Thanks for taking the question. On the North American pricing guidance down 1% to 1.5%, you said you're guiding for ICE volumes down, higher EV volumes. I would think EVs would come in at higher than ICE pricing. So, this presumably means ICE pricing comes down below the 1% to 1.5% guidance. If so, what level of pricing do you see the ICE portfolio in your '25 guidance?

Thanks, Tom. I keep returning to this topic. When we discuss the pricing assumption, it's essentially a mix of the average transaction price and the incentive environment. We've found that for our internal planning and setup, it's effective to anticipate some pricing pressure moving forward, as it allows us to respond more easily. Therefore, I would say we expect a stable average transaction price environment similar to what we've observed, but we have built in the risk or assumption of potential incentive increases in the future, whether they're market-driven or demand-driven, etc. If those increases do not materialize, I would expect that we will exceed that assumption as we have in previous years.

Got it. Thanks. And my follow-up on Super Cruise. I appreciate the comments on the adoption rate, etc. But wondering to what extent do you think the regulatory kind of system is a support mechanism for Level 2 plus, Level 3. Is this something that could ultimately be the real catalyst that pushes Super Cruise or Level 2, Level 3 down the road? Or do you see this as just being consumer demand driven?

We believe that consumer demand is driving this trend. Most of our customers who have Super Cruise in their vehicles use it regularly, and that number is over 60%. As we introduce new features, users find that they arrive at their destinations feeling more rested. This is reflected in the fact that 80% of our customers either wouldn’t consider purchasing a car without it or strongly desire it in their next vehicle. We plan to make Super Cruise standard on our electric vehicles, including the Cadillac lineup like the Escalade IQ, VISTIQ, OPTIQ, and LYRIQ-V. This presents a significant opportunity for more people to experience Super Cruise and the safe implementation of this technology. Therefore, I see this as being primarily driven by consumer preferences.

Yes, good morning. Thanks for taking the questions. The $2 billion to $4 billion of EV savings year-over-year the company was initially targeting for 2025 was driven about half by volume-related drivers. So, as you're thinking about the $2 billion and expecting some EV wholesale growth, can you give us a bit more of a sense of how much of that $2 billion is coming from volume and how much is from other factors like materials and battery savings? And then, to the extent there are changes in the policy environment, any sense you can share around what that might do to your EV volumes going forward?

Yeah, good morning, Mark. What I would say is it's probably about evenly split between scale benefits and other initiatives on cell cost efficiencies. We're continuing to ramp up cell site two as we talked about at Investor Day, and that's going to provide us some efficiencies going forward. There are some material cost savings that we're starting to bake in, etc., but it probably split about 50-50 between there. I think any policy changes, as I said before, there are literally infinite iterations that you can go through in terms of demand, value of credits, where we are on production tax credits, etc. So, that's why we've built in the assumption that this is kind of status quo. We'll react to that which we can, but we're going to continue to watch this. But this is our best estimate of where we are. And I think that's a good journey, long-term irrespective of what happens as Mary has reiterated many times. This is about providing choice to consumers, and many consumers as we've seen in the share data are opting for our EVs. As a matter of just corporate strategy, we've got to work and we've got to be focused on making sure we get those to profitability. And we're on that journey. And I think the team is making good progress for that. And it's going to require a little bit of time to get there depending on how quickly this scales up. But I think we've seen a tremendous improvement already, and we're anticipating more of that in the future.

Well, and I would also just add that if there are factors that cause EV demand to lessen, we have a great ICE portfolio that we'd happily ramp up production beyond what we have in our current plans for this year. So, again, that's that flexibility that Paul talked about.

Good morning. Thanks for taking my question, which is on China. It looks like you gained some pretty solid sequential traction there with sales rising 40% from 3Q, driven by inexpensive EVs such as the Wuling Bingo. What does the profitability though of vehicles such as the Bingo or the Hongguang Mini EV look like? I'm just curious, what are the ways you can capitalize upon these high-volume, but low-priced, and I'm presuming low-profit vehicles? Do you maybe benefit on the financing side, or expect to benefit over time from aftermarket parts and services? Some other automakers have mentioned similarly priced vehicles in China might be unprofitable, but they can then make money when exporting them to higher-cost markets. So, it looks like some good commercial traction, but just curious your thoughts on the best way to take advantage of this brighter area of the China sales picture.

Sure. We don’t discuss the profitability of individual products, but our partnership with Wuling is significant since they are known for being an efficient and low-cost producer. Their entire portfolio reflects this efficiency. I believe they are among the leaders in this area, and their vehicles are very popular with consumers. There are various opportunities beyond vehicle profitability to enhance our overall appeal. However, I cannot provide specifics on profitability. We collaborate with Wuling to source vehicles for international markets, ensuring they meet the standards of various countries, and we have been successful in this effort.

Okay. Thank you. Maybe lastly, a quick follow-up on your comments regarding capital allocation. I'm curious how some of the uncertainty surrounding regulation, particularly tariffs, could affect your thinking there. Might you potentially want to operate with more than the targeted $18 billion of gross cash for a time? Or are you thinking any differently about the planned cadence of repurchases in 2025 until we gain greater clarity, maybe as soon as April 1st as per one of the executive orders signed last Monday, or just how are you thinking about this?

Yeah. Hey, Ryan. What I would say is our stated liquidity goals alongside our revolving credit facilities are a target that includes a whole host of risks and things that might happen to us. And when you look at the liquidity we had going into COVID, for example, that was enough at the time to get us that time going forward. So, we're not anticipating having to build cash in anticipation of a big draw. And I would say it's going to be continued business as usual. We're going to have to execute going forward. As others mentioned, we do have still a little bit of capacity left under the buyback, and we're going to continue to work with the Board and allocate capital. But our free cash flow generation is strong and we expect to continue to allocate that and ultimately share that with our investors.

Thank you. And I want to close by thanking our team once again for their strong execution in 2024, which has set the business up for continued success in 2025. If you step back and look, we have a broad, deep, and compelling portfolio of internal combustion engine vehicles and EVs to meet customer demand and it keeps getting stronger with the strength of our products. We continue to innovate and we're growing technologies like Super Cruise for today and L3 for the future, even moving to L4. We're profit-focused and we're capital-disciplined with strong margins, cash flow, and a healthy balance sheet. And I want to remind everybody, we have demonstrated our agility many times over the last several years. And although there's a lot of uncertainty with some of the uncertainty, there's pluses in the column as what not just negatives. And we intend to capitalize on all of that. And that's why I believe that 2025 is a year that is full of promise for General Motors and I look forward to sharing our progress with you and demonstrating once again how much the General Motors team is capable of delivering. So, thank you again for joining, and I hope you all have a great day. Stay safe.