The operator introduces the General Motors Company First Quarter 2024 Earnings Conference Call and explains the format. Ashish Kohli, GM's Vice President of Investor Relations, welcomes participants and introduces the speakers, including GM's Chair and CEO Mary Barra and Executive Vice President and CFO Paul Jacobson. They will make forward-looking statements about the company's expectations, which are subject to risks and uncertainties. Mary Barra discusses the company's priorities for 2024 and reports that the team is executing well against them.

In North America, GM's Chevrolet, Buick, GMC, and Cadillac brands have shown strong performance with a 10.6% EBIT margin in the quarter. This is due to the success of their full-size and midsized pickups, SUVs, and EV portfolio. Despite lower incentives, GM has grown its retail shares and market share in the US, particularly in the truck segment. They have also seen success with new small SUVs, leading to high customer loyalty. In their EV business, GM is increasing production and profitability, with plans to double their current capacity by the end of the summer.

During the first quarter, GM saw a significant increase in EV production and retail customer deliveries, with the Cadillac LYRIQ outselling European luxury brands. The company's focus on software improvements and hiring executives from the tech industry is helping to differentiate their customer experience. Progress is also being made at Cruise, with the team back on the road and engaging with regulators and stakeholders. GM is pleased with their ICE performance and progress in EV execution, and is proud of their team's commitment and tenacity. As a result, they have raised their full year 2024 EBIT, EPS, and automotive adjusted free cash flow guidance. In addition, the company is launching redesigned models in high-volume segments, which are expected to have higher margins than the outgoing models.

The summer will see the release of the new Buick Enclave with Super Cruise, as well as upgrades to the GMC Yukon, Chevrolet Tahoe, and Chevrolet Suburban SUVs. The Corvette ZR1 and next-generation full-size ICE pickups are also in the works. In the EV business, the Ultium Cell plant is scaling production and the Chevrolet Equinox EV will be the most affordable long-range EV on the market. More affordable trim series for other EV models will be introduced in the second half of the year, along with new Cadillac EVs. The highly anticipated GMC Sierra EV Denali and Chevrolet Silverado EV RST will have a best-in-class range of 440 miles.

The Chevrolet and GMC EV pickup trucks have been tested and proven to have superior range and towing capabilities compared to other battery electric trucks. They also offer unique features such as the ability to tow while using hands-free driving technology. This success is a result of the company's investments in transformation and growth, which have led to increased spending in recent years. The company plans to continue scaling EV production and will provide regular updates on their progress.

The focus has shifted to driving free cash flow through enhanced profitability and capital discipline. The company has seen results and is now looking for ways to spend less while maintaining a focus on the customer. Examples of this include the winning with simplicity discipline and the upcoming Ultium-based Chevrolet Bolt EV. The call is then turned over to Paul, who discusses the company's strong financial results and how they have been able to maintain consistent pricing trends. Retail sales were up, but fleet sales decreased due to two main factors.

The company faced production constraints in the first quarter, but expects to recover volume in the second half of the year. They prioritized producing more retail full-size SUVs to meet customer demand and generate higher revenue per vehicle. The company also had a strong cash flow and completed stock repurchases, resulting in a 17% decrease in fully diluted share count. They have raised their full year guidance due to strong momentum and confidence in the 2024 outlook. In the first quarter, the company saw 8% revenue growth, achieved 9.0% EBIT adjusted margins, and $2.62 in EPS diluted adjusted.

In the first quarter of 2023, GM's EBIT adjusted was higher than expected due to strong ICE performance, improved EV profitability, and cost-cutting measures. Automotive free cash flow also improved significantly compared to the previous quarter. North America saw a 10.6% EBIT adjusted margin and a $300 million increase in EBIT adjusted, mainly due to higher wholesale volumes and cost containment. GM's fixed cost reduction program has been successful and they are on track to achieve their target by 2024. Dealer inventory levels are slightly above the target, but GM is confident in their position heading into the rest of the year. GM International's EBIT adjusted was breakeven, with a loss in China equity income due to lowered production to balance inventory levels. However, they expect to return to profitability in the second quarter. EBIT adjusted in GM International excluding China equity income was down $150 million due to lower volume in South America and strategic decisions to protect margins.

The company is expecting profitability improvements in Q2 due to new product launches and cost efficiencies. GM Financial performed well in Q1, with a dividend of $450 million paid to GM and a projected full year guidance range of $2.5 billion to $3 billion. Cruise expenses were reduced to $400 million in Q1 due to cost reduction activities and a more focused operational plan. The company is also focused on improving EV profitability, with sequential and year-over-year improvements in variable profit and EBIT margins. This is due to lower battery raw material costs, increased production in battery JV plants, and improved vehicle profitability. The company expects to see further benefits from the production tax credit and improved fixed cost absorption as production continues to ramp up.

In the first quarter of this year, we have seen a significant increase in the number of Ultium-based EVs we have wholesaled, with 22,000 units compared to less than 2,000 in the same period last year. We are still on track to reach our target of producing and wholesaling 200,000 to 300,000 units by 2024. We have also adjusted pricing for the 2024 Blazer EV, which has been well received by dealers and customers. We expect to achieve positive profitability for our EV portfolio in the second half of the year and a mid-single-digit margin in 2025. We are confident that our EVs will be well-received by consumers due to their design, performance, range, and value. Our strong cash flow is funding our EV transformation and other growth opportunities, and we are making efficient decisions with our capital spend. Our balance sheet remains strong.

The company has seen positive results from their ASR and their stock has outperformed its peers. They are still undervalued and are committed to improving their valuation. The company expects strong cash generation and progress on their EV strategy to generate significant returns for stakeholders. The Q&A portion of the call then begins. The pricing assumption for the remaining three quarters is negative, but there are factors such as higher EV sales and smaller crossovers that could potentially improve mix. However, there may also be headwinds in pickups. The company expects the EV variable profit to turn positive in the second half of the year. Overall, the guidance includes the outperformance seen in Q1.

The speaker discusses how not much has changed in their assumptions going forward. They mention an increase in EV volume and pricing headwinds in the second half of the year. They also mention that they are still guided by the same principles as their initial guidance for the year. The speaker also talks about their mix and how they are lapping some price increases from last year. They believe the market is holding up well and may take up guidance again if pricing momentum continues. The speaker then addresses Cruise and their re-launch, mentioning improvements to their technology stack and the progression towards unsupervised operation. They also mention that the core tech stack has been strengthened for safety.

In October, the company faced issues with building relationships with regulatory agencies and the public and being transparent. They have since focused on improving these areas and are excited to demonstrate the safety of their technology. They plan to return to the road in one city and expand from there, with the budget and potential outside investments in mind. The company remains confident in their technology and has continued to improve it. In terms of volume mix, they will be introducing new and refreshed ICE crossovers in the next couple of quarters and are aiming for margin improvement. The software strategy and goals for the Ultifi platform over the next six to 12 months will be discussed by Mary.

The speaker discusses the success of the new Chevy Trax and Buick Envista crossovers, with sales up 500% in the quarter. They also mention that trends in average transaction prices may be affected by the increase in volume of these crossovers. The company's strong guidance for the future takes this into account. The CEO also talks about the company's software strategy and how they have made changes to improve it, with a focus on launching with quality and growing subscriptions and services. They are confident in their team and progress made so far. A question is then asked by an analyst from Bank of America.

John Murphy asks Mary Barra about the future of GM's operations in China, given the current geopolitical climate and the fact that it is not currently profitable. Barra states that GM remains committed to the Chinese market and is focusing on strengthening their supply chain and advancing their electrification strategy. They believe there is still a role for GM to play in the luxury premium segment in China, and will continue to leverage both global and local solutions.

The speaker explains that the company's focus is on both profitability and supply chain resiliency. The interviewer asks about the company's pricing strategy, and the speaker acknowledges that predicting pricing is difficult. However, he believes that the company will continue to see resilience in the market due to various factors such as tight supply and labor shortages. The 2% to 2.5% estimate is not an expectation, but rather an assumption used for guidance purposes.

The company's first quarter performance was strong, but they are cautious due to potential macroeconomic headwinds. They are managing demand and pricing well, which has been favorable for their margins. The EBIT for the full year is expected to be between $12.5 billion and $14.5 billion, with some potential pressure in the back half due to the scaling up of electric vehicles. However, if pricing remains strong, there is potential for outperformance.

Mark Delaney asks a question about GM's EVs and their pricing in the competitive market. Paul Jacobson responds by mentioning strong retail demand and softness in fleet sales, but also notes that the company is building momentum and has strong capabilities in terms of performance and range. He believes that as consumers continue to see these capabilities, GM will be well positioned in the growing EV market. Dan Ives then asks a question.

Mary Barra, CEO of GM, discusses the company's progress and positive outlook in relation to the UAW negotiations and EV strategy. She mentions feeling better about the company's position, with the module issue resolved and good progress with Ultium-based EVs and charging infrastructure. Barra also mentions confidence in the company's software progress. A question is asked about wholesale growth for the full year.

Mary Barra, CEO of General Motors, discussed the company's global volumes, which increased by almost 4% in the quarter. She also mentioned that there will be some downtime for full-size pickups in order to install equipment for a seamless launch of the next model. The company will focus on customer demand and managing inventory to maintain strong pricing and product strength. Paul Jacobson, GM's CFO, added that EV supply will increase throughout the year as they ramp up production at the Ultium Cell plant in Spring Hill. The company is also seeing growth in China, but there were some losses in the quarter for their joint venture in the country.

The speaker is asking about the profitability expectations for the remainder of the year and specifically in regards to GMI consolidated. The response is that they expect profitability to continue for the rest of the year, but they are monitoring the situation in South America. The speaker then asks a question about the production guidance for Ultium and whether it is a firm number or subject to change based on consumer demand.

Mary Barra, CEO of GM, discusses the company's plans for electric vehicles and their response to customer demand. They believe they are well positioned in the $200,000 to $300,000 range with their upcoming EVs and are seeing strength in their current models. Barra also mentions their strong ICE portfolio and their ability to adapt to customer demand. When asked about competition from Chinese companies, Barra states that they want to compete based on products and would prefer a level playing field.

The speaker discusses the importance of a level playing field in the global market and how GM is focused on maintaining its share by offering great vehicles at the right price. They mention the strong Chevy brand in South America and the company's efforts to reduce costs and improve margins in their EV business. They also reference a previous presentation outlining a roadmap for EBIT improvement, with a majority of it being driven by scale benefits.

GM's EBIT losses are mostly due to the need to grow into their new electric vehicle business. They have made progress in reducing costs, with battery raw materials and cell costs decreasing. As they scale up production, they expect to see further cost reductions. They will also continue to monitor pricing and adjust accordingly. If demand for EVs is lower than expected, they have the flexibility to lower costs, including potentially rationalizing their battery plans.

The company experienced a delay in production at their Orion plant, but they used the opportunity to make improvements that will lower costs. The company has a strong portfolio of both ICE and EV vehicles and is focused on meeting customer demand. The seasonality in wholesale is expected to be similar to previous years, with Q1 and Q4 being slightly lower than Q2 and Q3.

The speaker thanks the company for providing detailed information on their upcoming BEV launches in the US, and notes that it is likely they will gain market share due to the attractiveness of their offerings. They then ask if the company has a similarly aggressive EV rollout strategy planned for China, as their share in the country has declined during the industry's transition to EVs. The speaker also mentions the increased competitiveness of domestic Chinese automakers as a contributing factor.

Mary Barra, CEO of GM, discusses the factors that may stabilize the company's share trend in China, including the launch of new NEVs and upgrades to existing ICE vehicles. She also highlights the company's strong presence in the Chinese market, including OnStar, financing, sales, service, and a dedicated software and digital business organization.

In summary, the company's focus on improving and competing in software and services, along with their GMF financing and OnStar, will continue to drive growth. The 60 basis point improvement in EV margins is largely due to scale benefits, and while lower volume may have a short-term negative impact, the company is on track to reach their goal of breakeven at low 200,000 volume. The company has built flexibility into their strategy to respond to changes and is confident in their long-term growth potential.

In response to a question about the impact of reduced battery raw material costs, CEO Mary Barra and CFO Paul Jacobson explain that there is still room for improvement in 2024 due to current inventory levels. They also assure that their investments in vertical integration have been made with a portfolio approach, and will benefit the company in the future. Barra adds that the company is making good progress and using its strong free cash flow to reinvest in the business and its employees.

GM plans to invest between $10.5 billion and $11.5 billion in capital this year to grow their ICE and EV businesses profitably. They are also advancing their software-defined vehicle capability. The company has set aside $160 million for profit sharing in recognition of their manufacturing team's contributions in the US. Shareholders are also benefiting from improved execution, a higher dividend, and a value-enhancing ASR launched in November. The company is on track to reduce their shares outstanding to fewer than 1 billion. The team is focused and committed to maintaining their momentum and making 2024 a strong year for GM. The conference has now concluded.

This summary was generated with AI and may contain some inaccuracies.