General Motors Company

Good morning and welcome to the General Motors Company first quarter 2021 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. To ask a question, press star, then 1 on your telephone keypad. To withdraw your question, press the pound key. As a reminder, this conference call is being recorded Wednesday, May 5, 2021. I would now like to turn the conference over to Rocky Gupta, Treasurer and Vice President of Investor Relations.

Thanks, Savitha. Good morning and thank you for joining us as we review GM's financial results for the first quarter of 2021. Our conference call materials were issued this morning and are available on the GM Investor Relations website. As usual, we are also broadcasting this call via webcast. I'm joined here today by GM Chairman and CEO Mary Barra, GM CFO Paul Jacobson, and GM Financial President Dan Burse. Before we begin, I would like to direct your attention to the forward-looking statements on the first page of the chart set. The content of our call will be governed by this language. I will now turn the call over to Mary Barra.

Good morning, and thanks for joining our first quarter earnings call. Our start to this year was very strong, with a record Q1 performance that was driven largely by robust product demand in the U.S., as well as an outstanding quarter for GM Financials. we remain confident that we will achieve our full year guidance. We are on a path to transform our company on the timeline we have shared with you, and we are demonstrating our ability to accelerate our plan. Before I discuss the progress we've made on our transformation and growth strategy, I'll provide some highlights about our performance. I'm very pleased with the strength of our global business, which contributed to EBIT adjusted of $4.4 billion and an EPS diluted adjusted of $2.25. The strong quarter was a full team effort with people working in our plants all the way to our dealers. Global purchasing and supply chain, engineering, and manufacturing have been especially nimble and opportunistic as we manage through the semiconductor shortage. For example, our engineers are creating effective solutions using chips that are more readily available or by identifying alternatives to conserve semiconductors where possible. Their work helped us maximize production of our highest demand and capacity-constrained vehicles, reducing downtime and further demonstrating our team's agility. While we have production downtime in the second quarter, we expect to have a strong first half with EBIT adjusted around $5.5 billion-ish. We are also reaffirming our guidance for the full year, and based on what we know today, we see the results coming in at the higher end of the $10 to $11 billion EBIT adjusted range that we shared earlier this year. We remain committed to fund $7 billion in EV and AV investments that includes capital and engineering this year and accelerating 12 EV programs as we first announced last November. Paul will discuss our Q1 numbers and outlook in more detail in a few minutes. Looking ahead, I think there are many reasons why we are confident. For starters, we have great product momentum. Despite tight inventories, we maintain a clear lead in the full-size SUV market in the U.S., and our full-size pickups are in high demand. In China, our sales are rebounding sharply with the economy, and Cadillac achieved a record first quarter, led by its SUV lineup of XT4, XT5, and XT6. In addition, we are executing one of the fastest production launches in our history. Last November, we said we would return full-size pickup production to Oshawa Assembly in Canada in early 2022. Because of the team's speed, we are pulling the start of retail production ahead into the fourth quarter of this year. The new timeline and incremental volume will begin to have a meaningful impact next year as we ramp up production. But I'm sharing it with you now as another example of how we are working urgently to achieve key milestones. Let's turn now to our growth strategy, starting with a battery update. We intend to lead on all aspects of battery development and cost reduction, and we are moving quickly on every front. Our vertical integration approach to battery technology, which includes building our own cells, will help us scale quickly and efficiently to deploy new, innovative chemistries that boost energy density and reduce cost over time. Altium batteries are unique in the industry because of their large-format pouch-style cells that can be stacked vertically or horizontally inside the battery pack. This allows engineers to optimize battery energy storage and layout for each vehicle design. Depending on the vehicle, Altium enables a GM estimated range of up to 450 miles or more on a full charge with zero to 60 miles per hour acceleration in three seconds. As we've previously said, we will realize a 40% battery cost reduction with our first-generation Altium platform compared with today's Chevrolet Bolt EV. And we're already on the road to delivering a 60% cost reduction compared to the Bolt EV with the next generation of Altium, and we expect costs will continue to decrease from there. Currently, our next-gen lithium metal prototypes have completed about 150,000 simulated test miles, and we expect them to have nearly double the energy density of our current EV batteries. The team has already secured 49 patents for GM's lithium metal battery development, with another 45 pending. Our own work, along with the intellectual property from Solid Energy Systems, will form the basis of our recent joint development agreement with SES, one of the companies we're working with to commercialize lithium metal batteries. We are targeting production of our next-gen Altium battery by mid-decade, and we're also expanding our battery cell manufacturing footprint to control our cost and cell supply. Last month, Ultium Cells LLC, our joint venture with LG Energy Solutions, announced its second high-volume battery cell plant in the United States, and construction begins immediately on the site adjacent to our Spring Hill Assembly Plant in Tennessee. The new facility will create about 1,300 new manufacturing jobs when it comes online in late 2023. It will join the Ultium Cell LLC facility in Lordstown that is opening next year. And this is just the beginning, and we'll continue to expand our battery cell capacity on our way to achieving our goal of EV market share leadership in North America. Let's turn now to our Ultium-powered products. During the quarter, we unveiled the second new Hummer EV, the 2024 GMC Hummer EV SUV, which launches in 2023 and will be built at Factory Zero in Detroit, Hamtramck. It will be available loaded with new GM-developed software-driven technologies, including Crab Walk, Extract Mode, and many more features that are either industry-leading or segment differentiators. The Cadillac team unveiled the stunning Lyric production model, which we accelerated by nine months. And as we've previously said, we have cut the development time of most of our EVs in half because of our use of virtual engineering and other software tools. Cadillac will take reservations beginning in September with initial availability in the first half of 2022. We were also excited to confirm that Chevrolet will introduce a Silverado full-size electric pickup truck for retail and fleet buyers with a GM estimated 400 miles of range on a full charge for certain configurations. The initial interest has been overwhelming, especially from commercial and government customers. We gave a small number of them a sneak peek at the interior and exterior design. They said it exceeded their high expectations with zero emissions, long range, pickup capability, innovative storage, and strong value along with a powerful design. What's especially important is that this truck will be in a high volume entry and one of the most popular and competitive segments in the industry. In addition to Altium propulsion, Super Cruise is a feature that connects all of these vehicles and an increasing number of vehicles we're selling today. Since its debut in 2017, Super Cruise has twice been ranked as the best driver assistance technology in the industry by a leading third-party consumer group. Super Cruise is enhancing our reputation, elevating our brands, and laying the foundation to generate substantial feature subscription revenue for us as we move forward. To creatively illustrate how fun and liberating Super Cruise can be, Cadillac recently wrapped up its It's Time to Let Go campaign. It captured celebrities as they drove the 2021 Cadillac Escalade with Super Cruise and its new lane change capability. It was really fun to watch the reactions and how people quickly shifted from being cautiously curious to just pure excitement. We'll roll out Super Cruise to 22 models by the end of 2023, and we plan to add even more features. Our ultimate vision is that this system enables hands-free transportation in 95% of driving scenarios. What makes our large-scale deployment of Super Cruise and all of its new features possible is our Vehicle Intelligence Platform, or VIP, which connects every vehicle system into one advanced high-speed and very secure network. VIP's 4.5 terabytes of data processing power per hour represents a five-fold increase from our previous electrical architecture. That's enough capacity to manage all of the data loads of our self-driving technology, driver assistance systems, electric propulsion, over-the-air updates of every vehicle module, plus capacity to manage future applications. It's also an enabler for software as a service, including new apps and capabilities that we can market to our customers, such as the latest must-have trailering and parking apps. By the end of 23, VIP will be on 7 million vehicles and 38 global models. Another major element of our growth strategy is our BrightDrop commercial delivery business, and it is progressing and on track. In March, our product and manufacturing teams reached an important milestone as they conducted EV600 prototype builds. Plans to build the BrightDrop EV600 at GM Canada's CAMI assembly in Ingersoll are progressing rapidly. The BrightDrop team remains on track to reach its goal of delivering EV600s to its first customer, FedEx Express, by Q4 of this year. Interest is high, and we continue to have active discussions with many prospective new customers who are seeking the efficient and zero-emission delivery solutions that BrightDrop offers. And this is encouraging as third parties estimate that the addressable market for ELCBs could be $30 billion by 2025 and double that in 2030. As our EV volumes grow, we are also investing in relationships to build a robust, reliable, and easy-to-use public charging infrastructure. Last week, we revealed LTM Charge 360, an innovative and holistic approach that integrates charging networks. GM vehicle mobile apps and other products and services to simplify the charging experience for GM EV owners. It builds on our existing work and partnerships to support a charging ecosystem that will give GM EV owners more confidence and convenience. We have signed agreements with seven major charging networks, giving customers a more seamless access to nearly 60,000 plugs across the US and China. As part of our existing collaboration with EVgo, we've opened the first three fast-charging stations in California, Florida, and Washington, on our way to 2,700 plugs by the end of 2025. And we expect about 500 fast-charging stalls to go live by the end of this year. We'll continue to provide updates about Altium Charge 360, including new elements and collaborations. The last major EV development I want to share follows up on our joint announcement last year with Honda that we will co-develop two Altium-based EVs for Honda to be built in North America by the GM team. Honda recently confirmed these vehicles, a large SUV for the Honda brand and one for the Acura brand, and will launch in North America market for the 2024 model year. This further validates our Altium technology, and we continue to work closely with Honda to expand our partnership and cooperation in key areas such as purchasing, research and development, and connected services. Turning to AVs, Cruise continues to establish itself as a leading force in commercializing self-driving vehicle technology. In the latest funding round that closed after raising $2.75 billion, it included investments from Microsoft and Walmart, and this brings the valuation of Cruise to more than $30 billion, with GM continuing to own a majority stake. Cruise is moving steadily closer to commercialization. Its real-world driverless vehicle testing in San Francisco and its last-mile delivery pilot with Walmart in Scottsdale, Arizona, will help pave the way for new commitments like the one Cruise just signed with the city of Dubai. Cruise will be the city's exclusive provider of self-driving taxis and ride-hailing services, with plans to deploy up to 4,000 self-driving vehicles by 2030. Dubai chose Cruise over several competitors, so it's another great validation of Cruise's technology and our overall approach to autonomous vehicles. Before I turn the call over to Paul, I want to quickly update you on our coronavirus measures. We remain diligent and disciplined with our safety protocols to keep employees safe as variants and new hotspots emerge. The GM medical team continues to monitor new COVID-19 cases globally, and our vaccine task force teams are working to understand vaccine administration priorities for each country and determine how we can best assist our employees, including operating vaccine clinics in several of our U.S. facilities. All the work GM medical has done behind the scenes was crucial as we restarted production last spring. and their work has helped the rest of the team stay focused on driving our business today and driving our growth strategy. I also want to recognize the entire GM team for its hard work, flexibility, and resilience. In addition to our suppliers and our dealers who are helping us manage the semiconductor issues, we are also working to serve our customers and leveraging everything we can do to turn inventory quickly. Everyone has been remarkably dedicated and it shows in our results and we appreciate everyone's hard work. This is just the beginning for the next generation of General Motors. We are well on track with our plans to transform our company and lead the industry into the future and we are pleased with the significant progress we have made on all fronts during the quarter. We look forward to building on this strong momentum and providing a more comprehensive update on our growth initiatives and progress later in the year. We plan to have an investor event in the Detroit area, and we'll announce a date later in the summer because we would like this event to be face-to-face. We'll use this event to go deeper into our growth strategy and financial opportunities and everything that drives them, including software, hardware, and services, along with our strong brands. So with that, I'll turn it over to Paul to provide more details on our financial performance and our full-year guidance.