General Motors Company

Good morning and welcome to the General Motors Company second quarter 2022 earnings conference call. During the opening remarks, all participants will be in a listen-only mode. After 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. To ask a question, press star, then one on your telephone keypad. To withdraw your question, press star, then two. As a reminder, this conference call is being recorded Tuesday, July 26, 2022. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations.

Thanks, Brad. Good morning, everyone, and thank you for joining us as we review GM's financial results for the second quarter of 2022. Our conference call materials were issued earlier today and are available on the GM Investor Relations website. We are also broadcasting this call via webcast. Joining us today is Mary Barra, GM's Chair and CEO, Paul Jacobson, GM's Executive Vice President and CFO, Dan Burst, President and CEO of GM Financial, and Kyle Boyd, CEO of Cruise, will also be joining us for the Q&A portion of the call. Before we begin, I would like to direct your attention to the forward-looking statements on the first page of our presentation. The content of our call will be governed by this language. And with that, I'm happy to turn the call over to Mary.

Thanks, Ashish, and good morning, everyone. Thanks for joining the call today. As you have seen in our press release and other materials, GM delivered $2.3 billion of EBIT adjusted in the second quarter, which is in line with the update we shared on July 1st. We also remain on track to deliver our full-year guidance, which includes EBIT adjusted of between $13 billion and $15 billion. This is a truly unique and dynamic market that presents both challenges and opportunities for GM. Overall, GM production continues to improve year over year despite some short-term challenges, and we are on track to increase our wholesales by 25 to 30% in line with our expectations for the year. This has helped us extend our U.S. truck leadership where demand is the strongest and supplies are well below optimal. The Chevrolet Silverado and the GMC Sierra led the industry in total full-size pickup sales in 2020 and in 2021. We continue to lead in 2022 by a wide margin. In fact, our retail market share in the first half is up two percentage points to 40%. But even as we operate our truck plants at near full capacity, our inventory has remained extremely low due to continued strong demand. The stock on the ground for GM full-size pickups has been in the mid-teens in terms of day supply for more than 90 days. For full-size SUVs, it's below 10. This helps explain why we continued building trucks in June, even though we couldn't ship everything right away due to supply chain issues. The facts are the customers are there for our vehicles. They've been waiting, and all indications are they remain ready to buy. While demand remains strong, there are growing concerns about the economy, to be sure. That's why we're already taking proactive steps to manage costs and cash flows, including reducing some discretionary spending and limiting hiring to critical needs and positions that support growth. In addition, we have modeled several downturn scenarios, and we are prepared to take more deliberate action when and if necessary. Regardless of the circumstances, we continue to move forward from a position of strength. We have a foundation of strong earnings and cash flow, an investment-grade credit rating, historically low pension obligations, and outstanding vehicles, services, and pricing. I like our position, and I wouldn't trade it with anyone in our industry. All of this will help us continue to execute our growth strategy and insulate it from short-term market challenges. Cruise is an example. Without question, the cruise team's launch of fully driverless commercial operations in San Francisco in June was historic. The next steps for cruise in the second half include working with regulators to increase their hours of operation and service area, expanding their fleet of bold AVs, and testing the cruise origin. And as always, we are committed to safety as cruise expands. Kyle Voigt and I will have much more to share about Cruise on September 12th at the Goldman Sachs Technology Conference in San Francisco. We will also host our own event later that day for investors and analysts, including an opportunity to experience a fully driverless ride. Another major highlight was the first customer deliveries of the Cadillac Lyric earlier this month. We are extremely proud of the Lyric, and it has received almost universal praise from the media who says it stands with the Escalade as one of the best Cadillacs we've ever done. I can't wait until everyone sees the Celestic in person. Nearly 70% of the Lyric reservation holders are new to Cadillac, and 30% are from the West Coast. This is very similar to what we're seeing with the Hummer EV, where 75% of reservation holders are new to GMC, with a very heavy concentration in California, Texas, and Florida. And looking ahead to early spring 2023, Anticipation for the Chevrolet Silverado EV continues to build. We now have more than 150,000 reservations, and the average fleet customer is requesting more than 200 trucks. The reaction to the Chevrolet Blazer EV has also been very enthusiastic. We think the media who says it's going to shake up the electric SUV market thanks to its design, technology, range, and pricing are spot on. Chevrolet will follow it up in September when it reveals even more affordable Equinox EV. And the ownership experience for all of our EV customers will be enhanced by agreements like the one we just signed with the Pilot Company to expand our Altium 360 charging network to facilitate interstate travel. Together with EVgo, GM and Pilot plan to install 2,000 DC fast chargers installed at 50 mile intervals along US interstate highways with special benefits for GM owners like exclusive reservations and discounts on charging. With Pilot investing a billion dollars to upgrade their customer service, we are confident this will be a very good solution for our customers. And as our EV strategy scales, the key question investors frequently ask is, how will you build enough batteries when competition for raw materials is intensifying? And as I've said, our strategy is to control our own destiny, and that includes building cells in partnership with LG Energy Solutions. We are just weeks away from the launch of the seven-day operations at the first Altium Cells JV plant in Ohio. Then each quarter, the plant will add 20% to its capacity, reaching the full 35 gigawatt per hour capacity in Q4 of 2023. Securing cells from this plant are... key to significantly ramping up production of the GMC Hummer EV and the Cadillac Lyric to meet pent-up demand. The second cell plant, which is under construction in Tennessee, is on track to open next year, and just last month, Ironworkers and our construction partners installed the final beam in a topping-out ceremony. In Lansing, Michigan, the site of the third cell plant, the foundation work is underway and steel work will begin in August, and that plant opens in 2024. And the team is also making good progress towards selecting the site for the fourth USL, which will take our projected total battery capacity to 160 gigawatts. What's happening upstream with these plants is just as critical to our long-term success. On previous calls, we had talked about all of the fully executed supply agreements GM has secured for EV raw materials and components. Today, we are announcing three more binding supply agreements. The first is with LG Chem, who will supply us with approximately a million tons of cathode material between now and 2030. We've also reached agreement with POSCO Chemical to supply us with CAM from their Korean operations from 2023 to 2025. The third is a multi-year supply agreement with Livent to secure significant quantities of lithium. What this means is GM now has binding agreements securing all battery raw materials supporting our goal of a million units in annual capacity in North America in 2025. This includes lithium, nickel, cobalt, and the full CAM supply. As we move forward, we will increasingly localize our supply chain just as we have localized battery cell production. For example, due diligence is already underway to further expand capacity at the JVCAM and CAM precursor facility GM and Pasco Chemical are building in Quebec. GM and LG Chem will explore the localization of a cam production facility in North America by the end of 2025. And Livent has a goal to transition 100% of the lithium hydroxide they are processing for GM to the U.S. I want to thank the team for their hard work to deliver this critical milestone, which includes close to 20 individual supply agreements. And I also want to thank our supplier partners. I use the word milestone deliberately because we are planning significant volume growth to meet our investor day commitment of $90 billion in annual EV revenue by 2030. That means our supply chain must be even more scalable, sustainable, and resilient. To that end, the team is building on existing supplier relationships and forging new ones. And for certain commodities, we will direct source up to 75% of our needs through 2030 with a focus on North America. We think this strategy will mitigate risks, drive down costs, and help us deliver upside volume opportunities. As you can see from these examples, every part of the company is rising to meet today's challenges. And we are adapting, changing, and innovating to execute our pivot to EVs. We are being thorough, collaborative, and leaving nothing to chance. And that's how we have made such huge strides and why we are so confident in our future. So thank you, and now I'll turn it over to Paul.