General Motors Company

Good morning and welcome to General Motors Company's first quarter 2023 earnings conference call. During the opening remarks, all participants will be in a listen-only mode. After the opening remarks, we will conduct a question and answer session. We are asking analysts to limit their questions to one and a brief follow-up. To ask a question, press star and then one on your telephone keypad. To withdraw your question, press star and then two on your telephone keypad. As a reminder, the conference call is being recorded Tuesday, April 25th, 2023. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations. Thank you. You may begin.

Ashish Kohli Thanks, Julie, and good morning, everyone. We appreciate you joining us as we review GM's financial results for the first quarter of 2023. Our conference call materials were issued this morning and are available on GM's Investor Relations website. We are also broadcasting this call via webcast. Joining us today are Mary Barra, GM's Chair and CEO, Paul Jacobson, GM's Executive Vice President and CFO, and Kyle Vogt, CEO of Cruise. Dan Burse, President and CEO of GM Financial, will also join us for the Q&A portion of the call. Before we begin, I'd 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 delighted to turn the call over to Mary.

Thanks Ashish, and good morning everyone. Thank you for joining us. Paul, Kyle, Dan, and I are glad to have this opportunity to discuss our first quarter results with you. Once again, we delivered strong earnings, and I appreciate the efforts of everyone involved, including the GM team, our dealers, our suppliers, our unions, that all helped us meet strong customer demand for our products. Highlights include our international markets outside of China, which had a record quarter, and North America, where we earned 10.9% EBIT adjusted margins. In the U.S., we are the market leader in retail and fleet sales, including commercial sales. We earned the largest year-over-year increase in U.S. market share of any automaker, and we did it with strong production and inventory discipline, as well as consistent pricing. We delivered more than 20,000 EVs in the U.S. in the quarter on the strength of record Bolt EV and EUV sales and rising Cadillac Lyric deliveries. This moved us up to the second market position and increased our EV market share by 800 basis points. We also continue to sell more trucks in the US than anyone by a wide margin. In addition, the $2 billion of fixed cost reductions we are targeting will flow to the bottom line faster than we originally expected. And the enterprise value of these fixed cost reductions will have even greater than $2 billion value because we're strengthening our culture, which has consistently delivered strong results. We're reducing our executive ranks by more than 15% through voluntary separations, which will help reduce bureaucracy. and we are empowering our leaders to structure their teams to be faster and more agile. In addition, we are prioritizing programs and projects that have the highest revenue and cost impact. We understand the bar continues to be raised, so we're holding ourselves accountable to drive improvements every single day. As we look at the performance of the business and the opportunity ahead of us with new ICE and EV launches, we're able to raise our full year 2023 earnings guidance to a range of $11 billion to $13 billion. The new ICE products we are launching around the world will build on this momentum and support strong mix pricing and EBIT. In GMI, the new Chevrolet Trax is off to a very fast start in Korea with more than 13,000 orders placed in the first week of sale. In Brazil, the new Chevrolet Montana pickup saw more than 10,000 orders out of the gate. And demand for our new midsize and heavy-duty pickups in North America is growing, especially at the high end. Over the last years, we've evolved our premium truck offerings from a niche to a franchise, and we did it through manufacturing investments, design, demonstrated capability, and technologies like Super Cruise. Our customers are responding. 60% of dealer and customer orders for the new Chevrolet Colorado are high-end Z71, ZR2, and Trail Boss models. Last year, it was 42%. Seventy-five percent of the GMC Canyon orders are for higher-end AT4 and Denali models. Last year, it was 45 percent. Fifty-two percent of Chevrolet Silverado HD orders are for the top-of-the-line high-country model. And 30 percent of the GMC Sierra heavy-duty orders are for the new Denali Ultimate, which is a brand-new model that didn't exist a year ago. Our profitable growth opportunities extend into other segments as well. For example, the Chevrolet Trax and Trailblazer and the Buick Encore GX and Invista will help us win new customers from brands that walked away from affordable vehicles or scaled-back customer choice. All four of these small SUVs are beautifully designed, packed with technology, and include a long list of standard active safety and driver assistance technologies. Yet they all have starting MSRPs below $30,000, with the Trax starting below $25,000. As a measure of just how good these vehicles are, the Trax earned a 63% lease residual. That's 24 points above the previous generation and the best we've ever done in this segment. As for the Invista, one auto writer said its gorgeous styling resembles a Lamborghini and another said as far as rivals go, the 2024 Invista might be playing in the sandbox alone because it's both premium and affordable. At the same time, our EV volumes and market share are growing as cell production rises and our teams master new hardware, software, and manufacturing technologies that we are deploying. As Paul and I have shared, we plan to produce 400,000 EVs over the course of 22, 23, and the first half of 2024, including 50,000 EVs in North America in the first half of this year and double that in the second half. So far this year, we've built more than 2,000 Cadillac Lyriks, and production will continue to rise to help us meet pent-up demand. Both GMC Hummer EV models are shipping from factory zero, and production is scaling. Our production ramp is carefully cadenced as we add additional trim series to the Hummer EV pickup and begin production of Edition 1 SUV. The team at CAMI has now built more than 500 BrightDrop ZEVO 600 vans, and the ZEVO 400 begins production in the second half of the year. and we've added Perlator and Rider as customers. We already have 340 fleet customers for the Silverado EV, and the team at Ramos Arispe is making great progress preparing for the launches of the Blazer EV and the Equinox EV in the second half of the year. All of this is enabled by rising production at Ultium Cells in Ohio, which we expect to reach full capacity at the end of the year. Everything we learned in Ohio will be applied to our next two Ultium Cell plants, including in Tennessee, where we will begin hiring and training production workers in a matter of weeks. Work also continues to transform our assembly plant in Orion Township, Michigan, to build the GMC Sierra EV and the Chevrolet Silverado EV. We have progressed so far that it's now time to plan to end the Chevrolet Bolt EV and EUV production, which will happen at the very end of the year. When Orion EV assembly reopens in 2024 and reaches full production, Employment will nearly triple, and we'll have a company-wide capacity to build 600,000 electric trucks annually. We'll need this capacity because our trucks more than measure up to our customers' expectation, and we'll demonstrate that work and EV range are not mutually exclusive terms for Chevrolet and GMC trucks, so stay tuned. As we scale EVs, we will lower fixed costs and we'll continue to drive margin improvements we outlined at Investor Day. This includes optimizing our pouch cells for energy density, range, and cost using new approaches pioneered at our Wallace Battery Center and by our technology partners. And we announced this morning that we're also working with Samsung SDI to add cylindrical and prismatic cells to our portfolio. Having multiple strong cell partners will allow us to expand into new segments more quickly, grow our annual EV assembly capacity in North America significantly above 1 million units, and integrate cells directly into battery packs to reduce weight, complexity, and cost. Reducing vehicle complexity and expanding the use of shared subsystems between ICE and EV programs is another priority. For example, we are reducing the overall complexity of our software configurations and related hardware on all future ICE and EV products. One important part of our efforts includes the reduction of infotainment screen configurations by 60% across our entire portfolio. By reducing complexity, we can focus on delivering new and improved digital experiences much more quickly. We also expect that our supply chain will be an even bigger competitive advantage starting in 26 and 27 because of the direct investments we've made in lithium, nickel, and other commodities, as well as CAM, which will allow us to purchase significant quantities of material on favorable commercial terms. All of this is coming together in a way that will fundamentally change the narrative that traditional automakers can't deliver competitive EV margins. We have a lot of work to do, but we have the right trajectory, and I believe we can get there much faster than people think. Now, before I turn the call over to Paul, I would like to invite Kyle to share an update on Cruise, which continues to expand the scale and scope of its operations. Kyle, over to you.