General Motors Company

Good morning and welcome to the General Motors Company first quarter 2025 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, please press star and then one on your telephone keypad to join the queue. To withdraw your question, press star and then two. As a reminder, this conference call is being recorded Thursday, May 1st, 2025. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations.

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 2025. 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, and Paul Jacobson, GM's Executive Vice President and CFO. Susan Sheffield, President and CEO of GM Financial, who has taken over from Dan Burse after his recent retirement, will also be joining us for the Q&A portion of the call. 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, it's my pleasure to turn the call over to Mary.

Well, thanks, Ashish, and good morning, everyone. I want to thank you for joining today's call, which was, as you all know, originally scheduled for Tuesday. We've had continual discussions with the president and his team since before the inauguration and had a good understanding of the president's plans heading into this week. But we felt it was important to hold this call after official actions were taken so we could have a more productive discussion with all of you. We're grateful to President Trump for his support of the U.S. auto industry. The administration invested the time to understand what it takes to be successful in this capital-intensive and highly competitive global industry, how we can work together to strengthen and grow American manufacturing, and the importance of companies like GM to communities across the country. Almost 1 million people in the U.S. depend on GM for their livelihood, including our employees, suppliers, and dealers. We have a network of 50 U.S. manufacturing plants and part facilities in 19 states, which includes 11 vehicle assembly plants. And we've invested $60 billion here over the last five years. Our business is growing and will continue to grow our investment in this country as we move forward. With the policy clarity we now have, we are updating our full year EBIT adjusted guidance to a range of 10 to 12 and a half billion, including a current tariff exposure of four to five billion. Paul will address this more from a detailed perspective in a few minutes. We look forward to maintaining our strong dialogue with the administration on trade and other policies as they continue to evolve. As you know, there are ongoing discussions with key trade partners that may also have an impact. We will continue to be nimble and disciplined and keep you updated as we know more. Over the last several years, we have been preparing for shifts in global trade policy by strengthening our U.S. manufacturing capability and supply chains. Since 2019, we have increased our direct purchases in the U.S. for North American production by 27%, and the content in our U.S. assembled vehicles is more than 80% USMCA compliant. In addition, we have reduced our direct material spend in China for U.S. production to less than 3%, and we have grown to become the largest battery cell manufacturer in the U.S. through our joint venture plants in Ohio and Tennessee. As tariff policy came into focus, we increased full-size pickup production at our Fort Wayne truck plant, which was already running three shifts by approximately 50,000 units on an annualized basis. And we are developing plans to further increase U.S. vehicle production. GM teams are also working directly with our suppliers to further increase their U.S. content and drive even higher levels of USMCA compliance. And we are increasing production of U.S. assembled battery modules a low-cost way to increase U.S. content. Alongside these actions, we are scrutinizing our discretionary spending everywhere, and we are taking steps to ensure that we stay aligned with a strong consumer demand for our ICE vehicles and the evolving regulatory environment around vehicle emissions. Some of these steps include extending production of the Cadillac XT5 at the Spring Hill Assembly Plant in Tennessee through the end of 2026. We're also focused on growing our EV business responsibly. We have some of the best and most successful EVs on the market today, including the Chevrolet Equinox EV and the Cadillac Lyric. To protect our brands, we have moderated EV production to ensure that we stay aligned with the consumer demand to avoid the heavy discounts our competitors offer. This will reduce our scale-driven profitability improvement, but we need to follow the consumer. We're also focusing our EV investments on greater efficiency and cost reductions across the value chain instead of further portfolio expansion. We've announced an agreement to sell our share of the Altium cells plant in Lansing to LG Energy Solution, which will result in us recouping our capital investment. In addition, we'll continue to execute our plan to develop US sources for battery cell and electric motor inputs like lithium, rare earth metals, permanent magnets, and cathode active material. Many of our supply chain initiatives are coming online later this year or early next year. In 2027, we expect our joint venture with Lithium Americas to open phase one of the Thacker Pass project in Nevada, and we are contracted for 100% of that offtake. GM's business is fundamentally strong, as we adapt to the new trade policy environment. Great execution is driving sales and market share growth with consistently lower incentives, lower inventory, and solid margins. And I'm very proud of our employees, our dealers, and our suppliers for their hard work. In Q1, we gained almost two full points of market share year over year in the U.S., which outpaced every other major automaker. In addition, our first quarter share of the US EV market was 10% and rose to 12% in March, solidifying our position as the number two EV seller. And our Q1 margin in North America was 8.8%, well within our 8% to 10% range, target range, despite the addition of cruise expenses. Our momentum is broad-based. Chevrolet became the fastest-growing EV brand. Cadillac gained ICE and EV market share both year-over-year and sequentially from Q4. And our redesigned ICE SUVs, including the Chevrolet Equinox, Traverse, and Tahoe, are hits because customers love their design, performance, and value. Importantly, they are more profitable than the prior generation thanks to our focus on capital efficiency, complexity reduction, and manufacturing efficiencies. In addition, sales of our redesigned Chevrolet Suburban and GMC Yukon were up more than 30%. and the Cadillac Escalade had its best-ever first quarter thanks to a combination of the new gas-powered model and the all-electric IQ. In their review of the Escalade IQ, Motor Trend said it may be the best luxury machine Cadillac has ever built, which speaks volumes about design, performance, technology, and everything we're delivering in that vehicle. The success of these products also supports the 2025 Super Cruise growth targets that we outlined in January, which include doubling the number of supercruise-equipped vehicles on the road. And we're off to a good start. In the first quarter, we expanded our supercruise-equipped fleet by more than 100% year-over-year, or about 230,000 units. Tariffs had a relatively small impact in Q1, and there were other headwinds and one-time factors that impacted the results, which we will discuss. They included some cost pressures and lower full-size pickup wholesales because of planned downtime for plant upgrades. Behind the scenes, our supply chain team worked with speed and agility during the quarter to overcome the effects of a fire at a supplier factory that could have severely impacted production of full-size pickups and SUVs. As things played out, we were able to quickly move some of the production and recover and repair tools from the damaged site, limiting the impact to about 7,000 units in the quarter. All of these units are expected to be recovered in the second quarter. The team in China also deserves recognition for delivering positive equity income while restructuring the business. They are launching very competitive new products and growing sales volume and market share. For example, all new Buicks launched in China will be launching in China starting in the second half of this year, and they will be new energy vehicles, and the premium models will be marketed under the Electra sub-brand. We'll also lead the development of a sophisticated ADAS smart cockpit and chassis designs across our Chinese vehicle portfolio. As I said, we started the year strong after growing revenues 9% and delivering record results in 2024 because the fundamentals of our business remain strong. We managed everything under our control and we continue to thoughtfully plan for the future. This includes developing our next generation software-defined vehicle platform, which will be simpler but have even more capability. It includes adding new features and products developed by our software and services team. We will also continue to grow and enhance the capabilities of Super Cruise, the industry's best L2 driver assistance technology. We'll also develop L3 and even more advanced automated autonomous technologies in collaboration with the team from Cruise. Leveraging the economies of scale we have made have made us the OEM producer of lithium-ion cells in the U.S., and we're introducing new battery chemistries and form factors that will deliver the EV range and performance our customers have come to expect from GM with even lower pack costs and improved profitability. And finally, we're continuing to deploy AI solutions across the business. This includes exciting collaboration with NVIDIA on next-generation vehicles, factories, and robots using AI, simulation, and accelerated computing. You'll hear more about these profit-driven value-creating initiatives throughout the year. So now I'd like to turn the call over to Paul.