Good morning and welcome to the General Motors Company First Quarter 2024 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. As a reminder, this conference call is being recorded Tuesday, April 23rd, 2024. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations.

Thanks, and good morning, everyone. We appreciate you joining us as we review GM's financial results for the first quarter of 2024. 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. Dan Berce, President and CEO of GM Financial 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 I'm delighted to turn the call over to Mary.

Thanks, Ashish, and good morning, everyone. In January, we outlined clear priorities for 2024 that are designed to build on our strength and learn from the challenges we faced in 2023. I'm very pleased to share that the team is executing well against all of them. Around the world, we are very focused on growth and profitability, which means taking full advantage of our winning product portfolio to grow share without chasing unprofitable business. In North America, the fundamental strengths of Chevrolet, Buick, GMC and Cadillac truly stand out. The team delivered a 10.6% EBIT margin in the quarter, thanks to our industry-leading full-size pickups, the momentum we're building in midsized pickups, the growth we are seeing in our SUV business, profit improvement in our EV portfolio and our overall operating discipline. We again grew retail shares and market share in the US during the quarter with incentives that remained well below the industry average, especially in our truck business. We grew our combined Chevrolet and GMC full-size pickup sales by 3% year-over-year and grew our retail market share 1.8 points to 43.8% with much lower incentives than our closest competitors whose sales were down. In March, we doubled sales of the GMC Canyon year-over-year. And the Chevrolet Colorado was the fastest-growing truck in the midsize pickup segment, thanks to its purity of function, simple elegance in execution and value. Those are MotorTrend's words, not mine. We also continue to gain market share and grow EBIT with our new small SUVs, including the Chevrolet Trax and the Buick Envista. These vehicles are helping us win new customers, and we will continue to excel at customer retention. During the quarter, S&P Global Mobility announced that GM has now had the highest loyalty of any OEM for nine consecutive years. That's a powerful competitive advantage. In our EV business, we are building momentum in production and profitability. For example, we have increased battery module production by 300% over the last six months. Quality is very good and continuing to improve. And the installation and validation of our new high-speed module assembly lines is on track. We are projecting to double our current capacity by the end of the summer. EV production rose sharply during the quarter, and our dealers translated that into a 21% year-over-year increase in EV retail customer deliveries. For example, the Cadillac LYRIQ outsold all of the EVs from European luxury brands in the first quarter. And since mid-March, we are now delivering Chevrolet Blazer EVs with updated and improved software. All of our product programs are benefiting from the end-to-end improvements we've made in software, including the increased rigor we have instilled in our quality and validation processes. More importantly, the talented executives and engineers we've hired from the tech industry are raising the bar for software design and execution, which will help us truly differentiate our customer experience and the suite of software-driven products and services we offer. We're also making progress at Cruise. The team is back on the road in Phoenix updating mapping, gathering more road information. This is a critical step for validating our improved self-driving system and building upon the more than 5 million driverless miles we've logged before the pause. We are engaging frequently with regulators and stakeholders and building trust as we regain momentum. Safety will remain front and center and will guide our progress. I am pleased with our ICE performance, our progress in EV execution and growth, our new software organization's performance and the steps we're taking to regain momentum at Cruise. In addition, I'm very proud of the GM team and all of our stakeholders for genuinely leaning in to keep our momentum going. Their commitment and tenacity helped give us the confidence to raise our full year 2024 EBIT, EPS and automotive adjusted free cash flow guidance. In our ICE business, the redesigned Chevrolet Traverse, GMC Acadia and Chevrolet Equinox are all launching in high-volume segments starting this quarter. So are the Chevrolet Spin and the S10 in South America, and they have higher margins than the outgoing models. Then this summer, the stunning new Buick Enclave will arrive. It's the first Enclave to offer Super Cruise. Later in the year, we will make important design and technology upgrades to our best-selling GMC Yukon, Chevrolet Tahoe and Chevrolet Suburban full-size SUVs. They include redesigned, tech-focused interiors, safety and security features that include a suite of connected cameras, riding handling improvements, styling enhancements and more. Mark and our performance team also have the unbelievable Corvette ZR1 coming and we can't wait to put customers behind the wheel. And we've already begun installing equipment at our Fort Wayne assembly plant to produce our next-generation full-size ICE pickups. In our EV business, the Ultium Cell plant in Spring Hill is shipping sales and scaling production through the year. The Chevrolet Equinox EV will arrive in showrooms this quarter, and we're very excited because it will be the most affordable long-range EV in the market. It will also offer Super Cruise like all of our Chevrolet, GMC and Cadillac EVs on the Ultium platform. We will then introduce more affordable trim series for the Chevrolet Equinox EV, the Blazer EV and the Silverado EV in the second half of the year, which will help grow volume and share. Also in the second half of the year, Cadillac will expand its EV lineup to include the OPTIQ and the Escalade IQ. This is important because EV adoption in luxury segments is higher and more resilient than in the broader market. Two of our most highly anticipated launches are the GMC Sierra EV Denali and the Chevrolet Silverado EV RST. They are best-in-class in ways that truly matter to truck customers. By optimizing the battery, aerodynamics and other systems, we were able to increase the range of the RST and the Denali by 10% to an estimated 440 miles, which is about 40 miles better than the median range of ICE vehicles on the road today. No EV pickup on the road today even comes close and it's possible to go even further. A few weeks ago, two road testers took the RST on a drive from Las Vegas to Phoenix. And they drove it like customers do on paved and gravel roads at freeway speeds at different temperatures and different elevations. At the end, they managed to travel 460 miles on a single charge. It's the same story for towing. One journalist drove a Silverado EV work truck and three competing battery electric trucks on a 500-mile trip over the Rocky Mountains while towing trailers. It wasn't even a competition. The Silverado EV stopped once to charge, while every other truck had to stop four to five times. Chevrolet and GMC are also the only pickup brands that allow drivers to tow while using Super Cruise, our hands-free driving technology. That's just one of the several features that uniquely differentiate our products. This is exactly the kind of design and engineering functionality that excites people, motivates them and turns them into customers. It's the same formula for Chevrolet and GMC have filed with ICE trucks, and those results speak for themselves. Based on the feedback we're hearing from customers and dealers, the early sales momentum we are seeing, we're confident that continuing to scale EV production is the right move. We know that transparency matters in every transformation. So Paul and I will give you regular updates throughout the year, including at our Investor Day we're planning for this fall as we achieve our EV production, sales and profitability milestones. All of these great ICE and EV products were made possible by the investments we made to drive transformation and growth. As a result, our spending was above historic levels for several years. Now that the foundation is largely built and we're starting to see results, our focus has turned back to driving free cash flow through enhanced profitability and capital discipline, finding ways to spend less for the same results and with an unwavering focus on the customer. You're already seeing some examples of this. Our winning with simplicity discipline is a great example of how we're improving capital efficiency and lowering costs. The next-generation Ultium-based Chevrolet Bolt EV is another. It's a profitable and capital-efficient program that will deliver one of the most affordable electric vehicles around when it arrives in late 2025. There will be many more examples as we move forward. With that said, I'd now like to turn the call over to Paul to take you through our results and our new higher guidance for the calendar year.

Thank you, Mary, and I appreciate you all joining us this morning. We're off to a good start to the year and I'd like to thank our team for all their hard work in helping deliver another strong set of financial results. We experienced consistent pricing trends during the quarter, below the 2% to 2.5% headwind we built into our full year guidance. For Q1, pricing was down only about $200 million year-over-year driven by demand for our products and a disciplined go-to-market strategy that prioritizes profitability and margins. And so far in April, we've seen pricing remain relatively consistent. That said, our comparisons get tougher as we lap price increases taken in Q2 of last year. The US retail industry experienced a slight mix shift away from the full-size truck segment during the quarter. However, we increased our volume and share with lower incentives than our competitors, which speaks to our strong truck franchises and our customer loyalty. Retail sales were up 6%, while fleet sales decreased more than 20% driven by two main factors. First, we encountered some production constraints impacting the timing of fleet deliveries on our commercial van and midsize pickups. We expect to recover most of this volume in the second half of the year. Second, we made the strategic decision to produce more retail full-size SUVs compared to last year to satisfy our strong customer demand. Retail sales on our full-size SUVs have a higher trim mix that earned us more revenue per vehicle. We are committed to growing our strong and profitable fleet business, but we'll continue to balance fleet and retail customer demands with a focus on profitability. We generated healthy cash flow during the quarter, helping support $600 million of year-to-date open market stock repurchases incremental to the ongoing ASR, retiring another 14 million shares since the beginning of the year. We now have approximately $800 million remaining in our existing share repurchase authorization. In addition, we completed the first tranche of the $10 billion ASR last fall, retiring 4 million shares in Q1. Our fully diluted share count at the end of the quarter was 1.16 billion, down 17% from where we were just one year ago. Given the strong momentum we've seen thus far and our confidence in the 2024 outlook, we are raising full year guidance to EBIT adjusted in the $12.5 billion to $14.5 billion range, EPS diluted adjusted to the $9 to $10 range and adjusted automotive free cash flow in the $8.5 billion to $10.5 billion range. Now let's get into the Q1 results. We grew total company revenue by 8% to $43 billion driven by higher wholesale volumes in North America. Over the last 24 months, we've achieved consistent revenue growth, resulting in a CAGR of more than 15% over that period. We also achieved $3.9 billion in EBIT adjusted, 9.0% EBIT adjusted margins and $2.62 in EPS diluted adjusted. EBIT adjusted was up year-over-year and well above consensus driven by our continued strong ICE performance, improving EV profitability and our strategic cost actions, mitigating the effect of higher labor costs. We achieved adjusted automotive free cash flow of $1.1 billion, up materially versus being flat in Q1 of 2023 driven by improved working capital benefits through inventory management and production timing. North America delivered Q1 EBIT adjusted margins of 10.6%, driving $3.8 billion of EBIT adjusted, up $300 million year-over-year primarily from higher wholesale volumes combined with steady pricing and ongoing cost containment. During the quarter, we continued to benefit from our fixed cost reduction program, realizing an incremental $300 million from lower marketing and engineering spend. Our fixed cost base is at its lowest since Q1 2022 and we are on track to achieve the full $2 billion net of depreciation and amortization by the end of 2024. Dealer inventory levels ended the quarter slightly above our 50 to 60 day end-of-year target at 63 days. However, we believe we are well positioned from an inventory standpoint as we head into a seasonally stronger part of the year and incur a few weeks of planned downtime in Q2 on our full-size pickups to prepare for future launches and to install new equipment. GM International Q1 EBIT adjusted was breakeven, down $350 million year-over-year. China equity income was a loss of $100 million, down $200 million year-over-year as we lowered production to balance dealer inventory levels. This was slightly better-than-expected due to a continued focus on cost efficiencies. Having made progress reducing inventory levels, production is normalizing, and we expect to return to profitability in Q2. EBIT adjusted in GM International excluding China equity income was $100 million, down $150 million year-over-year driven by lower volume in South America and strategic decisions to protect margins. We anticipate new product launches and further cost efficiencies will help drive profitability improvements beginning in Q2. GM Financial continues to perform well with Q1 EBT adjusted of $700 million, in line with last year and tracking well within the full year $2.5 billion to $3 billion guidance range. They continue to drive portfolio growth and paid a $450 million dividend to GM during the quarter. Cruise expenses were $400 million in the quarter, down from $800 million in Q4 2023, reflecting our cost reduction activities and a more focused operational plan. As Mary mentioned, Cruise is resuming operations in Phoenix, along with testing in simulated environments and on closed courses while they work to earn trust and build partnerships with regulators and customers. We expect full year Cruise expenses to be around $1.7 billion. Let's move now to one of the most important metrics we're focused on, EV profitability. We continue to see sequential and year-over-year improvements in variable profit and EBIT margins as we benefit from scale, material cost and mix improvements. Since last year, we have significantly reduced cell costs with a large driver being lower battery raw material costs, especially for lithium. We ramped our first battery JV plant last year, and as they increase production and make other efficiencies, the cost of cells came down significantly. And cell plant number two in Tennessee is ramping even faster based on the learnings from plant one and is expected to reach full installed capacity by the end of the year. Collectively, these factors are helping improve vehicle profitability. For example, we have seen more than $12,000 of year-over-year cost savings in the LYRIQ alone. As we continue to ramp, we expect to see the benefits from the production tax credit continue to grow and our fixed cost absorption to improve meaningfully. We wholesaled 22,000 Ultium-based EVs in Q1, up from less than 2,000 in the first quarter of last year and remain on track to achieve our 200,000 to 300,000 unit production and wholesale volume target for 2024. We will share more on EV profitability as we progress through the year. I would also like to touch on EV pricing, which we recently adjusted on the 2024 Blazer EV. This action has been well received by our dealers and customers. And as Mary mentioned, the vehicle is gaining momentum. We assumed some pricing pressure for both ICE and EVs in our business plan and guidance for 2024, but we continue to work on finding additional offsets through cost performance and other efficiencies. Importantly, this pricing action doesn't change our expectation to achieve positive variable profit for our EV portfolio in the second half of the year or our mid-single-digit margin target in 2025. We remain confident that when consumers see our new EVs and get a chance to drive them, they will appreciate the unique combination of design, performance, range and value that we offer at multiple price points. And because of our supply chain efforts, customers are well positioned to leverage the $7,500 clean energy consumer purchase tax credit. In closing, I want to reiterate our capital allocation framework along with our intention to be much more consistent in how we deploy capital. We are generating strong cash flow, which is funding our EV transformation and growth opportunities. These efforts include investing in future products, transitioning manufacturing capacity to EVs and deploying resources into cutting-edge battery technology. At the same time, you've seen us adapt to the dynamic market, particularly for EVs and made bold decisions to be more efficient with our capital spend, something we will continue to do moving forward. Our balance sheet remains strong. And on shareholder returns, we executed the ASR last November and the response has been overwhelmingly positive, with GM stock outperforming its peers and being up nearly 50% since the announcement. We have seen about a one-turn improvement in our P/E multiple since the ASR, but we are still significantly undervalued relative to our historical average as well as our competitors and other industrial companies. Obviously, we're not satisfied and know that we have a lot of work to do on our valuation and remain committed to improving it. As we move forward, we believe the strong cash generated by our ICE portfolio along with improved execution on our EV strategy as well as tangible progress on Cruise will help generate significant returns for all GM stakeholders. This concludes our opening comments and we'll now move to the Q&A portion of the call.

Thank you. Our first question comes from the line of Joe Spak with UBS. You may proceed.

Thanks. Good morning, everyone. First on the guidance, Paul, I just want to understand the pricing assumption. Is it now just 2% to 2.5% negative for the remaining three quarters? And then you mentioned a couple of things on mix. So you've got higher EV sales, smaller crossovers. Both of those seem like they should continue through the year. And then I think you also mentioned some potential trim headwinds in pickups. But then on the other hand, you have the EV variable profit turning positive in the second half. So I guess I just want to understand a little bit better how those all intersect. And should we actually see some maybe net improvement in mix as we move through the year?

Good morning, Joe. You're right that at the end of the day, 2% to 2.5% for the rest of the year is in our assumptions. So essentially what we have done with the guidance is taken the outperformance that we saw in Q1 and built it into the full year. So really not much has changed on the assumption going forward. So when you look at seasonality and you look at trend lines, keep in mind, in the second half of the year, we've got more EV volume coming in. And also we've got some of those pricing headwinds that we've built in. So we feel like this is a good move to go ahead and take it up from where we are. But we're still sort of guided by the same principles as when we put out our initial guidance for the year going forward. So as far as mix goes, we've talked about that a lot. We've obviously been trending fairly strong. We are lapping some price increases that we took last year. So as I said, the year-over-year comps get a little bit more difficult. But overall, I think the market is holding up fairly well. And as we said before, if we see pricing continuing with this momentum, we expect that we'd be in a position to take up guidance again.

Okay. Thank you. As a second question just on Cruise, with the re-launch, I understand the manually operated and mapping. But Mary, you emphasized an improved system. So maybe you could just give us a little bit more color on how much of the existing technology stack is really sort of being leveraged and what's been redone. And then just on the financial side, does the guidance assume any further steps towards that re-launch? And what about capital need with the cash bounce down to $700 million?

Sure. We're excited that Cruise has returned to the roads in Phoenix. Initially, operations will be manual, followed by supervised, and then unsupervised driving. Since the pause, we have been focused on enhancing our core technology to improve system safety, specifically addressing low probability but high severity issues. In October, we recognized that we needed to build better relationships with regulatory agencies and the public while being more transparent. Although we showed that our technology is safer than the average human driver, we understood the need for further improvements. As we return to Phoenix, we want to ensure everything is updated. I'm very optimistic about our technology and believe strongly in its potential. Our goal this year is to demonstrate that our model works in one city before expanding. This fits within our budget, and we are considering various funding options, including potential outside investments. We'll have more updates as the year progresses. I'm thrilled to be back on the road, and our commitment to enhancing the technology has continued throughout this period since last October.

Thanks for the color.

Thank you. Our next question comes from Itay Michaeli with Citi. Your line is open.

Great. Thanks. Good morning everyone and congrats. Just two questions for me. Maybe first for Paul. Just can you remind us how we should think about the volume mix of your new and refreshed ICE crossovers that the next couple of quarters and how you're thinking about the prior margin improvement targets that you spoke about, I think, it was last quarter? And then maybe for Mary hopefully you can kind of go back to the software strategy and maybe talk about some of the goals that we should be expecting for software and the Ultifi platform over the next six to 12 months?

Good morning, Itay. Thank you for your question. Regarding our crossovers, we've discussed the new Chevy Trax and Buick Envista, both of which have seen significant improvements in profitability compared to their previous performance. The Chevy Trax, in particular, has really taken off with sales up 500% this quarter, and it is performing exceptionally well for us. While the increasing volume of these crossovers might obscure some trends in average transaction prices, we've also observed strong pricing in our trucks and SUVs. We believe this adds value to our portfolio and is reflected in the robust guidance we are updating today.

And then as it relates to the software strategy as we move through the year and beyond, first, as Mike stepped back over the past year, though, he did an incredible job of re-evaluating and changing our software development process as well as our validation process and brought in an incredibly strong team of probably more than a dozen people at the senior level to really focus on having the right software strategy as we move forward. So I'm very confident. We paused at the beginning of this year with the Blazer as we saw a limited number of consumers had an issue where we've moved past that now. And that's allowed us to strengthen the software of all of our upcoming vehicles. And so the goals for the next couple of months are to launch with quality on time, and we're on a path to do that. And then as we go forward, as the new software goes across multiple vehicles then that gives us an opportunity to focus more on growing subscriptions and services. But I'm very pleased with where we are, with the team that we have and the progress they've made. And it's showing in our ability to launch with quality.

Perfect. That's all very helpful. Thank you.

Thank you. Our next question comes from John Murphy with Bank of America. Your line is open.

Good morning, everybody. Mary, I just wanted to ask one strategic question on China. At this point, it's really not a moneymaker for you. And there's a lot of, obviously, noise on a geopolitical basis and sort of our relationship or the US relationship with China. I'm just curious, is it time to really start thinking about strategic alternatives over there to potentially closing or selling the business? How do you kind of think about that in the context of sort of the broader portfolio over the next few years?

Yes. Overall, in light of everything that has transpired over the last few years, including COVID, the chip shortage, and general supply chain challenges, we have focused on enhancing the resilience of our supply chain, and we plan to continue doing so. Long-term, we remain committed to China as we see significant growth potential in that market in the medium term. We are leveraging both our global and sometimes local solutions as we pursue our electrification strategy. Currently, new energy vehicles represent about 30% of GM's total deliveries in China from the first quarter, and we aim to expand on that this year with a strong launch schedule for new vehicles. Starting from the second quarter onward, we will introduce several plug-in hybrid electric vehicles and move towards full electric vehicles as well. We have also set up the Durant Guild to target niche segments in China that cater to premium and lifestyle-focused customers. For example, the Tahoe and Yukon will be available for pre-order later this year. We acknowledge that the market dynamics have changed and that Chinese OEMs have gained more capability. However, we believe that GM still has an opportunity in the luxury premium segment. Our focus remains on combining our global and local solutions while maintaining supply chain resilience.

I have a quick follow-up on pricing. The estimate of 2% to 2.5% is your current best guess, but predicting pricing is challenging. Paul, could you share your perspective on pricing considering the various factors at play? On one hand, there's price cutting for electric vehicles, but the internal combustion engine side appears to be holding up well. With your capacity utilization at 100%, there are constraints on structural supply. The market for vehicles aged zero to six years is likely to continue shrinking over the next two years, suggesting that the used vehicle market will remain tight. It seems that resilience may last longer than initially expected. Additionally, you mentioned shortages in the Colorado Canyon and your vans that will address fleet demands later in the year. There are still pockets of shortages persisting, which implies that these conditions might linger longer than anticipated. How did you arrive at the 2% to 2.5% estimate, and what do you foresee for the next couple of years?

Good morning, John. I want to clarify that the 2% to 2.5% figure is not an expectation, but rather an assumption we've included in our guidance for modeling purposes. We've seen better-than-expected results in the first quarter, and April appears to be performing well, with average transaction prices slightly above those at the end of the quarter. This figure is simply a built-in assumption as we acknowledge potential macroeconomic challenges. We recognize that our comparisons will become more difficult as we reflect on the price increases we implemented last summer. However, the overall commercial environment remains strong. This has been a consistent theme for over a year, as we've navigated through some downward pressure while effectively managing commercial operations to meet demand. This balanced approach has positively impacted both our pricing and margins.

Okay. All right. Thank you very much.

Thanks, John.

Thank you. Our next question comes from Mark Delaney with Goldman Sachs. Your line is open.

Yes. Good morning. Thanks very much for taking the questions. First quarter EBIT was strong and annualizing at about $15.5 billion. I think guidance for the full year on EBIT is now $12.5 billion to $14.5 billion for the year. So I'm hoping to better understand some of the factors that temper EBIT over the balance of the year compared to the first quarter run rate.

Yes. Good morning, Mark. So I would say it comes down to a couple of things. One is there's still the assumption in there of the down 2% to 2.5%. And as we scale up EVs and we continue to make progress about getting them to variable profit positive, the margins on those are not as strong as ICE, obviously. So we see a little bit of pressure in the back half from that. But overall we'll remain consistent. And as I've said, if we don't see that pricing softness, I would expect that there's an opportunity to outperform these numbers.

That's helpful, Paul. Another question on EVs and on the pricing topic. The company spoke to good demand and feedback for its EVs, but the broader market has been quite competitive for EV in terms of pricing. Hoping to better understand if you think GM is going to need to take additional pricing actions this year to reach the 200,000 to 300,000 outlook that you have in North America? Or did the demand signals you have from the market suggest you can hit that kind of volumes this year with relatively firm pricing going forward? Thanks.

Sure. Well, obviously, the early results here as we're ramping up Ultium are pretty strong with retail sales up about 20% year-over-year despite the fact that the Bolt, which is sunsetting the prior generation was down about 60% during the quarter. So retail demand remained strong. We've obviously seen a lot of softness in fleet, particularly on the rental side for EVs, but we see customers responding. Now these are on admittedly lower volumes as we scale up, but we're building that momentum that I think we need with the products to be able to show consumers what our capabilities are. When you look at the statistics that Mary cited in the script about the range and what's in our earnings deck, you see that the purpose-built EVs are actually better in terms of performance, range, charging speed, towing capabilities, et cetera, than many of the other products that are out there on the market. And I think as consumers continue to see that, we'll be well positioned as EV demands at the retail side continue to trend. So we're obviously going to watch it closely, but the early indications are strong.

Thank you.

Thank you. Our next question comes from Dan Ives with Wedbush. Your line is open.

Yes, thank you. For Mary and Paul, does it seem like the UAW is now behind us and that our EV strategy is starting to bear fruit, putting the company in a stronger position with less uncertainty? Could you compare our situation today to what it was internally six to nine months ago?

No, I think you make a really good point, Dan. I feel much better about where we are. We're ramping up, and the module issue is behind us. All the additional lines we were scaling are on track, and we feel very good about that. We're pleased to have reached an agreement with the UAW and continue to work with them on various fronts to build our relationship with the new leadership team. We are continuing to communicate, address issues together, and solve challenges. I'm optimistic about that. As Paul mentioned, we're seeing strong progress with our Ultium-based EVs, which are purpose-built and do not require customers to make trade-offs. The charging infrastructure is improving every quarter, and I feel good about our momentum. Our team across GM is aligned and ready to seize these opportunities. Additionally, I feel confident about our progress in software due to the talent and work being done within the company. Overall, from last year to now, the situation is much better and more positive.

Great. Congrats.

Thank you.

Thank you. Our next question comes from James Picariello with BNP Paribas. Your line is open.

Good morning, everyone. I'm looking at wholesale growth for the full year. Global volumes increased by nearly 4% this quarter. Could you clarify the impact of the current quarter's full-size pickup downtime? Also, what should we expect regarding the split of Ultium volumes in the first and second halves, considering the target of 200,000 to 300,000 units? Thank you.

I can comment on full-size pickups. We have announced that we are experiencing some downtime as we begin installing equipment to ensure a smooth launch of the next model. Our focus will be on meeting customer demand. We believe our products are very strong, and as Paul mentioned, we are gaining market share. We achieved growth in the first half with competitive pricing, which highlights our product strength. However, we will prioritize customer demand and avoid overproduction, as it’s crucial to manage residuals and our inventory effectively. This strategy has helped us maintain strong pricing and product offerings. As for overall wholesale growth, Paul, would you like to discuss that from an EV perspective?

Yes. As for the growth in electric vehicles, we anticipate a rise in supply throughout the year as we work towards producing between 200,000 to 300,000 units, as previously mentioned. The Spring Hill facility started operations in the first quarter, and we are steadily increasing production levels at Ultium Cell plant two. As module production scales up, we expect the exit rate to be significantly higher. However, we need to remain mindful of consumer demand. Initial indicators suggest that the ramp-up is proceeding well, and we can expect consistent growth throughout the year.

Got it. And then just to hit on the quarter's China JV losses. Is the expectation to see profitability the remainder of the year or could this take another quarter or two? And then for GMI consolidated, can you just shed any light on the profitability actions that are taking place in South America? Thanks.

Yes, certainly. Regarding China, I believe we are making progress as we outlined in our initial guidance. We slightly exceeded our expectations, although we anticipated a loss in Q1. We expect to turn that around and achieve profitability for the remainder of the year. Our results in China are projected to be similar to or slightly below last year's figures. We will need to manage the rest of the year accordingly. Q1 performed a bit better than expected but overall was in line, so we are confident about profitability moving forward. As for the rest of GMI, we experienced some downtime, particularly in South America. We are closely monitoring Argentina as we observe the ongoing reforms. Overall, we see improvement from where we were and are not overly concerned at this point, but it remains a market we are actively watching.

Thanks.

Thank you. Our next question comes from Alex Potter with Piper Sandler. You may proceed. Alex, you may need to unmute your line.

Yes. Hi. Can you hear me?

We can hear you now.

Yes.

We got you, Alex.

Okay. Very good. So first question on Ultium. You talked to the 200,000 to 300,000 production guidance, which is good to see. But at the same time, you talk about how you're going to use consumer demand as sort of a gating factor. Would you say that the 200,000 to 300,000, is that something that you're going to stick to sort of come hell or high water and then gauge consumer demand from there or is it something that you could slow walk maybe towards midyear toward the second half if it doesn't seem like the consumer demand is materializing?

We're not going to produce products just for the sake of numbers; our focus is always on responding to customer needs. However, we believe we will achieve the production range of 200,000 to 300,000 vehicles with our Ultium-based EV launches. We're seeing positive momentum with HUMMER, LYRIQ, and the Blazer, which is just starting to ramp up. The Equinox is also on the way, along with several other models. These vehicles are designed to meet customer expectations in terms of performance and functionality, positioning us well. Furthermore, our overall portfolio remains strong, whether with internal combustion engines or electric vehicles. We aim to avoid overproduction while maintaining our prices and margins. Specifically, our Spring Hill plant is versatile enough to build both EVs and ICE vehicles. We are confident in our ability to meet the anticipated demand of 200,000 to 300,000 vehicles, and we will continue to adapt as needed.

Okay. Perfect. And then second, we talked a little bit about competition within China. I'm interested in hearing sort of your updated views on competition from the Chinese outside China. What's, I guess, GM's stance on this? Do you think protectionism is necessary? Are you more of a free market sort of philosophy from a company standpoint, competing against the Chinese globally particularly in places like South America? Yeah, any comments on China. Thanks.

Yes, that's an important question. Overall, we aim to showcase our best products. If there is a level playing field, we prefer to compete on that basis. It's important to assess where such a playing field exists and what global trends are occurring. While regulatory and trade factors can influence this, our primary focus is on ensuring that we offer excellent vehicles at competitive prices, which will help GM maintain its global market share. In South America, the Chevy brand remains exceptionally strong. We're committed to delivering outstanding designs and a robust product portfolio with the right features, while also continuously working to reduce costs. This approach adds value, and it’s how we plan to compete internationally. Our emphasis must be on achieving a fair competitive environment.

Great. Thanks.

Thank you. Our next question comes from Rod Lache with Wolfe Research. Your line is open.

Hi. This is Bruno on for Rod. Thanks for taking the question. I'd like to understand the key assumptions you're making in your EV margin outlook for positive contribution margins this year and positive overall margins next year. Based on the hints you've given us, we think you need to improve contribution margins per EV by like 10,000 to 15,000 in 2025 compared to '23. I think if I heard correctly, that's about in line with what you're seeing on the LYRIQ year-over-year. But if you could just help us understand the key buckets of lower cost and what's driving that and your underlying assumptions around pricing and costs. Thanks.

Yes. Good morning, Bruno. Thanks for the question. So if you go back to a presentation that we did back in November, we kind of highlighted the road map for 60 points of EBIT improvement in 2024 with about 60% of that driven by scale benefits. So if you think about where we are, we've invested a lot into the infrastructure, battery plants and manufacturing facilities, supply chain, et cetera, to ramp up production. So some of our EBIT losses are really driven by the fact that we need to grow into what we've built. And so that's about 60% of that 60 points improvement. The rest is really kind of split evenly between trims and launches and also material cost reductions. So we've gotten off to a good start as we've seen battery raw materials start to come into the cell costs this year. We've done a good job of reducing cell costs. And as we said, the LYRIQ is down $12,000 in cost year-over-year. So that's the type of progress that we expect. And then as we get into 2025, scale becomes a lower driver, and we get into more of material cost reductions in the vehicles that we're producing as they get out of their early years and we start to harness savings in each vehicle line in the second, third year of production, et cetera. So there's a pretty good road map there. Pricing, obviously, we're going to continue to watch and see where the market is. As we talked about, what we did on the Blazer was built into our expectations. So we're not changing off of those targets. And we're just a quarter in on the Ultium ramp, but the early indications are positive.

Okay. Thank you. And then just stepping back, we wonder if there's multiple paths to the EV losses that are currently being incurred eventually reversing. Specifically if the demand or pricing environment for these EVs is softer than expected, how much flexibility do you have to lower costs in the EV business, including as it relates to battery plans? I think your plans for 160 gigawatt hours eventually over 2 million units. Is there flexibility to rationalize that if the demand differs from your expectations? Thanks.

Well, I think you've seen us take steps before. We had a delay in the Orion plant where we've really kind of taken advantage of some of the slowdown to put improvements into that plant that are going to help us lower the cost that came out of some of the early learnings from production at Factory ZERO and things that we can do going forward. So I think you're going to see us be very nimble. And we're trying to build as much flexibility as we can to navigate from here to significantly higher EV adoption going forward. But when you look at our portfolio across both an ICE, EV, it's probably the best portfolio in our history and customers are responding to that. So we're going to meet the customer where they are and continue to endeavor to exceed their expectations and really reward them for that loyalty that they have to us going forward. And we think that, that can translate into the EV market as well. But as Mary said, we're going to continue to be guided by demand for our products and our vehicles. And the early indications are that it's going quite well.

Thank you. Our next question comes from Chris McNally with Evercore. Your line is open.

Thanks so much team. Just wanted to dive into some of the questions on seasonality following on to some of Mark's questions prior. Paul, could you talk about the seasonality in wholesale? I think you've talked about full year being up sort of mid-single-digits, which would imply somewhere in the low to mid-800,000 range for the rest of the year. But if you could just help us with just a little bit of the cadence, given some of the downtime you mentioned in Q2.

Yes. There was probably a little bit of pull forward from Q1 to Q2, particularly with the trucks as we prep for that downtime and that retooling that's going to happen for a few weeks. But generally, seasonality, we expect to be very similar with Q1 and Q4 being slightly lower than Q2 and Q3. So nothing has dramatically changed. But around the edges, maybe a little bit of pull forward from Q2 into Q1. So as we look at the second half, I just want to caution that we've got to continue to be guided by the assumption that's in there on pricing, which obviously has a bigger second half impact, given the performance that we've already booked in Q1 and certainly where April is looking right now. And then with the EV volume ratcheting up in the back half, that's where we see a little bit of front half loading in the guidance that we've provided.

Perfect. All makes sense. And then maybe just on the actual production side, should we think of sort of truck T1 production as maybe at a tight end in Q1? Do we get back to this level in Q4, just looking at the overall yield and inventory build?

I think we will continue to monitor demand closely. In March, we built up inventory, and we finished the quarter with about 63 days of inventory across the system. Some of this was intentional, as we anticipated a period of downtime. After we get past that, we could see production in the third quarter trend slightly higher, but our actions will depend on demand levels.

Thank you.

Thank you. Our next question comes from Ryan Brinkman with JPMorgan. Your line is open.

Good morning. Thanks for all the detail on your planned upcoming BEV launches in the US. It does seem likely you will gain share there with the number and attractiveness of the offerings. I'm curious if you have a similarly aggressive EV rollout strategy planned for China, including because it seems your share in China has declined amidst the industry transition there to EVs. I heard you citing earlier the increased competitiveness of the domestic Chinese automakers as another contributing factor. And there may be still other factors. But would a blitz of new EVs be sufficient? Do you think at this stage to stabilize the share trend in China? Do you have such a blitz planned over the next one to two years? And would that be a pathway to improved financial performance or given some of the recent pricing trends represent maybe more of an investment with the payoff some years further out?

Yes, we have some strong new energy vehicles coming in China this year. We're repositioning the Buick Velite and launching the Cadillac OPTIQ, which you will see at the Beijing Auto Show. We also have plug-in hybrid electric vehicle entries in the Buick GL8 and the Equinox. Regarding our internal combustion engine vehicles, we have a lead with the GL8 and more upgrades are planned. Additionally, we have new energy vehicle launches in SGM. I believe we will be better positioned, and this trend will continue as we progress through this year and into next year. This allows us to compete in the new energy vehicle market, including plug-in hybrids, hybrids, internal combustion engine vehicles, and electric vehicles. Furthermore, we have the Durant Guild in a niche segment, indicating that there is room for GM to expand and gain market share.

Okay. Great. Thanks. And with all these questions about the new vehicle operations in China, maybe just highlight some of the attractiveness if it is that you can draw from the installed base of vehicles there, the OnStar, the financing, sales service, GM Goodwrench and sort of how do you feel about that element of the China business?

Well, you mentioned all of the things that come together to allow us to be successful in the market. But I would say one of the other things is last year, we also established in China dedicated software and digital business organization. And that is going to allow us to continue to improve and compete on a software basis and also on a services basis, along with what we have from a GMF perspective, financing as well as OnStar. So we'll continue to build that.

Very helpful. Thank you.

Thank you. Our last question comes from Tom Narayan with RBC. Your line is open.

Yes, good morning. Thanks for taking the question. Paul, just a follow-up on that comment on the EV margin. So 60% of the 60 basis point improvement is coming from scale benefits. So if BEVs were kind of closer, let's say, to the 200,000 versus the 300,000, is that a net negative or positive to overall margins? Presumably BEVs come at lower margins, but if you're selling a few of them, then there's a negative impact from less scale benefit. So just trying to understand that like how do we think about that volume number impact to the company's margins.

Yes. Good morning, Tom. What I would say is that, obviously, based on just where we are in the journey, scale matters quite a bit when you built the infrastructure that we have. So certainly, in the short run, lower volume would have a negative effect on that trajectory. But I think what we're looking at is kind of breakeven on the variable profit side around low 200,000. So we still are tracking to be able to get that goal. But I look at that as more of a little bit of timing of when we grow into what we've built. And I think from a strategic perspective, growing capacity slightly ahead of adoption to make sure that we can pace and meter ourselves on this journey. Remember, we're playing a 10, 15-year plus game from that standpoint. So we've built the flexibility in to be able to respond to ebbs and flows. And we're at a phase right now where we've got to grow into that scale we've built. But those are all really, really sound investments. And we feel good about where that's going to go in the short to intermediate term. And then we're going to continue to watch that going forward.

Thank you. I have a quick follow-up regarding the battery raw materials. We've noticed that lithium prices have dropped approximately 80% from their peak. I'm curious about your contracts. Have we reached the lowest point for those reductions, or is there still a delay, meaning we might see further benefits due to the timing of your battery raw material contracts? Thank you.

So what I would say is there's still some goodness to come in '24. So while we saw battery costs come down, remember, we exited the year with a pretty sizable inventory of cells as we ramp up our module production. So as a result of that, there's still some historical costs in there from last year. But that will flip pretty much, I think, by the time we get to mid-summer. And in the second half of the year, we'll see cells that have much closer to current prices. And then as you look at kind of vertical integration and investment steps that we made, most of that capacity is in 2026 and beyond. There isn't anything that we've done that I would say we regret because we locked in higher prices et cetera. Everything that we've done has been done with a portfolio approach to make sure that we get value for our investment either through floors and caps or discounts to market et cetera. So we haven't done anything that would have locked in sort of historically high prices. And that should be a benefit for us as we roll forward into 2026 and beyond.

Great. Thank you so much.

Thank you. I'd now like to turn the call over to Mary Barra with her closing comments.

Thank you, and thanks, everyone, for your question. As we've talked today, we are making extremely good progress across the board. We're driving revenue growth. We've got great margins, our free cash flow is strong, and that's enabling us to reinvest in the business and our employees. So we plan to efficiently invest between $10.5 billion and $11.5 billion in capital this year to leverage the strength of not only our ICE business but also grow our EV business profitably. And we're also advancing our software-defined vehicle capability. So I feel very good about the key areas of focus and how we're doing there. In addition, we've set aside more than $160 million in profit sharing for the first quarter to recognize the contributions of the manufacturing team members in the US, which were significant, both in terms of production volumes and quality. And our shareholders are also benefiting from the progress too, thanks to our improved execution, a higher dividend and the value-enhancing benefits of the ASR we launched in November. We are on track to reduce our shares outstanding to fewer than 1 billion. So I can say to everyone with confidence and conviction that our team is very much on point. We're focused and we're going to do everything in our power to keep this momentum going. 2024 can be a very strong year for GM. So thank you all for your time.

That concludes the conference for today. Thank you for joining. You may disconnect.