General Motors Company (GM) Earnings Call Transcript & Summary

Got it. On the last earnings call, GM indicated the goal to speed up the rollout of the new EV models and especially high-volume affordable ones. How would you go by this?

Yes. So Mary spoke about how fast we've moved on the GMC Hummer EV. We can apply that to future processes as well. So speed to market is an absolute priority for GM. Mary will provide further color on this in the coming weeks. So again, I apologize, I'll have to say, stay tuned. But what I really want to focus on and showcase today is that GM's Ultium platform gives us the flexibility and energy to build EVs in every segment on the road today from performance vehicles to work trucks. The Ultium propulsion system is designed to be modular and is also designed to be flexible. It can be custom-tailored to various vehicle needs as well as customer expectations. And as a result of its flexibility, not only do we get scale. In other words, a lot of common parts shared between the different vehicle applications that drive material cost down and capital efficiency up. But also because it's so versatile, we don't have to re-engineer specific components every time we bring a new vehicle to market. So it also helps with our speed and alacrity.

That make sense. One question from an investor on the line. What would you say is the most differentiated about your native EV platform versus peers such as Tesla or Volkswagen? Like I'm sure you benchmark a little bit the competition, what would you say is most differentiated and exciting?

Yes. So again, we don't specifically speculate on competitors. We will say that the Ultium propulsion system is incredibly versatile. So as I mentioned earlier, we've designed it to be modular and flexible, so some examples of this. The drive unit family, Ultium Drive, consists of 5 different drive units that contain a family of 3 different in-house designed motors that allow for front-wheel drive, rear-wheel drive, eAssist all-wheel drive and ultra high performance all-wheel drive for anything from a small vehicle to a large 1,000-horsepower ultraperformance GMC Hummer EV. So that flexibility and that interchangeability, again, allows us to operate at scale to truly consider vertical integration, putting our manufacturing prowess to work. And it also provides the flexibility, again, to give the customer and the vehicle exactly what it wants. Another example are the battery packs that are part of the Ultium propulsion system. So we can have single stack packs of modules. Each module is the basic building block of a pack. These modules are interchangeable. They can be put in various different configurations. They can house either prismatic can cells or pouch cells. You can have various number of modules in a single stack pack anywhere from 6 to 12, in a double-stack pack anywhere from 10 to 24. And so this interchangeability and this modularity is really, again, testament to GM's architectural and design prowess. Inside the module, there's one cell. So there's one common cell. We can replicate it at scale as part of the joint venture that we have with LGC and at Ultium LLC. And again, that allows us to truly leverage technology as well as manufacturing might to bring products to bear quickly with really good capital efficiency and very low material costs.

Okay. That makes sense.

I'd also like to mention, Emmanuel, if I may. Sorry to cut you off. There's a little bit of a delay. Our wireless battery management system really differentiates us from the competition. So traditionally, these modules inside the packs that I talked about are connected by wires in order to communicate with each other, in order to control certain functionality. Our wireless battery management system brings that interface to a whole new level. It reduces complexity. It reduces wire count. It reduces part count, assembly and labor costs and also makes the pack easier to recycle at end-of-life since there aren't a bunch of cables in the way.

Yes. No, definitely an industry first. That's quite exciting. Can you talk to us about the company's plans for Factory ZERO, which was recently announced?

Sure. So Factory ZERO is really exciting. As we've said, we're investing $2.2 billion in Factory ZERO in Detroit-Hamtramck for retooling and upgrades that will position the facility to build EVs at scale. It represents the single-largest investment in a plant in GM history, which is very impressive. We've already announced that this facility will manufacture the GMC Hummer EV and the Cruise Origin, and we will build other vehicles in the facility as well. We're also designing the plant with sustainability in mind. We have made significant commitments toward using renewable energy. This facility, for example, will have a 30,000-watt solar carport and a 516-kilowatt ground-mount photovoltaic solar array from DTE. In addition to the investments at Factory ZERO, we've also recently announced that we'll be investing $2 billion in our Spring Hill, Tennessee assembly plant to produce EVs, including the Cadillac Lyriq. We're also investing $2.3 billion with LG Chem in our Lordstown, Ohio joint venture, Ultium Cells LLC, a new, state-of-the-art battery cell manufacturing center that I spoke about earlier. And some of the stats that I'm most proud of and love to share with people is that it's capable of 30-gigawatt hours of cell production a year, and the floor space is the equivalent of 30 American football fields. It's big, Emmanuel.

Wow. A question from an investor on this topic of, I guess, EV manufacturing. Is it reasonable to assume that it takes fewer workers or man-hours to assemble an EV versus a combustion engine? And that over time, whether it's 5 or 10 years, you'd be able to ride this curve towards a smaller workforce?

So you know what, we haven't actually published the details. We can say that the electric propulsion systems are, in general, simpler than their internal combustion engine counterparts. They have lower part count. And what, again, is really exciting, as I mentioned earlier, is that the flexible and modular design allows for interchangeable parts and reuse, which makes everything more efficient, from design to engineering to manufacturing. And again, at GM, we have 100-plus years of propulsion manufacturing experience, over 25 years of EV production experience. So this is not really a new game for us. We see definite synergies in our internal competencies. They're easily transferable from ICE to EV. We like to say in the engineering community that physics is fungible. The laws of physics apply whether they're an engine or an electric vehicle. So the engineers that we have get excited to work on both. And you can say the same for manufacturing. So our manufacturing prowess of making propulsion systems and vehicles is very easily transferable and scalable from ICE to EVs. And it's a really exciting time. And again, we have the resources and the know-how to make the transition in an incredibly efficient manner.

Understood. Let's focus a little bit on the battery now. So you have this joint venture with LG Chem. You're going to be manufacturing your own cells. Why them? Why did you choose LG Chem? And do you foresee any impact from their decision to spin off the battery unit out of LG or is it just business as usual?

So we've been collaborating strategically with LG Chem for a long time. And in a good joint venture like Ultium Cells LLC, we have like-minded visions around a zero emissions future. We're leveraging GM's technical expertise, purchasing and manufacturing scale in combination with LG's chemistry prowess. So the relationship helps both of our companies reduce material cost, which enables us to be profitable and yield dividends on our invested capital. Our internal projections show that we're doing this in a capital efficient manner and indicate profitability. We are well on the road to reducing battery cost to industry-leading levels. Again, about the joint venture, working with LG Chem on our Lordstown, Ohio joint venture, Ultium Cells LLC, we're essentially combining the best of 2 companies, LG Chem's deep chemistry experience and GM's manufacturing and purchasing might in a synergy that's even more potent than the sum of the 2 companies. So every day, these joint teams are finding innovative solutions in the factory simulations to improve every station within the facility. Our purchasing and sourcing teams are finding value that we're able to turn into profit and efficiency. And our continuous innovation culture is happening in real-time and never stops. Also, we continue to innovate and make new technological breakthroughs outside the joint venture at our R&D lab on-site at our Warren, Michigan-based Global Tech Center.

Okay. So you're mentioning this confidence in getting to industry-best cost. Let's talk a little bit about that cost curve. Where is GM now? Where could you see the costs go? And what's going to drive those costs lower? I think a few years back as part of an Investor Day, I think GM published a very exciting cost curve. Can you just update us on where we are and where should we be going?

Sure. So we've already talked about achieving cost below $100 per kilowatt hour with the Ultium battery system. And really, that's just the beginning, Emmanuel, of where we're headed. We see potential in silicon and lithium metal anodes, so future chemistries that will improve vehicle range and affordability even beyond the gains our customers will see from our initial Ultium-based AVs. Our recipe is a lithium-protected anode with a proprietary liquid electrolyte. So in our R&D lab, we have a 6 amp hour multilayer pouch cell that's already completed 500 deep charge/discharge cycles, offering promise for automotive applications. Beyond that, it's too early for us to discuss the specifics of our cost targets, but we will continue to innovate. And that's really just the technological piece. As we talked about in the joint venture, scale, one common cell, large-format cells in order to have more energy per pack, really clever supply chain relationships, all of these things will continue to bring down and advance the cost curve. Emmanuel?

Can you hear me? Adam, are you still on? Adam, can you hear me?

Is it better on my phone, Emmanuel? Emmanuel, I can hear you.

A couple of questions from the audience. How should we think about the scale at which GM's electric vehicle will approach profitability versus the combustion engine? Is there like a magic number where the scale is there? What does it depend on?

So we said publicly that the Ultium propulsion system and the new round of EVs that it debuts in will be profitable from Day 1. So again, we're focused on all the right elements. We are designing propulsion systems, again, that are flexible and modular. We're capitalizing them at very large scale. We're combining synergistically with partnerships that allow us to supply parts in an incredibly efficient manner. And again, all of these things bring the cost curve down and there's many, many activities that increase profitability and will allow us to be incredibly competitive going forward.

Understood. Another question from an investor on the line. How do you reconcile, I guess, some of the comments that the manufacturing are and production skills are transferable from ICE to EV with, I would say, relatively modest EV targets from a lot of traditional automakers or even as a percentage of their fleet? What is, I guess, the main impediment to scaling this faster?

Yes. So we already talked about things that drive speed, right? So again, the flexibility of the Ultium propulsion system, the amazing development cycles that we're working with on the GMC Hummer EV. And as far as the skill transferability, EV propulsion systems do have new technologies inside. But it's important to remember that there are wires. There are connectors. There are castings. There are stampings. There are tubes. There are bolts. There are nuts. All the same bits and pieces that we know and love today in ICE-propelled vehicles. And so our workforce, whether it be engineering, manufacturing or purchasing are committed to making the world's best vehicles and transferring knowledge from ICE to EV is actually a really big advantage for us. We know how to make things at scale. We know how to mass produce them with quality. We know what our customers want. And we have the resources to make it happen. One key point or a statistic that I really like to share when some of these questions come up. General Motors today casts 100,000 tons of propulsion system and chassis components a year. So not many of those are EV. But in the future, we can leverage that might and the installed capacity in order to make EV components, whether they be propulsion or vehicle, and continue to expand our footprint as we transition from ICE to EV.

Okay. That makes sense. Maybe one more question on the battery side. And then I wanted to definitely ask for your view on the fuel cell. But first on the battery, any thoughts you'd share with us after the Tesla Battery Day? How are you thinking about the future progression of anode and cathodes, the cell structure, the cell to structure integration? Are these things that you view as achievable? Are these things that GM feels you can work on? And are these things needed to get to where we need to be on the cost side?

Sure. So we're confident at GM that we're competitive. So GM is absolutely competitive and has the right strategy and technology to lead the transition to EVs. We already spoke about the work we are doing with silicon anodes and lithium metal anodes. We agree that a larger cell format is more efficient. It's an industry trend to pursue bigger, more scalable cells that can be more easily deployed across different vehicles and segments. We saw at Tesla's Battery Day, for example, that they're moving to larger format cells, closer to the capability of ours. The larger the cell, the lower the percentage of the wrapper, the connections, all of the wires and cooling that are basically ancillary to the function of the device. So we see our large-format cells as a huge competitive advantage. As far as integrating the battery into the vehicle, we've simultaneously engineered the Ultium propulsion system with our new EV vehicle platform, and we've made the battery pack a structural element of the vehicle. So in other words, the box that houses the battery is not only an enclosure. It's also part of the torsional rigidity and critical crash structure of the vehicle. So that's another big advantage to the Ultium propulsion system and again, a testament to really thinking about efficiencies due to up-integration. Another one of GM's core competencies is supply chain management and value stream mapping. So we're bringing those capabilities to bear for our EVs as well. And we're focused on engineering out costly rare earth materials like cobalt. With Ultium, we have a state of the art nickel, cobalt, manganese, aluminum or NCMA chemistry, which was designed to reduce the cobalt content in our batteries by more than 70%. So inside of our Ultium battery system, we have the technology, we have the know-how and we're building the scale.

That's great. That's great to hear. From GM's market research or feedback from dealers, is there a specific vehicle or vehicle type that the consumer asks you most often if GM will make an EV version?

Yes. So at GM, we're absolutely convinced that in order to transition to an all-EV future, we need to provide a wide array of different vehicle types that really resonate with our customer base. So our customer base today enjoy various different shapes and sizes and performance levels of vehicles. And as we move from ICE to EV, we don't really see that trend changing. So GM is committed to an all-EV future. We're focused on zero emissions, zero crashes, zero congestion. And in order to make all of these strategic initiatives true, we need to provide a full range of vehicles. So we're creating a full EV portfolio, again, of various different shapes, sizes and flavors. And we really see that as being the answer to making sure that our customers get what they want.

Great. Looks like I'm back on the video feed. I'm not sure exactly what was going on before. Let's maybe conclude it in a way which is even better than before, correct?

Sure.

I forced that answer. Can you talk to us about GM's fuel cell technology? I think we have mentioned it a little bit earlier on and GM looking at various ways to apply that. But what is it that you have in terms of technology? What are the plan to use it?

Sure. So fuel cells and battery electric propulsion units are synergistic. So fuel cells are a really clean way to make electricity. And that electricity can then be used to propel the vehicle through the Ultium propulsion system. So again, they complement each other. They're completely synergistic technologies. They're both very clean, zero emissions. So GM's vision of an all-electric future includes both. We're exploring all opportunities to commercialize our Hydrotec hydrogen fuel cells, including our ongoing discussions with Nikola. GM has invested heavily in manufacturing the best hydrogen fuel cells in the world and has a joint venture with Honda to manufacture Hydrotec fuel cells in Michigan. GM is deeply committed to innovation and sustainability. The commercialization of Hydrotec fuel cells is a part of that commitment and our commitment to a zero emissions future.

Great. That's perfect. Look, I really appreciate the discussion today. Apologies again for the technical issues, but we went through most of the questions ahead as well as from the audience. So thank you so much for being with us, for participating. Best of luck in what seems to be one of the most exciting areas of autos right now. And as you've said through a lot of the call, we'll stay tuned. It seems like you have a lot to announce in the very near term.

Thank you so much for the opportunity, Emmanuel. It was an absolute pleasure.

Thank you so much. And thanks, everyone, for participating and for submitting your questions.